3 Alternative Retirement Income Sources to Consider Beyond Social Security for 2025

So, when you retire, the Social Security would complement your earnings, but I did some homework and as of November 2024, the average payout is $1,925 a month. Most probably, that amount won’t cover your lifestyle later in life. Your basic needs will be met by Social Security, but more income will be needed to live your lifestyle. The following three nifty strategies can be implemented to increase retirement savings before retirement is achieved.

Workplace Benefits

Although 401(k) plans and other similar kinds of plans have become pretty common in modern workplaces, pensions are rare. Such plans save you for your retirement and come with tax benefits. Employers usually make a match on the contributions, thus increasing your total amount highly.

For example, if you take home $100,000 per year and put 6% into your 401(k), you are putting away $6,000. But if your employer matches 50%, now you’re getting $3,000 more. Eventually, employer matching contributions can add up to six figures, so they have a real effect on your retirement finances. >

Contribution Limits:

For 2025, 401(k) contribution limits are: >

AgeContribution Limit
Under 50$23,500
50+$31,000 (including a $7,500 catch-up contribution)

More Workplace Benefits

In addition to 401(k)s, also consider these possibilities >

  • Stock Options or RSUs: Accumulate company equity.
  • Employee Stock Purchase Plans (ESPPs): Acquire stock at a reduced price.

Assess these advantages to see how much potential value and risk they may carry.

Open Individual Retirement Accounts

In addition to using plans offered through work, individual retirement accounts serve as another way to accumulate wealth. Select between these two options: >

  • Traditional IRA: Contributions are tax-deductible, meaning taxes are levied at the time of withdrawal.
  • Roth IRA: Contributions are taken after taxes, but withdrawals in retirement are tax-free.

IRA Contribution Limits (2025):

AgeAnnual Limit
Under 50$7,000
50+$8,000

Consistent contributions can result in substantial growth over time. Here’s a projection assuming an average annual return of 8% to 10%:

Years of SavingGrowth at 8%Growth at 9%Growth at 10%
10$109,518$115,922$122,718
20$345,960$390,352$441,017
30$856,421$1,040,027$1,266,604
40$1,958,467$2,578,043$3,407,963

Create a Dividend Income Portfolio

Dividend income portfolios may prove to be a real life-changer for people seeking supplementary income aside from their retirement accounts. Dividends are those payments companies make to shareholders often in the form of a share of profits.

Why Invest in Dividends?

  • Passive Income: Regular payouts can supplement Social Security.
  • Reinvestment Opportunities: Through Dividend Reinvestment Plans (DRIPs), dividends can compound over time.

Important Considerations:
Dividends are not guaranteed. Research a company’s history and financial health before investing to ensure its ability to sustain payouts.

Don’t Rely Solely on Social Security

Social Security is designed to provide a foundation for retirement income—not cover all expenses. If you’re still working, now is the time to bolster your savings. Starting early allows your money to grow through the power of compounding.

Already retired? Consider:

  • Taking up a part-time job or consulting work.
  • Seeking side gigs to make more money.
  • Making your savings work harder or cutting expenses to stretch the budget.
  • Proactive planning and smart financial decisions will ensure you secure a comfortable retirement.

FAQs:

How much does the average retiree receive from Social Security?

The average monthly benefit is $1,925 as of November 2024.

What is the 401(k) contribution limit for 2025?

$23,500 for those under 50, $31,000 for those 50 and older.

What’s the difference between a Traditional and Roth IRA?

Traditional IRA contributions may be tax-deductible; Roth IRA withdrawals are tax-free.

What is dividend income?

Payments companies make to shareholders, often as a share of profits.

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