Retirement Income

Review your income sources

Before creating your retirement income plan, you’ll want to understand where your money will come from. Focus on the following key sources.

• Retirement savings plans offered through your employer or an individual account
• Social Security
• Personal savings or investments
• Working in retirement

Assess your finances

Check in on your retirement savings. Use myOrangeMoney®* to estimate how much you’ll need in retirement and see your progress toward your goal.

Find ways to save more. If you are behind on your savings, look for ways to close the gap. Here’s a few ideas to help:

• Increase your retirement savings contributions. Even a small amount can have a big impact in helping you reach your goals.
• Save more with catchup contributions which allow you to save an additional $5,000 per year once your turn 50.
• Take advantage of matching contributions if offered by your employer.
• Open an additional account like a traditional or Roth IRA
• Organize your finances. Creating a budget might help you find more ways to save.  

Factor in Social Security. Social Security will be a key retirement income source for many, and it’s important to understand how it will impact you. Make sure you understand how your benefit amount will change depending on when you begin collecting Social Security. 

Estimate expenses in retirement. It’s important to think about how your expenses might change once you hit retirement. 

Understand income strategies

There are a few different strategies commonly used when creating a withdrawal plan in retirement:

Bucket approach. Mange your money in three different time horizons: shorter-term, intermediate-term and long-term with each bucket invested differently to account for varying degrees of risk. 

Systemic withdrawal plans. Set a specific withdrawal dollar amount or percentage from your portfolio each year.

Guaranteed income floor approach.** Manage your money according to need by using guaranteed income sources (Social Security, annuities, bonds, etc.) for essential expenses and an invested portfolio for discretionary expenses.

Dividends and interest. Pay for all expenses with dividends and interest earnings only, leaving your principal portfolio untouched.

Focus on key considerations

Longevity. People are living longer today which means you’ll potentially have more years of income to cover.

Inflation. Account for the fact that the cost of goods and services will rise over time, meaning your dollars don’t go as far from one period of time to the next.

Market risk. Changes in the market are inevitable. Make sure to understand your investments and consider implementing a diverse portfolio across stocks, bonds and cash to potentially help you manage market volatility. Keep in mind that diversification doesn't assure or guarantee better performance and cannot protect against loss in declining markets.

Liquidity. Ensure you have money set aside to cover unexpected expenses in case of am emergency.

Taxes and legislation. Understand the tax implications of each of your retirement income sources and how it will impact your plan. 

Medical and chronic care. Health care can be one of the biggest expenses in retirement. Make sure you plan for health care needs and costs in retirement as well as understanding the different components of Medicare. You may also was to consider additional coverages such as chronic illness or long term care. 

Get help if you need it

A financial professional can help provide personalized guidance to help you develop a retirement income strategy for your unique needs.