Identify Income Sources

The Four Pieces of the Retirement Pie:

Pension Plans
Social Security
Tax-Qualified Plans
Personal Savings and Investments

Questions to Consider:

How Much Income Will You Receive from Your Pension and Social Security? See Social Security Benefits Calculator.
How Much More Can You Expect From the Funds Accumulating in Your Tax-Qualified Plan and From Outside Personal Investments?

Impact of Retiring at Age 62 with a Life Expectancy of Age 85:

Fewer Years to Plan and Save for Retirement.
Retirement Income Must Last Longer.
Larger Share of the Retirement Income Source Must Be Saved.

Identify Retirement Income Sources: The Four Pieces of the Pie

For most people, retirement income comes from a combination of four sources: pension plans, Social Security, tax-qualified plans, personal savings and investments. Together these form a retirement income "pie." The importance of the retirement pie is that it helps you identify the amount of your retirement income for which you will be responsible. Knowing this leads you toward a plan of action.

For many people, pension and Social Security benefits will account for around 40% of their retirement income. The remaining income is your responsibility. Here is some additional information that you must know when planning for retirement.

On average, we now retire at age 62 and our life expectancy has increased to age 85. Our retirement income resources have shifted so that now we can expect only 40% to 60% of our required retirement income to be funded by pensions and Social Security. Therefore, we need to supplement the balance from personal savings, and sometimes part-time employment.

Pension Plans. If you have one, contact your employer to determine how much you will receive from your defined-benefit plan.

Social Security. Each year Social Security sends a benefit estimate to those over the age of 25. This is called the Personal Earnings & Benefit Statement (Form SSA 7004). If you do not have that statement, run a rough estimate online with Social Security. The Retirement Planning Quick Report will estimate this benefit for you.

Tax-Qualified Plans. Your employer-sponsored tax-qualified plan is a fundamental building block of a successful retirement plan. These plans allow you to save for retirement on a pretax basis (payroll pretax deduction) with the assets growing tax deferred. Income taxes are payable upon withdrawal. Federal withdrawal restrictions and tax penalties may apply to early withdrawals. These plans are the most powerful way to save for retirement and can also reduce your current taxes. To see the benefits of a tax-deferred arrangement, see the Tax-Deferred Comparison Calculator.

Personal Savings and Investments. This category represents the money you have saved and accumulated over the years. This would include bank accounts, savings accounts, mutual funds, Individual Retirement Accounts (IRAs) and other investments.

Important Notice about Purchasing a VALIC Annuity From Us

To help the government fight the funding of terrorism and money-laundering activities, federal law requires all financial institutions to obtain, verify, and record information that identifies each person who purchases certain annuity products. What this means for you: When you purchase certain annuity products from us, we will ask for your name, address, date of birth and other information that will allow us to identify you. We may ask to see your driver's license or other identifying documents.

Annuities and insurance products are offered by The Variable Annuity Life Insurance Company (VALIC), AIG Annuity Insurance Company, AIG-affiliated insurance companies or other approved companies. Each underwriting company is financially responsible for its own insurance products.

Securities and investment advisory services are offered by AIG Retirement Advisors, Inc., member FINRA, SIPC and an SEC-registered investment advisor.

AIG Retirement is the marketing name for the group of companies comprising AIG Retirement Advisors, Inc.; AIG Retirement Services Company; and The Variable Annuity Life Insurance Company (VALIC); each of which is a subsidiary of American International Group, Inc.

This information is general in nature and may be subject to change. Neither VALIC nor its financial advisors or other representatives give legal or tax advice. Applicable laws and regulations are complex and subject to change. For legal or tax advice concerning your situation, consult your attorney or professional tax advisor.