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Types of Income

As you reach the age of retirement, however you define it, you must look at the income sources that will provide you with the necessary cash flow to meet your expenses. In general, most people will have no more than four sources of postretirement income, including some combination of: Social Security, pension and qualified plan benefits, income from investments, and income from postretirement employment. Let's look at each of these to better understand their role in providing you with income continuity as you move from collecting a paycheck to enjoying your retirement living.

Figure 3-1 provides some sense of how people currently generate their postretirement income and how I believe the numbers will shift over the next 20 years to reflect a shift in the responsibility from the government to the taxpayer. Since this is more an art than a science, the numbers do not represent a single source, but rather a variety of sources collected from both the private and public sectors.


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