5 steps to retirement income planning
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See where you stand compared to households like yours, and get steps you could take to grow from here.
1. Estimate your retirement expenses
- Mortgage, rent and other property-related expenses. You’ll need a place to live, so be sure to consider your mortgage and/or rent, property taxes, repairs and other property-related expenses.
- Taxes. Aside from withdrawals from a Roth IRA after age 59½, most (if not all) of your retirement income is taxable (even Social Security) .
- Medical expenses. The average 65-year-old may expect to spend $172,500 on medical expenses in retirement .
- Car payments. Typical car-related expenses in retirement include car loan payments, repairs, tires and insurance.
- Food and personal items. You’ll still need to eat, bathe and clothe yourself in retirement, so be sure to budget for those expenses.
- Travel. Unless you plan on staying put for all of your retirement, travel is another expense you’ll typically have in retirement.
- Entertainment. This includes things such as subscriptions, movie tickets and social events.
2. Identify your sources of retirement income
- Social Security. Starting at age 62, you may qualify for Social Security retirement benefits.
- Retirement accounts. This includes money you’ve saved in 401(k)s and IRAs (Roth, traditional and SEP). These accounts typically have required minimum distributions.
- Brokerage accounts. Money in brokerage accounts, including dividends from stocks held in those accounts, can be a source of retirement income.
- Pensions. Depending on where you’ve worked, you may have a pension plan that provides retirement income.
- Savings. This includes money you have in savings accounts, certificates of deposit or checking accounts.
- Rental income. If you own a rental property that you plan to keep during retirement, your rental income should be part of your retirement income.
- Rent out a room in your home. Not only does renting a room provide additional income, but it can help prevent loneliness and isolation in retirement.
- Buy and rent out an investment property. Purchasing and renting out an investment property can supplement your retirement income if the rent is more than what you pay for the property’s mortgage and other expenses (such as property taxes, repairs and rental management fees).
- Capitalize on your hobbies. Hidden talents can turn into income, such as turning a love for gardening into cash from selling your crop at your local farmers’ market.
- Borrow money. This may not always be the best or easiest option. For one thing, it can be harder to borrow money when you’re retired, because your retirement income may be lower than your working income. Additionally, you’ll likely pay interest, which can decrease your income in the long run.
3. Strategize how you’ll tap into retirement income
- Diversifying your income sources. You’ll want a mix of guaranteed income sources and invested assets that can sustain your lifestyle for your lifetime.
- Deciding how you’ll approach withdrawals. There are several common withdrawal strategies you could follow to maximize the longevity of your retirement savings.
- Delaying collecting Social Security retirement benefits. You can claim Social Security as early as age 62, but you don’t receive 100% of your benefits unless you wait until you reach full retirement age (full retirement age varies with birth year, but it is 67 for people born in 1960 or later). If you can hold off even longer (say, to age 68 or 69), your monthly benefit could increase by as much as 8% a year. (There is no financial incentive to wait past 70 to start taking Social Security .)
- Managing your tax liability. As noted, most of your retirement income may be taxed. Having a tax-efficient strategy could save you money down the road.
See where you stand compared to households like yours, and get steps you could take to grow from here.
Your actual benefit may be lower or higher than estimate made with this calculator, because it does not take into account your actual earnings history.
We assume you have earnings every year until you begin receiving Social Security benefits. If you had several years of noncovered employment or your earnings changed significantly from year to year, this calculator will overestimate or underestimate your benefit.
This is your estimated benefit
if you begin taking Social Security at age 62
This is your estimated benefit
if you begin taking Social Security at age 67
Estimated benefits from age 62 to 70
Social Security break-even age
Your break-even point is the age at which the cumulative amount you may receive if you file later equals the cumulative amount you may receive if you file early. It signifies the point at which it may "pay off" to wait.
Age 75.9 is the age at which the total number of dollars you receive if you retire at age 67 exceeds the total number of dollars you'll receive if you retire at 62.
About these results
We estimated and then indexed your past earnings by using your current annual salary, the national average wage indexing series and the Social Security Administration's annual wage base.
We assume that people age 18 to 22 are less likely to have full-time earnings.
Future earnings are based on correct annual salary and expected annual salary increase.
With the exception of the indexing factor applied to past earnings, the calculations do not include an inflation rate. The results are presented in today's dollars.
4. Adjust your portfolio for retirement
- Shift to income-generating assets. Rebalancing your investment portfolio toward high-dividend ETFs or stocks can generate a regular stream of income.
- Reduce your risk. Including more lower-volatility assets like bonds will help to protect your retirement income from major swings in the market.
- Watch out for inflation. While reducing risk is important, you may want to keep some portion of your portfolio invested in assets that help your savings stay ahead of inflation.
5. Look for ways to decrease your retirement expenses
- Pay off the mortgage before you retire. Not having a mortgage payment can help keep your housing expenses low during retirement.
- Enroll in Medicare. To help with medical expenses, be sure to enroll in Medicare (you can first enroll in the three months before turning 65) .
- Downsize your home. Selling your home and moving to a smaller one or even an apartment or condo can reduce costs.
- Move to a cheaper city. Although jobs in bigger cities sometimes come with bigger salaries, when you retire you don’t need to worry about a salary. Consider reducing your expenses by moving to a city with a lower cost of living.
- Drive a less expensive car. Unless your car is already paid for in full, consider trading in your car for one with a lower monthly payment.
Article sources
- 1. Social Security Administration. Income Taxes And Your Social Security Benefit. Accessed Dec 23, 2025.
- 2. Fidelity. How to plan for rising health care costs. Accessed Dec 23, 2025.
- 3. Social Security Administration. Delayed Retirement Credits. Accessed Dec 23, 2025.
- 4. U.S. Centers for Medicare and Medicaid Services. When does Medicare coverage start?. Accessed Dec 23, 2025.
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