Social Security is a federal program that provides a monthly income to retirees, based on your work history and the amount you paid into the system through payroll taxes. When you reach full retirement age (typically 66 or 67, depending on your birth year), you can begin receiving benefits. While the amount you receive depends on how much you’ve earned during your working years, Social Security is designed to help cover basic living expenses in retirement, although it’s often not enough to rely on as your sole income source. You can start receiving benefits as early as age 62, but your monthly payments will be lower than if you wait until your full retirement age or even age 70.

A retirement savings plan is a financial strategy that helps you set aside money for your retirement years. It typically involves contributing to accounts like a 401(k), IRA, or Roth IRA, where your savings grow tax-deferred or tax-free. By consistently saving and investing over time, you can build a nest egg to provide income once you retire, ensuring you have enough funds to cover your living expenses and enjoy your retirement.

A 401(k) is an employer-sponsored retirement savings plan that allows you to contribute a portion of your pre-tax income, which grows tax-deferred until you withdraw it in retirement. Many employers offer matching contributions, which is essentially free money to help boost your savings. The funds in a 401(k) are typically invested in a range of options, such as stocks, bonds, or mutual funds, and you can begin withdrawing at age 59½ without penalty.

An IRA (Individual Retirement Account) is a personal retirement savings account that offers tax advantages. There are two main types: a Traditional IRA, where contributions are tax-deductible, and taxes are paid upon withdrawal, and a Roth IRA, where contributions are made with after-tax dollars, but withdrawals are tax-free in retirement. IRAs allow you to invest in a variety of assets, like stocks, bonds, and mutual funds, and they provide a way to grow your retirement savings while benefiting from tax deferral or tax-free growth.

A Health Savings Account (HSA) is a tax-advantaged savings account designed to help individuals save for medical expenses. It’s available to people who are enrolled in a high-deductible health plan (HDHP): a health insurance plan with a higher deductible and lower monthly premiums than traditional plans.

Here are a few key features of an HSA you should know about:

Tax Benefits

Contributions are tax-deductible: Money you contribute to an HSA reduces your taxable income in the year the contribution is made.

Growth is tax-free: Earnings on the money in the account (such as interest or investment growth) are not taxed.

Withdrawals are tax-free when used for qualified medical expenses.

Qualified Expenses: The money in an HSA can be used to pay for qualified medical expenses, including doctor visits, prescription medications, dental care, vision care, and some over-the-counter items, as long as they meet IRS requirements.

Portability: Unlike some employer-sponsored health plans, an HSA is not tied to a specific job or employer. It stays with you even if you change jobs or retire.

Ownership: The account is owned by the individual, not the employer, meaning you can manage it and carry the funds over from year to year. There’s no “use it or lose it” rule like with some other types of health accounts (e.g., Flexible Spending Accounts, or FSAs).

Contribution Limits:

There are annual limits on how much you can contribute to an HSA. For 2025, the limits are:

• $4,300 for individual coverage
• $8,550 for family coverage
• An additional $1,000 “catch-up” contribution if you’re 55 or older.

Flexible Use:

HSA funds can be used for medical expenses at any time, and there’s no expiration date for the funds in the account. Additionally, once you turn 65, you can withdraw money for any purpose without penalty, though non-medical withdrawals will be taxed as income.

Eligibility:

To open and contribute to an HSA, you must meet the following criteria:

• Be enrolled in a high-deductible health plan (HDHP).
• Not be enrolled in Medicare.
• Not be claimed as a dependent on someone else’s tax return.

An HSA is a powerful tool for saving for healthcare costs, especially if you don’t expect to need much medical care in the short term and can let the account grow over time.

Personal savings for retirement refers to the money you set aside independently, outside of employer-sponsored plans like 401(k)s or pensions, to support yourself during retirement. This can include contributions to savings accounts, investments in stocks, bonds, mutual funds, real estate, and other forms of personal wealth accumulation. The goal is to build a financial cushion that provides income and helps cover living expenses once you stop working, offering more flexibility and security in your retirement years.

Assets you purchase or contribute to with the goal of generating returns can provide income during retirement. These can include stocks, bonds, mutual funds, exchange-traded funds (ETFs), and real estate. By strategically investing, you can grow your wealth over time, helping to create a source of passive income, appreciate the value of your assets, or provide steady cash flow through dividends and interest, all of which can supplement other retirement income sources like Social Security or pensions.

Annuities are financial products purchased to provide a steady, guaranteed stream of income during retirement. In exchange for a lump sum or series of payments, the annuity issuer agrees to make regular, fixed payments to the retiree for a set period or for life. This can help ensure a reliable income source, protecting against the risk of outliving one’s savings. Annuities can be tailored to fit different retirement needs, offering options like fixed, variable, or indexed annuities, depending on the desired level of risk and return.

Indexed Universal Life (IUL) insurance can be used as a source of income in retirement by providing both a death benefit and the potential to accumulate cash value. With an IUL, a portion of your premium is invested in a stock market index (such as the S&P 500), allowing your cash value to grow based on market performance, but with a cap on gains and protection against market losses. In retirement, you can access this accumulated cash value through tax-free loans or withdrawals, providing supplemental income while also offering a death benefit for your beneficiaries. This combination of growth potential and flexibility makes IULs an attractive option for retirement planning.