What Types of Income can you use in Retirement to support yourself?

You can use Social Security, pensions, retirement accounts, investments, savings, annuities, or even part-time work to pay for things when you retire. Each source has a different part to play in bringing about peace and stability. When you put these income streams together, they can help you meet your needs and enjoy life without always worrying about money. In this blog, I'll go into detail about these ways to make money, showing how they work and how they fit together. 

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What Types of Income Can You Use in Retirement to Support Yourself?

Having more than one way to make money makes it easier to retire. There are often gaps if you only have savings or one check. That's why you should learn about the different kinds of retirement income you can get. Some types of income, like Social Security or pensions, are always there. Some people need to plan and invest.

Here are the main ways you can make money in retirement:

• Social Security benefits that pay you a check every month for the rest of your life

• Pension or annuity payments that are like a regular paycheck

• Taking money out of 401(k)s and IRAs, which are often the biggest savings accounts for retirees

• Earnings from investments, like dividends, interest, and capital gains

• Extra help comes from rental income or freelance work.

• Health Savings Accounts to help pay for medical bills in the future

You make a balanced plan by putting these streams together. Knowing how much money you can live on in retirement gives you both confidence and freedom. You can pay your bills and enjoy the years ahead without worrying about money all the time.

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Social Security Benefits

Social Security is the main source of income for many Americans when they retire. You get this money from the government after working for a long time and paying into the system. How much you get each month depends on how long you worked, how much you made, and when you start collecting. Some people start at 62 and get a bigger monthly payment, while others wait until 70. Social Security might not pay for everything, but it does give you a steady income for the rest of your life.

Pension Income

Pensions aren't as common as they used to be, but for those who do have them, they are still a great way to support themselves in retirement. An employer offers a pension plan that pays you a set amount of money each month after you stop working. The amount is usually based on how long you've worked there and how much you've made in the past. Having a pension can make you feel like you're getting paid every month, even after you stop working.

Retirement Accounts 401(k)s and IRAs

One of the most crucial things you can do to get ready for retirement is to save money in accounts like 401(k)s, 403(b)s, and IRAs. These accounts, which frequently offer tax benefits that facilitate saving, are designed to assist you in saving money while you work. Many employers will even match a portion of your contributions to a 401(k), which is akin to receiving free money for the future.

Contribution Limits and Catch Up Rules

The amount you can donate while working has annual caps. In 2025, the maximum amount you can contribute to a 401(k) is $23,000. You can make an additional $7,500 as a catch-up contribution if you are 50 years of age or older. An IRA can have a maximum contribution of $7,000. You can add an additional $1,000 if you are fifty years of age or older. Since these limits are subject to change annually, it's important to stay up to date.

Withdrawal Rules and Tax Forms

You can start taking money out of these accounts to pay for things when you retire. Timing is very important. The IRS usually charges a 10% penalty and income tax if you take money out before age 59 and a half. The IRS says that once you turn 73, you have to take out a certain amount of money each year. This is called Required Minimum Distributions. You usually report these withdrawals on your tax return using Form 1040. A financial advisor can help you plan ahead so that your savings last for decades.

Investment Income

You can also get extra help when you stop working by investing outside of retirement accounts. These could be stocks, bonds, or mutual funds that you have built up over time. For instance

• When a company shares its profits with investors, dividends from stocks give you regular payments.

• If you own government or corporate bonds, the interest on them gives you a steady stream of income.

• When you sell an investment for more than you paid for it, you make a capital gain.

Income from investments can be very helpful in retirement, but it also has some risks. Your income may not always be steady, and markets can go up and down. Many retirees use investments along with other, more stable sources of income to feel safe and balanced.

Annuities

You can buy an annuity with a one-time or regular payment. In exchange, the annuity will pay you a steady amount of money for a set amount of time or for the rest of your life. A lot of retirees like them because the payments are steady and not tied to the stock market. They can be costly or hard to understand, so it's important to know what you're getting into. But they give you peace of mind because you know you'll always have money coming in.

Rental Income

If you own a house, apartment, or business space, you can make money when you retire. Some people choose to rent out their old home and move into a smaller one. Others buy rental properties earlier in life to make money over time. Rental income can be useful, but it's not always easy. There could be repairs that need to be made, issues with tenants, or costs that come up when managing the property. Still, rental income is worth a lot when it's managed well because it usually grows over time as rents go up with inflation.

Health Savings Accounts (HSAs)

A Health Savings Account can be a good way to help you in retirement. You don't have to pay taxes on money you take out for medical bills, and you report it on Form 8889. You can use the money for other things after you turn 65, but those withdrawals are taxed like regular income and reported on Form 1040. An HSA can help with the cost of healthcare, which is one of the biggest expenses in retirement.

Combining Income Sources

Most retirees use more than one stream of money to build a retirement paycheck. Common sources include

• Social Security checks, shown on Form SSA-1099. In 2025 the average monthly benefit is about $1,900

• Pension or annuity income, reported on Form 1099-R, with payments that can last for life

• Withdrawals from 401(k)s or IRAs. RMDs start at age 73 and are reported on Form 1099-R. The 2025 401(k) limit is $23,000 with a $7,500 catch up for those 50+

• Rental or freelance income. Rentals are listed on Schedule E of Form 1040, while freelance income is reported on Schedule C and can be subject to self-employment tax

Using these together creates balance and helps you stay secure even if one source changes.

How We Can Guide You in Retirement Planning

We have helped a lot of people make plans for their income that will help them relax in retirement. We know how to fill out forms, follow rules, and make choices that can be hard to understand.  We check that everything is correct and clear, from the Social Security shown on Form SSA-1099 to the pension and annuity income shown on Form 1099-R, from 401(k) and IRA withdrawals to the rental income shown on Schedule E.

We are available to assist you at every stage and to help you create a retirement income mix. Set up your free consultation with us right now to start planning with assurance.

Conclusion

The best way to be safe in retirement is to have multiple sources of income. Retirement accounts, Social Security, pensions, annuities, savings, investments, part-time employment, and rental income can all be beneficial. You feel safe and secure when these streams come together to form a robust safety net. You can take care of your health, spend time with your loved ones, and prioritize your priorities when you have enough money.

FAQs

1. What is the most common type of income people use in retirement?

Social Security is the most common source. It gives you monthly checks for life. A lot of people also use it with pensions or money taken out of retirement accounts.

2. Can I use rental income as part of my retirement plan?

Yes, you can constantly benefit from the money you make from renting out a property. Schedule E of Form 1040 lists it, and as rents increase over time, it may increase as well.

3. Do withdrawals from IRAs and 401(k)s incur taxes?

Yes, you must report most of your withdrawals on Form 1099-R and pay taxes on them as regular income. Additionally, there may be a 10% penalty for withdrawals made before the age of 59.

4. How do annuities help with retirement income?

Annuities promise to pay you money for a set number of years or for the rest of your life. You can find them on Form 1099-R, and they can help keep things stable even when the markets change.

5. Can part time or freelance work count as retirement income?

Yes, a lot of retirees work part-time or as freelancers to make extra money. You need to report this on Schedule C of Form 1040, and you may also have to pay self-employment tax on it.

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