Turn Retirement Savings Into Income- Here's How

3 Steps to Planning for Steady Retirement Income

The first step in creating retirement income is to picture how you’d like to spend those years. This way you can understand how much money you’ll need and prioritize what’s most important.

1. Prioritize It
The first step is to picture what you’d like to do in retirement. This way you
can understand how much money you’ll need and prioritize what’s most
important.

Start by asking yourself questions about:

• Logistics – Where will I live? Do I need/want a new car? What’s my
• retirement date?
• Lifestyle – Will I travel, volunteer or get a part-time job?
• Legacy – What will I leave to family, friends or philanthropic projects?

Now create a list of goals to determine which things you might add, defer or eliminate depending on your budget.

2. Pay for It
Based on your goals, create a realistic budget and find out how to revise it for different phases of retirement. You may have dreaded this step and put it off, but your future is worth taking the time to plan.

Start by writing down your current annual budget and increase or decrease specific line items as needed. Some expenses such as taxes, gas, retirement savings, and daily lunches may go down when you stop working. Other
expenses such as healthcare, travel and entertainment may go up. Be detailed when preparing your budget so it’s easier to adjust if needed.

If you find your financial plan won’t cover the things you’d like to do in retirement, there are ways to improve your readiness:

• Delay retirement and save more.
  
• Reduce future expenses.
  
• Defer Social Security payments to maximize your benefits.
  
• Evaluate how much risk you can take with your investments. More aggressive investments may help you grow your portfolio, but also come with more risk.
  

3. Plan It
Once your retirement budget is created, it’s a good idea to look at the biggest risks you could face and get ideas on how to manage them.

The four common risks retirees confront are:
LONGEVITY RISK—OUTLIVING YOUR MONEY.
Retirees are living longer, so you may need your money to last 20, 30 or more years. Otherwise, you may have to cut corners to avoid running out of money at some point. Careful planning may help manage longevity risk.

Help make your money last:

• Choose a realistic time frame for how long your retirement money needs to last. If you retire at age 65, plan for 30 to 35 years.
  
• Maintain an adequate amount of stock investments. This can potentially help your savings continue to grow; however, it does come with additional risk.