Ideally, as workers gain experience in a job, their wages increase and their savings grow. When employers don’t offer pension or retirement benefits, workers can still take advantage of individual retirement accounts (IRAs). Unfortunately, the yearly limit on contributions to an IRA is much smaller than the limit on 401(k) plan contributions.

The ideal of retirement savings is not a reality for all working Americans. About a quarter of adults have no retirement savings at all. While that figure includes younger adults who have not started to save for their retirement years, 17% of Americans between the ages of 45 and 59 have no retirement savings.

Waiting to save for retirement is a mistake. The longer money is invested, the more it will grow. When workers delay their retirement savings, they may need to work beyond an expected retirement age to assure that they have adequate income. Still, saving money can be difficult when workers need to cope with growing expenses, periods of unemployment, and unexpected health issues.

Continuing to work is not a desirable option for everyone who reaches retirement age, although others may look forward to part-time work. Here are some potential sources of income for older Americans who have retired from their former employment.

Social Security and SSI

Most individuals who paid FICA taxes for a total of 10 years (or 40 quarters) are eligible for Social Security. Benefits depend on the amount of income that the individual earned during his or her working life and the age at which the individual retired.

Social Security is available at age 62, although full benefits are not available until the age of 67 (or earlier for workers who were born before 1960). Benefits increase when they are deferred beyond the age of eligibility for full benefits, although there is no additional benefit for deferring the receipt of benefits beyond the age of 70.

Supplemental Security Income (SSI) is available for people who have reached the age of 65, have a low income (including Social Security), and have limited assets. The current asset limit (not including a car and an owner-occupied home) is $2,000 for a single person and $3,000 for a married couple. The income limit depends upon the state in which the retiree lives.

Retirement Plans

Retirees can begin to take distributions from a 401(k) plan at age 59½ without paying an early withdrawal penalty. However, employees who retire or are fired after turning 55 can take penalty-free distributions from a 401(k) offered by the employer that employed them when they stopped working.

Letting money sit in a 401(k) plan allows it to continue growing. Retirees generally need to begin taking a minimum distribution after reaching age 72.

Subject to limited exceptions, distributions from an IRA must also begin no earlier than age 59½. With the exception of Roth IRAs, which do not need to be withdrawn until the owner dies, minimum distributions must begin at age 72.

Pension plans are no longer a common benefit for private employees. Plans typically offer a choice of a lump sum distribution or a monthly annuity for life. Retirees should consult a financial advisor or conduct research before making that choice.

Disability Income

In addition to SSI based on age, SSI benefits are available to individuals of any age who have serious impairments of vision or any disability that prevents work and will likely result in death within one year.

Benefits are also available through Social Security Disability Insurance (SSDI). Eligibility depends on the number of years that the applicant worked and how much of that work was completed within ten years of becoming disabled. 

To qualify for SSDI benefits, an applicant must have a medical condition that the meets the Social Security Administration’s definition of disability. The condition must prevent the applicant from working and must be likely to prevent work for at least a year.

Specialized disability benefit programs are available to veterans whose disability was caused by military service and to railroad employees. Workers’ compensation benefits are generally available to employees who experienced a work-related disability, although state laws generally require an application for benefits to be made soon after a disabling injury occurs or a disabling health condition is discovered.

Earnings from Work

Even after retirement, an older person may be able to generate income from the skills and experience acquired over a lifetime of employment. The gig economy offers a variety of opportunities for older workers to work at their own pace, accepting assignments that they feel comfortable performing.

While people think of ride sharing and food delivery services as the backbone of the gig economy, anyone with skills that can be shared online can take advantage of websites that allow freelancers to market their skills. Bookkeeping, programming, tutoring, writing and editing, and providing online companionship are among the many services that retired individuals can provide to earn a few extra dollars without leaving home.