30-03-2025
Fidelity Reveals Top 3 Sources of Retiree Income Today: Should You Diversify Yours?
Planning for a successful retirement isn't just about saving enough, it's about creating a reliable mix of income streams that can support your lifestyle in a tax-efficient and sustainable way.
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Fidelity's 2025 State of Retirement Planning study revealed the top three sources of retiree income today:
Social Security: 77%
Pensions: 48%
Personal savings (such as checking or savings accounts): 41%
These remain the most common ways retirees support themselves, but financial experts say that diversifying income sources, especially in an uncertain economic landscape, may be key to long-term stability and peace of mind.
Before making changes to a retirement portfolio, individuals should first consider their broader financial objectives. This includes factors like cash flow needs, expected retirement expenses and longer-term plans such as buying property or supporting children or grandchildren with educational costs.
As Jennifer Kohlbacher, CPA and director of wealth strategy at Mariner Wealth Advisors, pointed out, understanding these goals helps inform decisions around rebalancing and aligning your portfolio with risk tolerance and liquidity needs.
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One of the biggest concerns in retirement is the possibility of outliving your money, according to Yehuda Tropper, CEO of Beca Life Settlements. This risk is magnified by the rising costs of healthcare and long-term care.
'If your savings run out, you may find yourself relying only on Social Security, and with the average monthly benefit hovering around $1,900, that likely won't be enough to cover all your basic living expenses,' Tropper said.
Diversifying income sources can be a practical way to help prevent this scenario.
Tropper recommended combining 'guaranteed assets' — such as Social Security, pensions and annuities — with 'liquid assets,' like cash reserves or dividend-paying stocks. Additional sources like real estate or commodities (like gold) may also provide inflation protection and help diversify income.
This approach creates flexibility while supporting both day-to-day needs and long-term goals.
Kohlbacher also emphasized the importance of evaluating all investment accounts and your full financial picture before making portfolio adjustments. For example, those with significant real estate holdings may not need more exposure to the same asset class elsewhere in their portfolio.
A complete review of your assets, including retirement and taxable accounts, can lead to smarter, more strategic rebalancing decisions.
Tax planning is also important in your retirement income strategy, especially for those with taxable investment accounts. One technique to consider is direct indexing, which involves purchasing individual securities that mirror a market index rather than buying a bundled fund. This can provide more control over specific stock exposure and concentration risk, Kohlbacher said.
Direct indexing also enables tax-loss harvesting, a way of selling underperforming assets to offset capital gains and potentially reduce tax liabilities.
For those with charitable intentions, a charitable remainder trust (CRT) may offer both tax benefits and an opportunity to give back. A CRT is an irrevocable trust that can be established during a person's lifetime or as part of an estate plan, Kohlbacher said.
By donating assets to a CRT, individuals may qualify for an immediate income tax deduction and remove those assets from their taxable estate. The donor can retain an income stream from the trust for life or for a fixed period (up to 20 years), after which the remaining assets are transferred to the designated charity.
Kohlbacher noted that CRTs are exempt from federal income tax, which means that highly appreciated assets can be sold within the trust without triggering capital gains — providing flexibility and tax efficiency.
While Social Security, pensions and savings remain key income sources for many retirees, building a more diversified and tax-smart plan can help protect your retirement lifestyle.
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This article originally appeared on Fidelity Reveals Top 3 Sources of Retiree Income Today: Should You Diversify Yours?
