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In Retirement, Plan to Make Your Money Last

From Fidelity.com

As you move into and through retirement, it's particularly important that you establish specialized plans for generating reliable income to sustain you for the rest of your life.

1. Establish a budget.

Begin by envisioning the type of retirement you want. Estimate your anticipated retirement expenses, designating them into two groups: your essential or must-have expenses and your discretionary or nice-to-have expenses.

2. Identify your sources of income.

Match specific sources of income to your expenses. For example, you may want to earmark predictable sources of lifetime income (like Social Security, pensions, lifetime income annuities, and sustainable withdrawal plans) to cover your essential retirement bills.

3. Identify ways to supplement your lifetime income, as needed.

If the predictable income you expect from sources like Social Security and pensions won't cover all of your essential expenses, you may want to consider converting a portion of your savings into a regular stream of income payments by purchasing a lifetime income annuity and/or developing an automatic withdrawal plan that schedules regular payments to yourself.

4. Address your remaining income needs.

Convert your other assets into a regular cash flow as needed.

retirement cash flow

Get Started With Your Plan

Perhaps the most important step in managing your income in retirement is to begin the planning process; the sooner you start, the better prepared you'll be to make informed decisions about your investments and your withdrawal strategy — decisions that will ultimately determine your lifestyle and financial security in retirement. Use the Fidelity Retirement Income Planner to create a budget and determine a strategy for making your money last in retirement.

*Spectrem Market Insights report, "Serving Baby Boomer Retirees," 2004.

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