After a lifetime of working and saving, retirement is the light at the end of the tunnel. Most of us envision it as a time of rest and relaxation when we enjoy the frཧuits of our labors.🌌 We envision a steady source of income without the need to go to work each day.

It's a great vision, but generating income without going to work tends to be a murky concept during our working years. We know what we want but aren't totally sure how it will happen. So how exactly will you turn your nest egg into a steady flow of cash during your retirement years? Developing a concrete🍌 strategy based on these income sources can help.

1. Immediate Annuities

Purchasing an 澳洲幸运5官方开奖结果体彩网:immediate annuity is an easy way to convert a lump sum into an ongoing income stream that you can't outlive. Retirees often take the money they saved up during their working years and use it t𒉰o purchase an immediate annuity contract because the income stream starts immediately, is predictable, and is unaffected by falling sto♒ck prices or declining interest rates.

In exchange for the cash flow and security, an immediate annuity buyer accepts that the income payment will never increase, which means that it actually decreases in value over time due to 澳洲幸运5官方开奖结果体彩网:inflation. The greater concern for most immediate annuity purchasers is that once you buy one, you cannot change your mind. Your princ🧔ipal is locked in forever 𝕴;and, upon your death, the insurance company keeps the balance remaining in your account.

澳洲幸运5官方开奖结果体彩网:Annuities are complicated products that come in a variety of forms. Before you rush out and buy one, do your homew꧑ork.

2. Strategic Systematic Withdrawals

Even if you've got millions sitting in your bank account, taking it all out at once and stuffing it under your mattress is not a strategic method of maximi💙zing or safeguarding your income stream. Regardless of the size of your nest egg, taking out only the amount of money you need and letting the rest continue to work for ꦐyou is the wise strategy.

Figuring out your cash flow needs and taking out only that amount of money on a regular basis is the essence of a 澳洲幸运5官方开奖结果体彩网:systematic withdrawal strategy. Sure, taking out the same amount of money each week or month can also🙈 be categorized as systematic, but if you don't match your wi🧔thdrawals to your needs, it isn't strategic.

One way or another, most people implement a systematic withdrawal program, 澳洲幸运5官方开奖结果体彩网:liquidating their assets over time. Equity holdings, such as 澳洲幸运5官方开奖结果体彩网:mutual funds and stock in 401(k) plans, are often the largest pools of money tapped in this manner, but bonds, bank accounts, and other assets should all be considered as well. A properly implemented drawdown strategy can help ensure that your income stream lasts as long as you𝕴 need it.

"For retirees who are pulling retirement money out of traditional IRAs (not Roth IRAs), 401(k)s, and 403(b)s, the "right withdrawal amount" is not their decision—rather, it is determined by the 澳洲幸运5官方开奖结果体彩网:re⛎quired minimum distribution (RMD) starting at age 70½," says , designer of 7Twelve Portfolio, based in Springville, Utah. "In genღeral," Israelsen adds, "the RMD requires smaller withdrawals during the first five to six years (roughly through age 76). After that, annual RMD-based withdrawals will be significantly larger for the remainder of the retiree's life."

The age requirement for RMDs was increased to age 72 from age 70½ in late 2019 under the Setting Every Community Up for Retirement Enhancem💛ent (SECURE) Act of 2019. The age was raised again to 73 for anyone turning that age on or after Jan. 1, 2023, after the SECURE Act 2.0 was passed in December 2022.

3. Laddered Bonds

Bond ladders are created through the purchase of multiple bonds that mature at staggered intervals. This structure 澳洲幸运5官方开奖结果体彩网:provides consistent returns, low risk of loss, and protection from c🧸all risk, as the staggered maturities eliminate the risk of all the bonds being called at the same time.

Bonds generally make interest payments twice a year, so a six-bond portfolio would generate a steady monthly cash flow. As the interest rate paid by the bonds is locked in at the time of purchase, the periodic interest payments are predictable and u෴nchanging.

When each bond matures, another is purchased, and the ladder is extended, as the maturity date of the new purchase occurs further in the future than the maturity date of the other bonds in the portfolio. The variety of bonds available in the marketplace provides considerable flexibility in creating a bond ladder, as issues of varying 澳洲幸运5官方开奖结果体彩网:credit quality can be used to construct the portfolio.

"Individual bonds—laddered across different sectors, asset classes, and time periods—can provide a guaranteed return of principal (based on the viability of the issuing company) and a competitive interest rate," says , president and 澳洲幸运5官方开奖结果体彩网:portfolio manager at&nbꦆsp;Anthony Capital LLC, of Broomfield, Colo.

"I recently had a client who, when presented with this strategy, decided to take her company's $378,000 lump-sum pension buyout offer and purchase 50 different individual bonds, from 50 different companies, not risking any more than 2% in any one company, spread out over the next seven years. Her cash flow yield was 6% per year, more than her pension or an individual annuity."

4. Laddered Certificates of Deposit

The construction of a 澳洲幸运5官方开奖结果体彩网:certificate of deposit (CD) ladder mirrors the techniq♔ue for building a bond ladder. Multiple CDs with varying maturity dates are purchased, with each CD maturing later than its predecessor.

On꧅e CD might mature in six months, for example, with the next maturing in one year, and the next maturing in 18 months. As each CD matures, you purchase a new one, and the ladder is extended since the maturity date of theꦐ new purchase is farther in the future than the maturity date of the previously purchased CDs.

This strategy is more conservative than the laddered bond strategy because CDs are sold through banks and are insured by the 澳洲幸运5官方开奖结果体𓆏彩网:Federal Deposit Insurance Corporation (FDIC). 澳洲幸运5官方开奖结果体彩网:CD ladders are often used for short-term income needs, but they🍰 may be used for longer-term needs if interest rates are attractive and provide the desired level of income.

The interest earned on CDs is only paid when the CDs reach maturity, so to ensure that maturity dates coincide with income needs, it's important to structure the ladder properly. Note that some CDs have an automatic 澳洲幸运5官方开奖结果体彩网:reinvestment feature, which could prevent you from receiving the investment's inco💯me. Make sure that any CDs you use to generate a retirement income stream do not include this feature.

Other Income Sources

For many people, retirement funding does not rely on a single source of income. Instead, their cash flow comes from a combination of sources, which may include a pension, Social Security benefits, an inheritan𝕴ce, real estate, or other incom𓂃e-generating investments.

Having multiple sources of income—including a 澳洲幸运5官方开奖结果体彩网:portfolio structured to include an immediate annuity, a systematic withdrawal program, a bond ladder, a CD ladder, or a combination of these investments—can help safeguarꦆd your income if interest rates fall or one of your investments delivers less-than-expected returns.

The Bottom Line

A steady 澳洲幸运5官方开奖结果体彩网:source of income during retirement is possible, but it takes planning. Save diligently, invest conscientiously, and determin꧟e the best payout o🀅ptions when the time comes to draw down your funds.