Who's Going to Pay for Your Retirement?

You are. Study the pie chart below. It breaks out the typical sources of retirement income for the average current retiree. Obviously, this is just an average, and your situation may be different. But it's a good starting point to get you thinking.

The first surprise is that Social Security accounts for less than a half of the total. And that's based on the Social Security payouts happening today. Changes may need to be made to the Social Security system to maintain these payouts, but so far, there is little agreement on what needs to be done. Clearly, you shouldn't count on getting more than 40% of your retirement income from Social Security, and you may get a lot less.

The other four slices of the retirement income pie basically are your responsibility. Pensions refers to money from a traditional company-paid pension and the money you save in your employer-sponsored retirement savings plan. Assets is money saved outside of a retirement savings plan, including savings-for instance, in a credit union, bank, or brokerage account.

If you expect to receive a company-paid pension, then a portion of the 18% pie slice allocated to Pensions is taken care of. If you don't have a pension, the entire 18% slice comes from your employer-sponsored retirement savings plan. Likewise, if you don't continue to work part-time, the 24% earnings slice needs to be apportioned among your savings slices.

Bottom line? Up to 60%, and possibly more, of your retirement income may come from your employer's retirement savings plan coupled with your personal savings and investments, including IRAs, credit union and bank accounts, and brokerage account. The ball's in your court.