Retirement Income

Retirement Income

Retirement may bring changes to both your lifestyle and your finances. It is important to have a plan that takes into account certain risks which may impact your retirement security.
For employers, defined contribution retirement plans represent freedom from financial volatility, traditional pension risk, market volatility, and long-term financial uncertainty; however, they also impose new risks and responsibilities on the employer. For employees, defined contributions offer individual control, greater flexibility, and, in an ideal world, access to institutionally priced investments. Secure the future of your finance even after you retire.


Put Your Money to Work

Generating income for your retirement

As you approach the time when you’ll trade your paycheck for retirement, you’ll begin relying on your hard-earned retirement income sources to help provide an income stream that will see you through your retirement years.

Determine your retirement income sources

Start by determining your potential sources of retirement income, and how much income they are likely to provide in retirement. Our investment portfolio can help you get started, and common income sources include:

  • Guaranteed Income (i.e. Social Security, Annuities)
  • Pension plans (i.e., defined benefit plans)
  • IRAs
  • Retirement savings, including 401(k), 403(b), and 457 plans
  • Other non-retirement savings, including brokerage accounts, savings accounts and certificates of deposit (CDs)

Categorize your retirement income sources

As you think about the retirement income sources available to you, begin grouping them into income categories such as lifetime, dividend, and interest income. Because of their predictability, many retirees use lifetime income sources to cover essential living expenses. Discretionary and unexpected expenses are generally more flexible than essential expenses, so your investable assets can help cover these costs.




Goal Income with growth potential Steady income stream Lifetime income stream
Examples Dividend-producing stocks, equity mutual funds Bonds, bond mutual funds, fixed income instruments, cash, CDs Social Security benefits, pension plan payments, annuity payments, insurance benefits
Helps manage Adverse impact of inflation Market volatility How long income stream will last
Benefit Seeks to provide growth to help outpace inflation Helps reduce impact of market volatility Helps create an income stream to cover essential expenses
Considerations Severe market drops or prolonged periods of volatility can reduce portfolio value May not produce income adequate to outpace inflation and rising health care costs Limited liquidity and control of assets

Additional costs associated with annuity and insurance products

Diversify your retirement income sources

Because each retirement income category represents a different type of income, and mitigates different retirement risks, diversifying your retirement income across all three can help you generate income in retirement that may last a lifetime.

  • Dividend: Equity income investments. Designed to provide long-term growth and income, equity income investments can help offset the effects of inflation. As you approach retirement, keeping a portion of your investable assets invested in high-quality, dividend-producing stocks and equity mutual funds can help hedge your retirement portfolio from inflation risk. These investments also give your portfolio the opportunity to benefit from strong market performance — which is increasingly important for retirees, as many people are spending 20 or more years in retirement. However, equity investments are, of course, subject to market volatility.
  • Interest: Bond and fixed income investments. Interest-bearing investments offer the potential for a stable, low-risk income stream, while also preserving your principal investment. As you near retirement, increasing your interest-bearing investments may help your portfolio weather market fluctuations; however, these investments are subject to credit and other risks.
  • Lifetime: Social Security and pensions. Social Security benefits are the primary source of lifetime income for many of today’s retirees. Although you can start receiving Social Security benefits as early as age 62, or defer your benefits until age 70, the monthly payment amount you receive varies based on your retirement age. The Social Security Administration’s Social Security tool can help you decide when to start receiving Social Security benefits.

Get started today

  • Learn more about investing options available to you.
  • Request a free retirement consultation to see if your retirement planning is on track.
  • Consider partnering with a Financial Advisor to create an investment strategy for your retirement portfolio.

Digital-arbitrage can help you invest your savings to create predictable retirement income

As you consider various strategies for investing your retirement savings, Digital-arbitrage can help. Get started today by contacting us, requesting a retirement consultation, or learning more about withdrawal strategies for your retirement savings.

No lifetime income sources?

If you don’t expect to receive Social Security benefits and pension plan payments, or if these amounts won’t cover your essential living expenses, consider converting a portion of your investments into an annuity.