Consider creating a plan to replace your income

You’ve spent years putting away money so that, one day, you’ll be able to retire. Now that time is near, what you’ve saved is no longer a nest egg—it’s the source to fund your vision of retirement. And you can turn your savings and investments into a source of steady, reliable income with a detailed income plan.
Picture your lifestyle

First, think about the lifestyle you want in retirement

This includes thinking through how you will spend your time in retirement, where will you live, what is most important to you, what will your family look like, what are your preferences, what are some of the concerns, etc. Discuss with your partner to get a clear understanding on these important topics to ensure you have a clear vision and goal that can inform the rest of your plan.
Determine expenses

Then, figure out how much your lifestyle will cost

Some people aim to replace between 80% and 100% of the income they received while working; your exact needs will depend on your lifestyle goals and personal situation. To get a better estimate, start with a budget worksheet separating essential or everyday expenses from those that are more discretionary — separate the needs from the wants.
1

Calculate essential living expenses

Include the cost of essentials such as housing and household expenses, food and clothing, healthcare, transportation, insurance, taxes and loans.
2

Be realistic about discretionary expenses

Plan right and you can also indulge in the things you enjoy most. This may include travel, hobbies and clubs, socializing, volunteering, starting a business, or leaving gifts for the next generation.
3

Account for changes over time

Expenses may increase with inflation, or simply change with age. For example, more of your budget may be used for discretionary travel early on. But it may shift toward essential healthcare costs as you age.
Don't put it off
65%

65% of Americans don’t know how much income they'll have each month after they retire.

Source: TIAA Lifetime Income Survey, 2016
Understand your income sources

Know where your income is coming from

You may have multiple savings and investment accounts, plus Social Security. All can pay you back in retirement, but each works in different ways.
Read more
Estimate income

Estimating your cash flow

If you're within 10 years of retirement, if you are a TIAA plan participant, you can log in to use our Retirement Income Planner to explore your income options and learn how to help maximize your income payouts. You have been saving all these years.  Do you know how much income you can generate?
Break it out

An income plan can fit your unique needs

If you're unsure about how to best utilize and combine various sources of income, a detailed income plan can help give you a sense of your estimated income and your anticipated needs. A good income plan will identify what combination of income choices is right for your current situation, and build in the flexibility for changes as your vision for retirement evolves. Here are the basics:
1

Estimate Social Security income

Along with Social Security, evaluate other sources of reliable income (such as employer-sponsored pensions). This could become the base of your “income floor” to cover budget essentials.
2

Consider covering gaps with income you can’t outlive

If existing sources of guaranteed income fall short of paying your expenses, consider using a portion of your savings to create lifetime income from an annuity to help bridge the gap.
3

Be smart about withdrawals

A dynamic approach to withdrawing from your investment portfolio, may allow you to respond to changes in the market and provides the flexibility and growth potential needed to cover discretionary expenses.
Asset allocation

Finding the right balance

If your essential needs are covered by guaranteed sources of income, you could position your investment portfolio for potential growth to try to keep up with inflation. This may mean updating your asset allocation strategy to balance equities and fixed income in a new way. Please keep in mind that there is no guarantee that asset allocation reduces risk or increases returns.

To find the asset mix for your portfolio, try the TIAA Asset Allocation Evaluator
Think about simplifying

Learn more about consolidating accounts

Many people find it easier to manage their retirement money by working with only one provider. You should seek the guidance of your financial professional and tax advisor before consolidating assets.
Read More
Mind the minimums

Pay attention to Required Minimum Distributions (RMDs)

With most retirement accounts, the IRS requires you to begin taking minimum distributions by age 70½ or face a penalty of up to 50% of the distribution. To reduce the risk of penalty, consider setting up a minimum distribution withdrawal option paying the required amount each year while your savings continues to grow.
Consider taxes

Take taxes into account

To maximize tax advantages, consider drawing first from the savings in taxable investment accounts, leaving any earnings in the retirement accounts to be tax deferred (or in the case of Roth IRAs, potentially tax free).
Next steps

How TIAA can help

Annuities

We can discuss annuity options that can help you pursue your retirement lifestyle.

Investment strategies

We can help you align your asset allocation with your long-term income needs.

Retirement income planning

We can help you create a retirement income strategy that factors in your concerns, as well as your goals.
Get in touch
Talk to a TIAA Consultant to help you review your overall retirement strategy and to help you consider the next steps.
 
888 583-2535
 
Weekdays 8 a.m. to 10 p.m. (ET)
Saturday 9 a.m. to 6 p.m. (ET)
This article is intended for informational and educational purposes only and should not be regarded as a recommendation or an offer to buy or sell any product or service to which the information may relate. Certain products and services may not be available to all entities or persons.
Please note that TIAA is not responsible for the content or privacy policies of third-party sites that may be referenced in this article or to which you may link from this article. TIAA does not endorse or recommend the products, services, or information found on any third-party site.
Annuities are designed for retirement and other long-term goals. They offer several payment options, including lifetime income. When you contribute to an annuity; your money must remain in it until you reach 59 1/2.   If you make a withdrawal before then, the money will be taxed as ordinary income and you may be subject to an additional 10% early withdrawal penalty. While guarantees are based on the claims-paying ability of the issuer, payments from variable annuity accounts are not guaranteed and will rise or fall based on investment performance. Please note that with variable annuities, your money will be subject to the risks associated with investing in securities, including loss of principal. This material is for informational or educational purposes only and does not constitute any of the following: a recommendation or investment advice; a solicitation to buy or sell securities or other investment property; or a solicitation to pursue an investment strategy or retain an investment manager or investment advisor.
This material does not take into account the specific objectives or circumstances of any particular investor, or suggest any specific course of action. Investment decisions should be made in consultation with an investor’s personal advisor based on the investor’s own objectives and circumstances.
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