• Tim Lofton

Retirement Income



There are many variables to retirement savings. Regardless of when an individual begins saving for retirement, unexpected changes along the way can impact their retirement plans. When it becomes time for a retiree to manage their retirement income, a few solid guidelines are useful. Here are some key factors for managing retirement income.


Employment Income vs Retirement Income


Retirees often miscalculate their expected need for income during retirement years. Conservative retirees may think they need to severely limit monthly spending or work a part-time job in order to survive during their retirement years. Others overestimate their expected income and fall woefully short of their retirement planning goals. There are several major factors that impact how much monthly income will be needed upon retirement. Some common expenses that may increase or decrease monthly expenses include:

  • Work-related expenses

  • Mortgage debt

  • Health insurance

  • Leisure activities


Work-related expenses such as lunches, transportation, clothing, etc. are likely to decrease upon retirement. Many couples and individuals also plan their retirement around the time their mortgage is paid in full. Other costs, like leisure activities, travel, and health insurance costs are likely to increase during the retirement years.


Fixed and Variable Income Sources


Planning for retirement income includes addressing multiple streams of income. Pension plans, annuities, and Social Security income are considered fixed sources because they are typically preset and are unlikely to change for the duration of retirement. When these fixed sources are sufficient to manage all or most monthly expenses, retirees can make adjustments to their variable income sources. Variable sources include employer-sponsored retirement plans, individual retirement accounts (IRAs), and personal savings.


Growth Potential for Retirement Income


Retirees commonly move or keep their funds in a money market or other low interest-bearing account during retirement. This could be a mistake, as funds invested in these types of accounts may not earn enough interest to keep up with regular inflation. Income from variable sources and funds that are not needed on a monthly basis, can still be invested in growth opportunities appropriate for retirees. Choosing these investment vehicles not only provides the potential for additional funds in retirement but also increases the availability of inheritance funds for future generations.


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