The Importance of Generating Retirement Income

Most American retirees rely on Social Security as their primary source of income. After all, that seemed to be President Franklin D. Roosevelt’s intention when he signed the Social Security Act into law on Aug. 14, 1935.

FDR called the act the “minimum of the promise that we can offer to the American people” that will “constitute a right which belongs to every individual and every family willing to work.” However, since the distribution of regular ongoing monthly benefits began in January 1940, some folks have, perhaps, overlooked one word in FDR’s quotation: minimum.

According to a recent survey from Transamerica, 91% of American retirees are expecting some of their income to come from Social Security, while 58% say that Social Security will be their primary source of retirement income.

But with the average monthly Social Security benefit for a retiree coming in at $1,924.35, it’s concerning that:

• Just 41% of retirees are expected to generate income from retirement accounts, like a 401(k), 403(b) or IRA
• Only 37% expect income from a company-funded pension plan
• And a shockingly low 9% believe their aforementioned retirement accounts will be the primary source of their retirement income

Transamerica’s survey findings highlight the need not only for better personal finance education in America but also better retirement planning education in particular. The fact that 91% of current retirees are not willing or unable to rely on retirement accounts as their primary source of income exposes the chasm between Social Security expectations and Social Security reality.

When FDR referred to Social Security as the “minimum,” he was admitting it was the least the federal government could promise its citizens. Unfortunately, the substantial remainder is increasingly up to you to address.

Visit Money’s retirement section to understand which types of accounts offer the most benefits, which strategies can help you maximize your retirement savings and how blended income can stretch your wealth further.

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The Federal Reserve is poised to cut rates one last time in 2024, which means now is a great opportunity to nab a CD with a high yield. CDs are a safe way to grow your savings over time. If your cash is just sitting in savings anyway — and you can afford to have it locked away for a period of time — why not maximize your returns?

Check out Money’s list of the best CDs!

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