Nine Key Sources of Retirement Income—and How to Manage Them Efficiently

Year after year, in survey after survey, the biggest fear people report having about retirement has to do with either running out of money or falling short of income once work — and the paycheck that accompanies it — stops.

Indeed, a recent survey by the fund company Vanguard found that retirement income is the area of retirement that people feel least confident handling. For retirement-minded people, one way to allay those nest egg-related concerns is to gain a better understanding of the sources that will provide them income for retirement, and of how to efficiently manage those income streams — in short, how to create a paycheck for retirement by coordinating the various guaranteed, partially guaranteed and non-guaranteed sources of income to which they’ll have access during retirement, while also seeking to minimize taxes.

For people approaching retirement, “it’s really important to not just look at the types of income they will have, but the taxation of the income streams and how guaranteed those income sources are,” says Scott Bishop, who as both a Certified Financial Planner™ and CPA (Certified Public Accountant) manages taxes and retirement finances for clients at STA Wealth Management in Houston, TX.

Don’t wait until retirement is right around the corner to address the retirement income issue. Right around age 50 is a good time for people to start focusing on their retirement income picture, Bishop suggests. “Starting to look at [an income strategy] 10 to 15 years before retirement gives you the ability to adjust [the strategy] without there being too much pressure.”

The first step to developing a retirement income strategy is to take stock of the sources you expect to provide income during retirement, how much they will supply, when they’ll supply it, for how long and in what form (lump sum or in a series of payments). Then it’s a matter of taking steps to manage those sources as tax-efficiently as possible.

Here’s a look at nine of the sources people tend to tap for retirement income, with some keys to managing each:
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