4 Sources Of Retirement Income Besides Social Security To Rely On In 2025: Know Details

As the 2025 Social Security cost-of-living adjustment (COLA) is expected to be around 2.5%, many retirees may find that the small increase won’t cover rising living costs.

This modest adjustment, which could add only about $48 to the average monthly Social Security benefit, may not be enough to maintain your standard of living.

Fortunately, there are several other sources of retirement income that can help supplement Social Security. Let’s explore four reliable alternatives that retirees can turn to in 2025.

1. Personal Savings

Personal savings are one of the most flexible and immediate sources of retirement income. You can withdraw as much as you need, when you need it, to cover expenses. This could include savings in bank accounts, investment accounts, or tax-advantaged retirement accounts like IRAs or 401(k)s.

Withdrawal Strategies

The key to making your savings last is having a thoughtful withdrawal strategy. Consider withdrawing only what’s necessary each year and prioritize the order in which you withdraw from different accounts:

• Tax-deferred accounts like traditional IRAs and 401(k)s will require you to pay taxes on withdrawals.
• Roth accounts, on the other hand, allow you to take tax-free withdrawals in retirement.

If you’re over 73, remember that the IRS requires you to take Required Minimum Distributions (RMDs) from tax-deferred retirement accounts, even if you don’t need the money right away.

Investment Strategy

To maximize the longevity of your personal savings, keep a balanced investment strategy:

• Short-term funds can be kept in accessible accounts like savings accounts or certificates of deposit (CDs).
• Longer-term funds can be invested in bonds or the stock market to continue growing. Just be cautious with higher-risk investments—your primary focus at this stage should be preserving the wealth you’ve accumulated.

2. Income from a Job

For many retirees, working during retirement can be a practical way to supplement Social Security. You don’t necessarily have to return to your previous career—a part-time job in a field that aligns with your interests or new hobbies can provide meaningful income.

Part-Time or Remote Work

Working part-time a few days a week may be enough to cover gaps in your retirement income. Many jobs offer remote work, which allows for flexibility if you enjoy traveling or want to work from home.

Starting a small business in retirement is another option, but it’s important to weigh the financial risks. Starting a business can have up-front costs, and there’s no guarantee of success. Ensure you fully understand the costs and risks before pursuing this path.

3. Rental Income

If you own property, renting it out can provide a steady stream of rental income. Whether you rent out a second home, a vacation property, or part of your primary residence, it can be an effective way to supplement retirement income.

Long-Term vs. Short-Term Rentals

• Long-term rentals offer a more predictable income stream and fewer management responsibilities, making them ideal for retirees looking for stability.
• Short-term rentals, such as vacation properties listed on platforms like Airbnb, can generate more income, especially if you’re located in a tourist destination. However, managing short-term rentals often requires more hands-on work like cleaning, maintenance, and dealing with guests.

If managing a rental property sounds overwhelming, consider hiring a property manager to handle the day-to-day operations, including maintenance, tenant issues, and rent collection.

4. Government Assistance

If Social Security and your other income sources aren’t enough to cover your living expenses, you may qualify for government assistance programs. While this is often considered a last resort, these programs can help cover essential costs like food, housing, utilities, and healthcare.

Types of Assistance

• Supplemental Nutrition Assistance Program (SNAP): Helps with food expenses.
• Housing assistance: Offers subsidies or affordable housing options to qualified individuals.
• Energy assistance programs: Help pay for heating and cooling costs.
• Medicaid or other health-related programs: Assist with medical expenses for those who meet the income criteria.

Each program has its own eligibility requirements, usually based on income, and you may need to recertify periodically to continue receiving benefits.

Preparing a Budget for 2025

To navigate your financial situation in retirement effectively, it’s essential to create a retirement budget. Once you know how much you’ll receive from Social Security in 2025, you can estimate how much you’ll need from other sources to cover your living expenses.

Key Steps to Building Your Budget:

1. Estimate your monthly income from Social Security, savings withdrawals, and any other sources.
2. Identify essential expenses such as housing, healthcare, and utilities.
3. Plan for discretionary spending like travel or hobbies, if possible.
4. Adjust as needed: If your income falls short, consider reducing spending or finding additional income streams, such as part-time work or government assistance.

Revisit your budget every few months to ensure it’s still working for you, and adjust it as your financial situation evolves.

In conclusion, while Social Security may provide a foundation for your retirement income, it’s important to explore additional income streams like personal savings, part-time work, rental income, and government assistance to maintain your financial security.

Each source has its own benefits and considerations, so planning ahead and keeping a flexible mindset will help you navigate retirement comfortably in 2025.

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