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Insights & Education

Turning retirement savings into a lifetime income stream 


A pre-retiree guide for becoming “retirement ready”

After years or even decades of saving for the future, the transition to retirement marks a pivotal shift: turning accumulated retirement savings into a steady, reliable stream of income—a “retirement paycheck”—that will last as long as you need it to.

While each person’s financial needs in retirement are unique, most people will agree that having a reliable income stream in retirement is an important financial goal. It won’t happen by chance, though. Getting there requires an understanding of your current savings, how you can continue to grow them, and options for converting retirement savings into lasting income.

Let’s explore.

Take a closer look at your current savings

An important first step to navigating your retirement finances with confidence is assessing where you are right now and where you want to be when you retire.

Know what you have…and what you’ll need

While 73% of public sector workers plan to fund retirement with their employer savings plan, only 1 in 4 have clearly defined how much they’ll need.


Corebridge Financial Survey of Public Sector Workers, 2023.

Workplace retirement plans

Hopefully you’ve had access to and have been contributing to a defined contribution retirement plan through your employer, such as a 401(k) or 403(b). With these plans, you can start withdrawing savings at age 59 1/2 without penalty—but that doesn’t mean you should. Under current law, you are only required to take withdrawals beginning at age 73 as a required minimum distribution (RMD). Most likely, you will begin taking withdrawals somewhere between these two ages.

Your first step, however, is to assess how much you have saved in your workplace retirement plan and how much you will continue to save, potentially taking advantage of catch-up contributions. Catch-up contributions allow employees age 50+ to save more in a qualified plan, above the current 2025 maximum contribution amount of $23,500 annually. This catch-up contribution can be up to $7,500 in additional savings or, for employees ages 60-63, can be up to $11,250 in 2025. It’s important to note that annual contribution limits are indexed to inflation and may change.

Tip: If you’ve had more than one employer, make sure you are considering retirement savings from all of your plans, especially if you have not combined them.

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Traditional and Roth IRAs

Do you have any savings and investments in Individual Retirement Accounts (IRAs)? They offer tax-deferred growth and potential tax-free withdrawals (depending on the IRA type) and may allow you to save additional money beyond what you are saving in a workplace retirement plan, depending on your income. There are limits to how much you can contribute, and the timing of withdrawals is still an important consideration.

Learn more about IRA options, including the difference between a traditional and a ROTH IRA, here.

 

Life Insurance

Life insurance can help supplement retirement income and play an important role in a financial portfolio. Permanent life insurance policies, such as index universal life, can build cash value over time, which can be borrowed against or withdrawn while the policyholder is living, and help supplement income in retirement.

24% of Americans say building cash value they can use in their lifetime is a top motivator for purchasing life insurance.

The Corebridge Financial Life Insurance Insights & Awareness Survey, 2024.

Pension plans

While less common today, pension plans—also known as defined benefit plans—provide a fixed monthly benefit at retirement. These are a valuable source of guaranteed retirement income for those who have them. If you’re among this group, take time to understand:

  • Your payout options and amount.

  • Whether the plan includes cost-of-living-adjustments.

  • If you have any pension plan benefits from any previous employers.
     

Social Security

Do you qualify for Social Security? Most workers do, although certain states exclude some public sector workers from coverage. To understand your Social Security benefits, make sure you and your spouse (if applicable) set up accounts at ssa.gov. This will let you know how much monthly income you can expect in retirement and how that can change based on the age you and your spouse begin taking benefits. While Social Security alone was never meant to cover all retirement expenses, it is a crucial component to include in your retirement savings assessment.

Other assets earmarked for retirement

Additional savings and investments should also be considered, such as brokerage accounts, high-yield savings accounts, CDs, real estate, and business investments. You may also have a Health Savings Account (HSA), which is a tax-qualified account used to pay for qualified medical expenses. HSAs offer triple tax advantages—tax-deductible contributions, tax-free growth, and tax-free withdrawals for qualified medical expenses. And if you’re 55 or older, you can contribute an extra $1,000 annually to an HSA.

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Take a closer look at your retirement income options

Let’s explore the strategies and sources for turning your retirement savings into predictable cash flow. 

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Systematic withdrawals

With this approach, you withdraw a fixed percentage or amount of money annually from your savings, such as your workplace retirement plan, an IRA, or other investments earmarked for retirement. One common method is the “4% rule.” Here, retirees expect to withdraw 4% of the balance in their retirement account (or accounts) in the first year after retiring and then every year after for roughly 30 years. After the first year, the withdrawal amount is adjusted for inflation annually. Keep in mind, with this type of strategy, there is no guarantee that your retirement savings will last throughout retirement due to market performance, the timing of returns, tax implications, and withdrawal amounts. Considering the 4% rule is only a guideline, you can personalize (increase or decrease) the annual withdrawal rate to account for changing market conditions, spending needs, or other factors.

Whether using the 4% rule or another strategy, it’s also important to consider the impact of factors like lifespan, inflation, risk tolerance, investment mix, and taxes. Given the complexity of a strategy like this, many investors choose to partner with a financial professional who can help create a tailored retirement income approach based on their personal situation.
 

Annuities

For more guaranteed income in retirement, you may want to consider allocating a portion of your retirement savings to an annuity. In the most basic sense, an annuity is a long-term insurance product where you provide a lump sum of money to an insurance company and, in exchange, they provide a series of income payments that are guaranteed for a set period of time, or for life.

One of the main advantages of an annuity is protected lifetime income that’s guaranteed to last for as long as you live. Of course, annuities can also be helpful in building retirement savings before retirement income is needed.

More than 90% of workers find the idea of having an annuity that provides lifetime income in retirement appealing, with half saying it would be very appealing. 

Corebridge Financial Survey of Public Sector Workers, 2023.

There are different types of annuities—like fixed, index, registered index-linked, or variable—to help meet specific goals, income needs, and risk tolerance levels, all of which include the opportunity for guaranteed lifetime income through standard or optional benefits. You can also typically choose from single life income coverage for an individual or joint life income coverage for spouses. Joint life income coverage delivers a stream of lifetime income for as long as either spouse is living. Guarantees are backed by the claims-paying ability of the issuing insurance company.

Considering the variety of annuity options available today, it may be beneficial to consult a financial professional on how you might use them in your income strategy. Learn more here about how you can fund retirement with protected lifetime income from an annuity.

Social Security

If you will receive Social Security benefits, it’s important to understand the impact of timing when it comes to claiming benefits. Full retirement age for Social Security is 67 if you were born in 1960 or later. While you may be eligible to begin claiming benefits at age 62 after full retirement age, it will trigger a reduced benefit amount. Each year you wait to claim after age 62—up to age 70—grows your benefit amount by about 8%. This additional monthly income can make a big difference over time, especially if you spend multiple decades in retirement. You can learn more about the impact of timing Social Security here.
 

Dividends and interest

Some retirees incorporate dividend payouts from stocks into their income strategy. With this approach, stock dividends—regular cash payments distributed by companies to shareholders—provide a steady stream of income without requiring the investor to sell their shares.
 

Part-time work

Income from a part-time job can help you keep some money coming in—helping to make savings last. It may also provide a way to delay taking Social Security so you can receive a higher benefit.


Rental income

Some retirees generate steady cash flow by investing in rental properties. Years ago, monthly or yearly rental agreements were the only options, but newer platforms—driven primarily by tourist demand—have made daily or weekly rentals more common. These types of arrangements can help make it easier to potentially generate income from real estate you may own.

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Reach out to a financial professional for help

Taking steps to improve financial wellbeing

Reviewing your current financial state and creating a strategy for reliable retirement income requires careful planning and a clear understanding of your options. While you can do this on your own, there are benefits to obtaining professional guidance.

Partnering with a financial professional can help you:

  • Understand how much income you will need in retirement for essential and discretionary expenses.

  • Assess how your current savings and investments stack up and how much more you can save in the coming years.

  • See how taxes may play out in retirement, including how your income may be taxed based on where you live.

  • Rebalance your portfolio based on your retirement timeline and risk profile.

  • Manage your income withdrawal strategy, including when to claim Social Security benefits.

Being able to determine if you’re “retirement ready” starts by taking action well in advance of your actual retirement date. You can start making informed decisions by using this Retirement Income Action Planner, which can also be a useful tool in preparing for a meeting with a financial professional. Remember, investing involves risk, including the possible loss of principal.

Guidance improves retirement confidence
  • 78% of employees who work with a financial professional say it has made them more confident in their ability to retire.
  • 54% of employees who don’t work with a professional say they would feel more confident about retirement if they did.

Corebridge Financial Survey of Public Sector Workers, 2023.

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