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Income sources

In retirement, your income may come from Social Security, pensions, annuities, rental property, or part-time work, as well as your savings and investments. We recommend you make a list of your potential sources of retirement income and think about which ones will pay you a regular amount on a regular basis and which ones may not.

You should plan to use those regular income sources for your essential living expenses. You can use income from your less predictable sources to pay for things you may want but don't need.

Don't forget your savings. The money you've saved while you've been working can play an important role in your plan for retirement income. Many people choose to use their savings to help pay for their essential expenses.

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What will my savings cover in retirement? Working in retirement: A rulebook	Visit the Planning and Guidance Center to understand your expected sources of income.

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What will my savings cover in retirement?

Working in retirement: A rulebook

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Expenses

You can estimate your expenses by reviewing your current spending and making adjustments based on what you expect your life to be like during the first few years after you retire.

We recommend that you divide your expenses into 2 categories. The first category contains essential expenses including food, utilities, transportation, health care, housing, and other "needs." The second category includes discretionary expenses or "wants" such as hobbies, travel, dining out, gifts, and other non-essential purchases.

Organizing your spending into "wants" and "needs" can help you understand how much flexibility you may have to adjust your spending and ensure that you can pay for your most important expenses.

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Budgeting in retirement	Visit the Planning and Guidance Center to input at least a rough idea of your expenses and see how well they'll be covered in retirement. The key is to get started; you can refine as you go.

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Health care

How to pay for health care is an important consideration for people as they look ahead to retirement. If you plan to retire before you become eligible for Medicare, be sure to obtain health insurance coverage. Signing up for Medicare is different from choosing health insurance from your employer and it is worth the time to understand the options available.

To help you plan, consider our rule of thumb that 15% of your overall spending will likely go for health care and related items. As you gain understanding of your financial and medical situation, you can refine this estimate.

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Plan for rising health care costs Understanding Medicare	Estimate your health care expenses in retirement Explore health care options before Medicare

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Plan for rising health care costs

Understanding Medicare

Estimate your health care expenses in retirement

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Social Security

Deciding when to claim Social Security benefits is one of the most important retirement decisions you'll make. Your health, your expectations about how long you may live, and your lifestyle in retirement all play a role in your decision.

You can claim Social Security as early as age 62, but the amount of your monthly benefit could be as much as 30% less than it would be if you wait until full retirement age, which is 67 for most. With each year that you postpone taking Social Security, the amount of your monthly benefit will increase until age 70. That means you have good reasons to wait if you can do without the money and expect to live well past 70.

We can help you understand your options about how to manage Social Security most effectively for your situation.

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How to make the most of Social Security	Answer 5 simple questions to estimate your benefits.

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Investments

As you get closer to retiring, think about whether your investment goals and tolerance for risk will be different when you're retired than while you were working and saving. An investment portfolio that has been managed to grow the value of its assets over a long time may not be good for generating reliable cash flow as part of a retirement income plan. Portfolios with large allocations to stocks may also be uncomfortably volatile for those who no longer have the security provided by a paycheck.

We recommend you ask yourself whether your current investment strategy will still line up with your investment needs when you're retired. If it doesn't, consider making changes now.

Strategies that emphasize bonds and other types of fixed income securities can help you earn income from your savings while helping offset market ups and downs. Meanwhile, keeping a smaller allocation to stocks may provide growth and the potential to keep pace with inflation or unexpected expenses over the course of a long retirement.

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Investment considerations for retirement	Work with an advisor who can help you create an investment strategy.

In general, the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities). Fixed income securities also carry inflation risk, liquidity risk, call risk and credit and default risks for both issuers and counterparties. Lower-quality fixed income securities involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Foreign investments involve greater risks than U.S. investments, and can decline significantly in response to adverse issuer, political, regulatory, market, and economic risks. Any fixed-income security sold or redeemed prior to maturity may be subject to loss.

Stock markets are volatile and can fluctuate significantly in response to company, industry, political, regulatory, market, or economic developments. Investing in stock involves risks, including the loss of principal.

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Getting ready to retire

Overview

Saving for retirement

Getting ready to retire

Managing money in retirement

Here are some important topics to consider as you think about preparing for retirement.

Income sources

Retirement checklist

Investments

Social Security

Health care

Expenses

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Wealth Management

Planning & Guidance Center

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Income sources

Expenses

Health care

Social Security

Investments

Mutual Funds and Mutual Fund Investing - Fidelity Investments

Getting ready to retire

Overview

Saving for retirement

Getting ready to retire

Managing money in retirement

Here are some important topics to consider as you think about preparing for retirement.

Income sources

Retirement checklist

Investments

Social Security

Health care

Expenses

Let us help you plan

Wealth Management

Planning & Guidance Center

Additional resources to help get you on the right track

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