For decades, retirement planning advice has emphasized the importance of individual retirement accounts, or IRAs. Financial professionals often frame them as a cornerstone of retirement security, encouraging workers to contribute early and often. Yet survey data show a different outcome once retirement begins. Most retirees do not rely on IRAs as their primary income source. Instead, Social Security remains the main financial backbone for the vast majority of older Americans.
This gap between planning advice and lived experience highlights how retirement income actually works in practice, and why asset size does not always translate into income dependence.
Dependence
Social Security is nearly universal among retirees. According to the 2026 EBRI-Greenwald Retirement Confidence Survey, more than 90% of retirees report receiving income from Social Security. By contrast, only about 54% say they draw income from an IRA.
This means nearly half of retirees receive no IRA income at all. The share relying on IRAs has also declined slightly. In the prior year, 59% of retirees reported IRA income, compared with 56% in the 2026 survey. While the change is modest, it suggests that IRAs are not becoming more central to retirement income for most households.
There is also a notable difference between expectations and outcomes. About 71% of workers expect IRAs to provide retirement income, but far fewer retirees actually use them. The intention to rely on IRAs is common during working years, but circumstances often shift by retirement.
Simplicity
One reason Social Security dominates retirement income is its structure. Workers contribute automatically through payroll taxes, and benefits are calculated and paid without requiring individual investment decisions. Once benefits begin, payments arrive regularly through direct deposit or check.
IRAs, in contrast, require ongoing choices. Account holders must decide how much to contribute, how to invest, and when to withdraw. Market conditions, tax rules, and longevity risk all play a role. For many retirees, this makes IRAs a supplement rather than a foundation.
Assets
Despite their limited role in income generation, IRAs represent the largest pool of retirement assets in the United States. At the end of 2025, total U.S. retirement assets reached $49.1 trillion. IRAs accounted for $19.2 trillion of that total, according to the 2026 Investment Company Institute Fact Book.
| Retirement Assets 2025 | Amount Trillions |
|---|---|
| IRAs | 19.2 |
| Employer plans | 28.0 |
| Total market | 49.1 |
However, ownership is far from universal. Only about 42% of U.S. households held an IRA in 2025. This indicates that IRA assets are concentrated among a smaller segment of the population, rather than evenly distributed across retirees.
Structure
Retirement income has often been described as a three legged stool made up of Social Security, pensions, and savings. The ICI now describes a layered pyramid as a more accurate model.
Social Security forms the base, providing income to nearly all retirees. Above it are homeownership and employer sponsored retirement plans. IRAs sit higher in the structure, with other financial assets at the top. The size of each layer varies widely by household.
For very low earners, Social Security can replace more than 90% of lifetime earnings. For higher earners, the replacement rate drops closer to one third. As income rises, reliance on savings and investment accounts increases. As a result, IRAs tend to matter most for households that rely least on Social Security.
Balances
The median IRA balance was about $150,000 as of 2022. While substantial, this amount generates limited annual income. Applying a 4% withdrawal rate produces roughly $6,000 per year.
By comparison, the average Social Security retirement benefit in 2025 was approximately $1,976 per month, or $23,712 annually.
| Income Source | Approx Annual Income |
|---|---|
| Median IRA at 4% | 6,000 |
| Average Social Security | 23,712 |
This difference helps explain why Social Security anchors retirement budgets, while IRA withdrawals often play a secondary role.
Timing
Many retirees delay tapping their IRAs for years. At age 59 and a half, when withdrawals become penalty free, only about 9.5% of IRA owners take distributions. By age 72, fewer than 30% are withdrawing.
At age 73, required minimum distributions begin for most retirees, and withdrawals rise sharply. About 77% of account holders take distributions at that point. Roth IRA owners, who are not subject to lifetime RMDs, often delay withdrawals even longer or leave balances untouched.
This pattern suggests that IRAs often function as deferred or contingency assets rather than steady income sources.
Role
IRAs remain an important component of retirement planning. They provide tax advantages, flexibility, and a reserve for unexpected expenses. However, for most retirees, they do not replace earned income or Social Security.
In practice, retirement income for many households is built around Social Security, with IRAs adding modest support later in life. The data show that while IRAs hold significant wealth, their role is typically supplemental, not foundational.
FAQs
Why do most retirees rely on Social Security?
It provides steady income with minimal decisions.
How many retirees use IRAs for income?
Just over half report IRA withdrawals.
Are IRAs still important in retirement?
Yes, mainly as supplemental income.
Why do retirees delay IRA withdrawals?
Many wait until required distributions begin.
