How do I plan for retirement income?
When nearing retirement, it’s important to consider how your retirement plan savings will replace your employment income. By evaluating your savings, other sources of income, and potential expenses, you’ll get a clearer picture of how to withdraw plan funds for retirement income.
Replacing income in retirement
The money you’ve saved for retirement is designed to replace, or at least supplement, the income you earned while working. Doing this will help you maintain your standard of living so you can enjoy retirement.
To plan for income replacement, you’ll want to evaluate your different sources of retirement income and estimate potential expenses.
What sources of income might I have in retirement?
In addition to money you’ve accumulated in retirement savings accounts, you may receive income from other sources such as:
- Social Security
- Pension plan
- Part-time job
Take time to understand how each of these will contribute to your monthly income stream to cover your expenses.
What expenses should I anticipate?
To estimate your cost of living in retirement, start by calculating your expenses today. Then, ask yourself a series of questions to help you estimate future expenses.
- What expenses are taken from your paycheck today? Think health insurance—you may pay this out of your own pocket once you retire.
- Do you have expenses that are likely to increase once you retire, like medical expenses and prescriptions?
- Do you have expenses that might decrease once you retire, like housing, clothing or transportation?
- Have you budgeted for extras like travel and entertainment?
- Have you consulted a tax specialist to estimate your taxes during retirement?
- Have you budgeted for unexpected expenses, like home repairs, new appliances or automobiles?
How should I withdraw my retirement plan savings?
Once you understand expected income and expenses, you can make a plan for how you’ll withdraw money from your retirement plan savings.
Due to the tax implications of retirement plan withdrawals, it’s wise to consult with a tax professional and/or financial advisor to review your personal situation.
If your workplace retirement plan is with BB&T, you can contact us at 800-228-8076 and speak with a representative about a withdrawal plan.
The bottom line
Your method for withdrawing retirement plan savings is important, personal, and should be done by consulting a professional. By evaluating all of your income sources, potential expenses, and retirement plan savings, you can develop a clear picture of how you’ll replace income in retirement.