A secure retirement rarely depends on a single income stream. The most financially resilient retirees combine guaranteed income, portfolio withdrawals, and often one or two supplemental sources. Here is every retirement income source, with realistic amounts and tax treatment.
Overview: All Retirement Income Sources
| Income Source | Typical Range | Guaranteed? | Inflation Protected? | Taxable? |
|---|---|---|---|---|
| Social Security | Roughly $1,000-$4,900+/month depending on earnings history and claiming age | Yes | Yes (COLA) | Partially (0-85%) |
| Pension (defined benefit) | $800 – $5,000+/month | Yes (if plan solvent) | Sometimes | Yes — ordinary income |
| 401(k) / Traditional IRA | Depends on balance | No | No | Yes — ordinary income |
| Roth IRA / Roth 401(k) | Depends on balance | No | No | No — tax-free |
| Taxable brokerage | Depends on portfolio | No | No | Dividends + cap gains |
| Annuity (SPIA) | Depends on purchase | Yes | Optional rider | Partially |
| Rental income | $1,000 – $5,000+/month | No | Grows with rents | Yes (with deductions) |
| Part-time work | $10,000 – $50,000/year | No | Yes (wage-based) | Yes — ordinary income |
| Reverse mortgage | Depends on home equity | Yes (structured) | No | No (loan proceeds) |
| Dividends / interest | Depends on portfolio | No | Partial | Yes |
| Business / royalty income | Highly variable | No | No | Yes |
Social Security
The foundation of most American retirement plans. Your benefit is based on your highest 35 earning years.
| Claiming Age | Benefit as % of FRA (FRA = 67) |
|---|---|
| 62 | 70% |
| 65 | 86.7% |
| 67 (FRA) | 100% |
| 70 | 124% |
Percentages are the standard SSA actuarial figures for someone with a Full Retirement Age of 67. Your specific dollar benefit at each age depends on your earnings history — get your estimate at ssa.gov.
Tax treatment: Up to 85% of benefits are taxable at the federal level if your “combined income” exceeds $34,000 (individual) or $44,000 (married). At least 15% is always exempt. These thresholds are fixed by law and have not been adjusted for inflation since 1993 (1984 for the lower $25,000/$32,000 tier).
Inflation protection: Adjusted annually via Cost-of-Living Adjustment (COLA), announced by the SSA each October. Recent COLAs have ranged from 2.5% to 8.7% depending on the inflation environment — confirm the current year’s COLA at ssa.gov/cola.
Pension / Defined Benefit Plans
Pensions provide guaranteed monthly income for life. They are increasingly rare in private sector but common for government, military, and union employees.
| Sector | Coverage | Typical Monthly Benefit |
|---|---|---|
| Federal government (FERS) | Most federal employees | $1,500 – $4,000 |
| State/local government | Teachers, police, firefighters | $1,200 – $3,500 |
| Military (20-year retirement) | Active duty retirees | $2,000 – $5,000+ (rank-dependent) |
| Union trades | Electricians, Teamsters, etc. | $1,000 – $3,000 |
| Remaining private sector pensions | Legacy corporate plans | Varies widely |
Decision point: Most pensions offer a lump sum vs. annuity choice at retirement. See Pension Lump Sum vs. Annuity.
401(k), 403(b), Traditional IRA
The most common retirement asset for private sector workers. Contributions were pre-tax; withdrawals are taxed as ordinary income.
| Portfolio Size | Monthly (4% withdrawal) | Annual (4% withdrawal) |
|---|---|---|
| $250,000 | $833 | $10,000 |
| $500,000 | $1,667 | $20,000 |
| $750,000 | $2,500 | $30,000 |
| $1,000,000 | $3,333 | $40,000 |
| $1,500,000 | $5,000 | $60,000 |
| $2,000,000 | $6,667 | $80,000 |
RMDs: Required Minimum Distributions begin at age 73 (75 for those born 1960 or later). You must withdraw a minimum each year regardless of whether you need the income.
Roth IRA and Roth 401(k)
After-tax contributions grow tax-free and are withdrawn tax-free. No RMDs for Roth IRA (RMDs apply to Roth 401(k) unless rolled to Roth IRA — SECURE 2.0 eliminated Roth 401(k) RMDs starting in 2024).
| Advantage | Details |
|---|---|
| Tax-free withdrawals | No federal tax on qualified distributions |
| No RMDs (Roth IRA) | Let it grow as long as you want — pass to heirs tax-free |
| Flexibility | Access contributions (not earnings) anytime penalty-free |
| Tax diversification | Reduces income in future high-tax years |
| ACA/IRMAA optimization | Roth withdrawals don’t count toward Medicare IRMAA surcharge income |
Best use: Save Roth distributions for high-income years (RMD years, large capital gains years) to avoid bracket creep. Use in place of traditional IRA when you are already in a high tax bracket.
Taxable Brokerage Account
Money invested outside retirement accounts. No contribution limits, no withdrawal rules, no RMDs.
| Income Type | Tax Rate | Notes |
|---|---|---|
| Qualified dividends | 0% / 15% / 20% | 0% rate for taxable income under $98,900 married / $49,450 single (2026) |
| Long-term capital gains | 0% / 15% / 20% | Same thresholds as qualified dividends |
| Short-term capital gains | Ordinary income | Same as wages |
| Interest income (bonds, CDs) | Ordinary income | Less tax-efficient |
Best for: Retirees with substantial savings beyond retirement account limits; early retirees (no age-59½ restriction); those managing income for ACA subsidies or IRMAA avoidance.
Annuities (Income Annuities)
An insurance contract where you exchange a lump sum for guaranteed income payments.
| Annuity Type | How It Works |
|---|---|
| SPIA (Single Premium Immediate Annuity) | Turn a lump sum into instant lifetime income — payout rate depends on age, interest rates, and insurer; always get a current quote |
| QLAC (Qualified Longevity Annuity Contract) | Purchase with IRA funds (up to $210,000 per person in 2026); income starts at 80-85; reduces RMDs |
| DIA (Deferred Income Annuity) | Buy now, income starts in 10-20 years — lower cost than an immediate annuity; get a current quote |
Best use: Covering the gap between expenses and guaranteed income (Social Security + pension). Removes longevity risk for core expenses. Annuity payout rates move with prevailing interest rates and vary meaningfully by insurer — treat any published rate as a starting point for shopping, not a locked-in number.
Not recommended for: People with significant pension income already covering expenses; people with shorter life expectancy.
Rental Income
Real estate can provide ongoing monthly income, but requires active management or property managers.
| Property Type | Typical Monthly Income | Expense Ratio | Net Monthly (est.) |
|---|---|---|---|
| Single family rental | $1,500 – $2,800 | 30-40% | $900 – $1,960 |
| Small multi-family (2-4 units) | $3,000 – $6,000 combined | 30-35% | $2,000 – $4,000 |
| Vacation rental (Airbnb) | Highly variable | 40-50% | Variable |
| Commercial property | Highly variable | 20-30% | Variable |
Tax treatment: Rents are taxable income, but expenses (mortgage interest, depreciation, maintenance, management fees) reduce the taxable amount significantly. Many landlords pay little or no tax on rental income via depreciation deductions.
Part-Time Work and Encore Career
Working in retirement — even 10-20 hours/week — can dramatically extend portfolio longevity.
| Work Level | Annual Income | Impact on Portfolio |
|---|---|---|
| Minimal (consulting, gigs) | $5,000 – $15,000 | Reduces annual withdrawal meaningfully |
| Part-time (20 hrs/week) | $18,000 – $35,000 | Often fully covers discretionary spending |
| Encore career (full role) | $40,000 – $80,000+ | May eliminate portfolio withdrawal entirely |
Important: If collecting Social Security before full retirement age (67 for those born 1960+), earnings above an annually-adjusted exempt amount temporarily reduce benefits by $1 for every $2 earned. Confirm the current-year exempt amount at ssa.gov. Benefits withheld are restored (via a higher monthly benefit) at FRA.
Reverse Mortgage
Allows homeowners 62+ to convert home equity into income without selling. Most common: Home Equity Conversion Mortgage (HECM).
| Payout Option | How It Works |
|---|---|
| Monthly payment | Fixed monthly income for as long as you live in the home |
| Line of credit | Draw when needed; unused credit line grows |
| Lump sum | One-time payment (less common; fixed interest rate) |
Key facts: No repayment while you live in the home. Loan becomes due when you sell, move, or die. Heirs can repay the loan and keep the home or sell the home and keep any equity above loan balance.
Best for: House-rich, cash-poor retirees who plan to stay in their home long-term.
Building Your Income Stack
A resilient income plan layers sources to cover different needs:
| Priority | Income Type | Purpose |
|---|---|---|
| 1 | Social Security (optimized claiming age) | Core guaranteed income |
| 2 | Pension (if available) | Additional guaranteed floor |
| 3 | SPIA annuity (if gap remains) | Close any floor gap |
| 4 | Taxable account / dividends | Low-tax discretionary income |
| 5 | Traditional IRA / 401(k) | Fill needed income, manage brackets |
| 6 | Roth IRA | High-income years; late retirement |
| 7 | Part-time work (if desired) | Supplement early retirement years |
| 8 | Rental income (if applicable) | Inflation-adjusted supplement |
Sources
For more on building a sustainable retirement paycheck, see the Retirement Income hub.
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