Retirement is a big decision. Actually, it’s a series of decisions that travels the timeline of your adult life, from your first job to your last breath!

It’s a big question: Do I have enough money to retire?

If your entire working life is supposed to culminate in you accumulating enough assets to retire comfortably, then retirement itself is all about generating income, and hopefully income you cannot outlive. But where will it come from? Income sources will be as varied as the people’s lives who count on them, but they generally fall into six main categories:

  1. Social Security
  2. Qualified Retirement Accounts
  3. Investment Accounts and Savings
  4. Income you can never outlive
  5. Rental Income
  6. Your Home
  7. Earned Income

Social Security

More than forty years ago, the American public was introduced to a new concept: self-sufficiency in planning for retirement.

The IRA was legislated into law in 1974, the 401(k) in 1978, and the ROTH came along in 1997. Until then, the American worker was conditioned to believe that having a good job with a good company would lead to a good retirement, funded by a generous pension and a reliable monthly social security check in the mailbox. But with many well-publicized public and private pensions being mismanaged and underfunded, and the ongoing scare that social security was drying up, due to reckless mismanagement by the federal government, the message since the seventies has been, “do it yourself.” 

So, we got the brutally true hint and we’ve poured trillions into 401(k)s, IRAs and ROTHs in the last few decades.

Social Security is still around, but feebly so. The average retiree collects about $1,400 a month, which in most cases is not going to cover exploding healthcare costs, the money you’ll need to keep your home in livable shape, increasing food and transportation costs, not to mention gifts for the grandkids.

Because of this double whammy–falling income and rising costs–many retirees are deferring retirement to as late as age 70, and some even later. The longer you wait, the amount of your monthly social security payment will increase up to age 70, when you must begin taking payments.

If you have not yet done so, go to, establish your sign-on credentials. Social Security may be your most important decision regarding income for you and your spouse. Start to get very familiar with the ins-and-outs, so you don’t find yourself on the out!

Qualified Retirement accounts

As stated above, we’ve been warned for decades to participate in our employers’ 401(k) plans (457 plans for public employees) and to establish personal Qualified Retirement accounts like IRAs and ROTHs.

You can start taking money out at 59 ½ without penalty, but it would be wise to sit with an experienced certified financial planner (CFP) to map out how and when to take income, and how to best coordinate with the amount and timing of social security payments.

After age 70 ½ you are required, by law, to take required minimum distributions (RMD) to avoid paying a very stiff 50% penalty.

Also, if you are fortunate enough to draw a Pension, this monthly payment will likely be established to last for your lifetime, and possibly that of your surviving spouse. Check with your benefits department and work with a CFP to help choose your best payment option, and to coordinate the distributions and timing of payments with your personal retirement accounts and social security.

You should also check with your past employers, especially if you’ve changed jobs several times in your career, to see if you’ve left any money on the table in the form of pensions you may have forgotten about.

What’s in your nest egg? Whatever you have the goal should be to turn most of those assets into income producers, while still investing for some future growth of assets to offset inflation. If you can withdraw in the neighborhood of about 4% a year, your assets stand a good chance of not depleting in your lifetime.

Investment Account and Savings

Specifically, bank and brokerage accounts. These may be the accounts you would want to deplete first, but work with an advisor on this. Depleting your taxable accounts first allows your qualified assets to continue to grow tax-deferred, and if you have enough saved, it may allow you to defer taking social security payments right away.

Income You can never outlive

For the vast majority of people, there are only a few ways to create income streams that last longer than your life: Social Security payments, defined benefit pension plan payments, and fixed income annuities.

Unless you have some really great side deal going on with some other third party, these are your options.

Rental Income

This can be a double-edged sword. Sure, the rental income can be very nice, but do you want to be a busy landlord in your golden years? No easy answer there, but it all comes down to what you want to do in retirement. If you prefer to chase down rental checks instead of chasing marlin in the gulf, go for it!

Using a rental property to supplement your income may involve renting out your vacation house or investing in a rental condo in your hometown. Either way, you’re taking on a responsibility, and many retirees feel the increased income is worth the trouble.

Your Home

Like most retirees, you may be considering downsizing your life, and the biggest part of that is your home. If you’ve been there for some time, there’s likely to be some considerable value appreciation, and you can decide to downsize, you can pocket a pretty nice gain by selling big and buying small. But what if you don’t want to leave and you can use some extra income? A reverse mortgage may be a viable option, but regardless how trustworthy Tom Selleck is, they may not meet all of your needs from an income or estate planning perspective. Again, a qualified advisor is a must before going this route.

Earned Income

It’s the non-retirement retirement.

Working in retirement can be very different from your pre-retirement career, in terms of stress levels and overall enjoyment. It’s your opportunity to remain engaged (which has many more benefits that just income) and do the things you’ve always wanted to do. Turn a hobby into a business? Do it! Work in the lumber department of Home Depot just because you like the smell of lumber? Why not?

And depending how tied you are to your old life, here is a time to consult in your given field, picking and choosing the assignments you want. Now THAT sounds better than 9-to-5. (Special note: If your spouse also has a career, he or she may be on a different timetable than you, so that’s an important factor to consider when planning income distributions and healthcare coverage.)

With healthcare advances, and people generally eating smarter and exercising more, we are living longer than ever, so to have a shot at a happy and long retirement requires solid investment practices in your accumulation years (Passive Make), and detailed, thorough planning for your income years (Active Keep).