Retirement Income: Where is it Coming From?

One of the issues you need to address during retirement is the origin of your income. You need to make sure that you have adequate revenue streams to meet your needs during retirement.

Potential Sources of Income in Retirement

As you prepare for retirement, consider the following sources of income.

Retirement Accounts

Most of us plan to rely mainly on tax-advantaged retirement accounts. Building up a nest egg with the help of tax-advantaged accounts like 401(k)s and IRAs can be a great way to build wealth – as long as you understand the issues involved with these types of accounts.

You can use tax-advantaged accounts to make more efficient use of your investment dollars and boost your wealth. Your nest egg, when you begin taking distributions, can be one source of retirement income.

Social Security

If you trust it, Social Security is one of your retirement income sources. However, Social Security isn’t meant to be enough to retire on. Plus, if you don’t trust the system to perpetuate itself to the extent that you can rely on it later on, it’s not something you want to base your retirement income calculations around. However, there is a chance that you will get something from Social Security, and you can use that as part of your calculations – as long as you are conservative in your estimates.

Business Income

Because of uncertainly surrounding retirement accounts and Social Security, it may be wise to go beyond these two more traditional sources of retirement income.

One of the ways that you can build your wealth over time and cultivate income is through business activities. If you start and run a business, you have the opportunity to improve your cash flow. While economic factors can influence your business performance, just having that additional source of income can be helpful in the long run.

Passive Income

Don’t forget about passive sources of income. You can spend a decade or so building a dividend portfolio, or you can get involved in a creative endeavor that can help you earn royalties over time. You can also receive rental income. Even though many people think of this as active, the reality is that if you can hire someone else to manage your properties, you have very little to do beyond enjoying the monthly income.

The Need for Income Diversity

It makes sense to cultivate diverse sources of income. If one income source fails during retirement, you have other options to help pick up the slack. It’s important to remember that the best case scenario is unlikely to happen. There will probably be bumps along the way. Begin thinking about how you will fund your retirement. Consider the situation in terms of how much monthly income you’ll need, and set a goal to begin working toward achieving those income goals right now.

As you build up toward your needed income for retirement, you’ll feel better about the situation, and your ability to meet your needs.

Are you confident about your retirement? What are a few sources of income you’ll be lacking in retirement? How are you going to add those to your “retirement portfolio?” Leave a comment!

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Reader Comments

  1. says

    I believe in multiple income sources in life and retirement. I will have Social Security, pension, brokerage accounts, business income, IRAs and Roth IRAs.

  2. says

    I’d focus on the business and passive income the most. The US government is going broke quickly with no will to fix the problem. Social Security will likely be radically changed as will tax deferred retirement accounts by the time I reach retirement age.

    I hope I’ll be able to build enough passive income via automated businesses and rental real estate to weather the coming realignment.

    • says


      Keep in mind if #1 is true (US government is going broke), it will have some, if not dramatic effect, on your business and possible real estate. Unfortunately I don’t see any solution to the primary issue of the government needing more money.