Retirement income

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Reviewing retirement income sources is a necessary requirement when expenses exceed income. Using the table below, you can list sources that you project are going to be reliable when retirement begins. If more income is needed, go to Step 6: Determine options to generate more income.

Retirement Costs and Income

		Age/Years---------------------------------------->
		(59)	(60)	(61)	(62)	...	Catagory
Catagory	Month	(2007)	(2008)	(2009)	(2010)	...	Totals
Expenses
........
........
........
Expense Subtotal	7,480	75,360	98,521	116,216	111,246		401,343
Income
Salary	7,500	90,000					90,000
Pension			55,000	55,000	55,000		165,000
Social Security benefits
401k withdrawal			20,000	20,000	20,000		60,000
Stocks
Rental income	2,350	28,200	28,200	28,200	28,200		112,800
Deductions
401k	-600	-7,200					-7,200
Addl Life Ins	-40	-480					-480
Long term dis.	-50	-600					-600
Medical Ins	-13	-152					-152
Income taxes	-1,833	-22,000	-18,000	-18,000	-18,000		-76,000
Rental income Tax	-583	-7,000	-7,000	-7,000	-7,000		-28,000
Expected Income	6,731	80,768	78,200	78,200	78,200		315,368

As mentioned earlier, the month column applies just to the current year. The assumption for this example is that retirement will start in 2008. The pension withdrawals will kick in at this point.

The table also show a $20,000/year withdrawal from 401k. The principle will appreciate slightly with the funds invested in relatively secure areas. This will have to be monitored carefully over time. The goal would be to have 401k last through the remainder of a persons life.

List other areas that will provide income as well. Rental income is fairly stable, but when renters vacate, there will probably be additional needs. To be conservative, it is not a bad idea to show only 10 months/year of rental income.

Payroll deductions are listed in the current year. They are taken directly out of the paycheck. These will go away after retirement. 401k deductions will no longer occur and medical insurance will be replaced.

Social Security benefits could be important to cover the expense gap. However, the amount you receive is tied to when you start taking it and to other income sources.It may be good to delay this until there is a real need.

Most likely it will be necessary to find other income to meet all your expenses. Without using a retirement income calculator, deficiencies could be a challenge. Work through this carefully and start investigating possibilities as soon as possible.

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