You know how you get income today. But do you know how you’ll get paid in retirement? The answer may be a combination of Social Security and income from your retirement investments. You may be among the shrinking number of people who have a company pension plan. Many retirees also depend on part-time work as a major source of retirement income.
Here are 4 retirement income options to consider:
1. Employer-sponsored retirement plans
Consider contributing to a 401(k), 403(b), 457 or similar plan. These plans come with tax benefits, such as pre-tax contributions and the opportunity for tax-deferred growth. Plus, investing is easy because the money comes out of your paycheck before you have a chance to spend it.
Keep in mind that when you take withdrawals, the money is taxed as ordinary income and may be subject to a 10% penalty if you take it before age 59½.
2. Pension plan
If you're eligible to receive a pension benefit in retirement, call your benefits office and ask for your accrued and projected pension benefits.
Your accrued benefit is the annual amount you'd receive at your pension plan's normal retirement age if you left your job today. Your projected benefit is an estimate of the annual amount you will receive if you stay at your current job, with your current pay until your pension plan's normal retirement age.
3. Social Security
Social Security is a federal benefit that provides income to retired people. If you were born after 1960, you're not eligible for Social Security until age 67. Also keep in mind, some government pensions are reduced by the amount you receive from Social Security. Learn more about when you should start taking Social Security.
4. Other retirement savings options
Depending on your situation, you may want to invest for yourself in a retirement account like an IRA or Guaranteed Retirement Income from Nationwide®.
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Guarantees are subject to the claims paying ability of Nationwide Life Insurance Company. Rates are subject to change without notice. Fixed annuities are contracts purchased from a life insurance company. They are designed for long-term retirement goals. Withdrawals or surrenders are subject to income tax and if made before age 59½ may be subject to a 10% tax penalty. Your income may vary based on monthly contributions. Guaranteed Retirement Income from Nationwide is distributed and serviced by Nationwide Financial General Agency, Inc. Annuities are issued by Nationwide Life Insurance Company, Columbus, OH.