Retirement Income Planning

The primary sources are: Social Security benefits, employer pension or defined benefit plan income, withdrawals from tax-deferred accounts (401k, traditional IRA), distributions from Roth accounts (tax-free), dividends and capital gains from taxable investment accounts, and for some, income from rental property, part-time work, or annuities.

The decision depends on your health, other income sources, and marital status. Benefits are reduced by up to 30% if claimed at 62; they increase by 8% per year if delayed past full retirement age up to age 70. If you are healthy and have other income, delaying to 70 typically maximizes lifetime benefits.

Key strategies: withdraw in a tax-efficient sequence (taxable accounts first, then tax-deferred, then Roth), keep spending at or below 3.5%–4% of portfolio value annually, delay Social Security to increase the guaranteed base income, maintain an appropriate asset allocation that allows portfolio growth, and keep an emergency cash reserve.

An annuity is an insurance product that converts a lump sum into guaranteed lifetime income payments. Fixed income annuities provide predictable income regardless of market performance — valuable for seniors who want to ensure basic expenses are covered. The appropriateness depends on your overall income picture, health, and risk tolerance.