Retirement income plays a pivotal role in determining the quality of life retirees enjoy after leaving their careers. Saving for retirement is a top priority for many, with most recognizing the importance of having multiple income streams to ensure financial security in their later years. According to Bank of America's 2025 Workplace Benefits Report, 85% of employees anticipate that their primary retirement income will come from 401(k) or 403(b) accounts, while smaller numbers expect Social Security, checking or savings accounts, IRAs, or taxable brokerage or investment accounts to be their main sources of funding.
While the future remains uncertain for these survey participants, the current situation shows that the top three income sources for the average retiree are Social Security and pensions, retirement savings accounts and investments, and wages and earnings, as reported by the Federal Reserve in its study on the economic well-being of U.S. households. While some retirees face financial missteps that force them back into the workforce, others continue or return to work simply to supplement their income for added comfort. In 2024, 85% of working adults reported being financially stable, compared to only 54% of those not earning wages. Despite Social Security being a primary income source for most retirees, 81% also receive private income from at least one other source.
Social Security and Pensions Provide the Most Income
For retirees aged 65 and over, the Federal Reserve found that 91% received Social Security income between May 2024 and May 2025, with 64% of their income coming from pensions during the same period. These are the leading income sources for retirees, and those with pensions tend to feel more financially secure than those relying solely on Social Security. According to the U.S. Census Bureau, the average retirement income for a single person in 2024 was $56,680, which falls short of the household income needed for financial comfort in 2026.
The Social Security Administration reports that, as of January 2026, the average monthly Social Security retirement benefit is 33,310 for federal government pensions and 8,753, while military pensions provided a median benefit of $26,310. It's clear why retirees with both Social Security and a pension feel more financially confident than those depending solely on Social Security.
Retirement Savings Accounts and Investments Are Essential
In Bank of America's Workplace Benefits Report, 40% of respondents doubt they can live on Social Security benefits alone, and experts warn that Washington may struggle to keep Social Security solvent. This concern helps explain why 85% of employees expect retirement savings accounts to be their primary income source. However, the Federal Reserve reported that only 54% of retirees aged 65 and older received interest, dividends, or rental income between 2024 and 2025. Still, Bank of America found that most employees began investing for retirement by age 30, and 67% of workers were confident they were on track with their retirement savings goals as of 2025.
According to the Census Bureau, the median income from retirement savings accounts and similar investments for adults aged 65 and older was $10,070 in 2024. While this amount varies based on investment type and savings accumulated before retirement, such a low figure suggests that many retirees will need additional income sources to fully leave the workforce.
Working Retirees Enjoy Greater Financial and Personal Security
Wages and earnings rank among the top three income sources for the average retiree, keeping some in the workforce beyond the full retirement age of 67. The Federal Reserve reports that 25% of those aged 65 and over receive income from wages, salaries, and self-employment, even after retiring. The Census Bureau states that the median income from working for people aged 65 and older was 22,080 that year.
While some retirees return to work out of financial necessity, others do so for personal fulfillment. A 2023 Empower survey found that 41% of retirees who reentered the workforce did so for enrichment, not money. With an unprecedented number of employees leaving the workforce, the experience and values older workers bring to companies may be more valuable than ever. Working not only provides retirees with a necessary income but also contributes to a more satisfying life in their later years.