The Top 3 Sources Of Income For The Average Retiree

Retirement income is what determines how comfortably a retiree can live once they leave their career behind. Most people put a high priority on saving for retirement, and a majority think having multiple sources of retirement income is crucial to ensuring they can enjoy life after their working years. In its 2025 Workplace Benefits Report, Bank of America found that 85% of employees expect their retirement income to come from a 401(k) or 403(b) account, while smaller portions predicted Social Security, a checking or savings account, an IRA, or a taxable brokerage or investment account would be their main source of retirement funding.

And while it's hard to say what the future will hold for those survey participants, the present reality is that the top three sources of income for the average retiree are Social Security and pensions, retirement savings accounts and investments, and wages and earnings, per a report on the economic wellbeing of U.S. households from the Federal Reserve. While some retirees make mistakes that cause them to run out of money, forcing them back into the workforce, others go back or continue to work for the simple comfort of supplementing their income with extra cash. In 2024, 85% of adults who were in the workforce claimed they were doing fine financially, compared to 54% who weren't collecting income from wages. And although Social Security is a main source of income for a vast majority of retirees, 81% also collect private income from at least one source.

Of the retirees aged 65 and over, the Federal Reserve reports that 91% received income from Social Security between May 2024 and May 2025. In the same time period, retirees over age 65 received 64% of their income from a pension. These were the largest sources of income for retirees, and a more sizable portion of those with pensions reported feeling confident in their finances than those relying on Social Security alone. The average retirement income for a single person in 2024, according to the U.S. Census Bureau, is below that of any other age cohort at $56,680. This is well below the household income needed to feel financially comfortable in 2026.

The Social Security Administration reports that, as of January 2026, the average Social Security retirement benefit payment is $2,071 per month. Meanwhile, the Census Bureau reports that, in 2024, the median yearly income adults aged 65 and older received from pensions was $33,310 for federal government pensions and $24,930 for state and local government pensions. Annuities had a smaller median yearly payout of $8,753, while military pensions provided a median benefit amount of $26,310. So, it's clear why those who have a pension in addition to Social Security feel more confident in their financial wellbeing than those relying on Social Security payments alone.

In Bank of America's Workplace Benefits Report, 40% of those surveyed believe they won't be able to live off their Social Security benefits, and experts say Washington will have to break its promise to keep Social Security solvent. This helps explain why 85% of employees expect retirement savings accounts to provide the majority of their income. However, between 2024 and 2025, the Federal Reserve reported that only 54% of retirees aged 65 and older received interest, dividends, or rental income. However, Bank of America also found that most employees were investing for retirement by age 30, and 67% of workers are confident they're on the right track with their retirement savings goals as of 2025.

According to the Census Bureau, the median income from retirement savings accounts and similar investments in 2024 for adults aged 65 and older was $10,070. While this amount can vary depending on the type of investment and the amount of money an individual saved leading up to retirement, a figure this low suggests that many retirees will need to supplement their retirement savings and investment payments with other sources of income if they want to leave the workforce altogether.

As one of the top three sources of income for the average retiree, wages and earnings keep some retirees in the workforce beyond the full retirement age of 67. Per the Federal Reserve, 25% of those aged 65 and over receive income from wages, salaries, and self-employment, even if they're technically retired. The median amount people aged 65 and older made from working came out to $43,340 in 2024, according to the Census Bureau. Meanwhile, the same age group's median earnings from non-farm self-employment were $22,080 the same year.

The percentage of people who return to work after retiring may be surprising to some, though many are forced to do so out of financial necessity. However, there are some who choose to return to work because their lives are unfulfilled without the purpose working provides. In fact, a 2023 Empower survey found that 41% of retirees who reentered the workforce did so for their own enrichment, not for the money. With an unprecedented number of employees leaving the workforce instead of entering it, the experience and values older workers can bring to a company might be more important than ever. Plus, working can provide them with the income they need to feel comfortable as they age while also helping them lead a more satisfying life in their golden years.