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How Will I Pay For Retirement?

There are several potential sources of income in retirement. Learn about the three main places your funds might come from.


Saving for retirement as a three-leg stool

If you do a quick online search for the phrase, “Paying for Retirement,” you will find millions of results.

The fact is, there is a LOT of information out there on how to accumulate the funds necessary to stop working someday.

To narrow things down, let’s focus on three of the most common ways to pay for retirement, sometimes referred to as the three-legged stool. They are: Social Security, pensions, and personal savings and investments.



Social Security Benefits on laptop screen

Social security

This is a federal program that provides monthly income in retirement to qualified individuals, starting no earlier than age 62. It’s funded through the Social Security taxes withheld from our paychecks, plus an equal amount paid in by our employers. Social Security alone probably won’t be enough for most people to live on in retirement.

Pension on calculator with charts and pen


Offered by certain employers, including the military, pensions provide you with a monthly income for life. You must qualify to earn a pension, typically based on the amount of service time or age and years worked. Few employers still offer pensions, so the fact that you might get one is good news for your finances.

Stacking coins

Personal savings and investments

Savings and investments are dollars you have set aside for retirement. You have the most control over this leg of the stool. It’s important to prioritize saving and “pay your future self first.” Employer retirement plans such as the military’s Thrift Savings Plan (TSP) and the private sector’s 401(k)s can make retirement saving more convenient and often provide matching contributions. That means the employer matches part of your contribution to help you save more for retirement.

Key Takeaway: Social Security alone probably won’t be enough for most people to live on in retirement. It’s up to you to make up the difference – so start saving.