Reviewing your sources of income for retirement

After you retire, you'll draw income from several sources. Even if you'll receive guaranteed income from both Social Security and a pension, it may not be enough to cover all your expenses and support your lifestyle. You may also need to draw on your savings, investments and other sources to generate income.

Government and guaranteed income sources

Personal retirement savings and other income sources

Social Security. While it may not cover all your expenses, Social Security can provide some income. If you are not yet receiving Social Security, you can contact the Social Security Administration at www.ssa.gov to get started or to request an estimate of your future benefits. Pension plans. If you are fortunate enough to be covered by a traditional pension plan , you probably receive a steady income every month.

401(k) or other workplace retirement plan IRAs Annuities Savings accounts and certificates of deposit (CDs) Stocks, bonds and other investments Part- or full-time work Rental property

Planning when to begin withdrawals

Before you retire, you'll need to develop a strategy for withdrawing the money you need. Social Security and pensions may send a fixed amount every month, but you'll need a plan to make the most of your other assets. Consider working with a financial advisor to develop the right strategy for you.

Timing when you withdraw money can have a significant impact on the taxes you pay.

In addition to timing, the order in which you withdraw money also matters. While everyone's needs are different, the general guideline for tax-efficient withdrawals is:

• Taxable accounts first
• Tax-deferred accounts next
• Tax-free accounts last

This order may vary based on your individual goals and tax bracket, so it's wise to consult a financial advisor.

Generating income for retirement while growing your assets

Once you have the timing and order down, you'll need a plan for generating cash flow while keeping some assets growing. Your financial advisor can show you how to provide income using three basic elements:

• A cash account for day-to-day money may include liquid assets in checking, savings or money market accounts.
• A short-term reserve to cover emergencies and generate consistent income. Assets are generally placed in investments with guaranteed principal, such as certificates of deposit (CDs), Treasury bills and short-term notes.
• Long-term assets for potential growth. These may include stocks and bonds held individually or in mutual funds, fixed and variable annuities, real estate and real estate investment trusts (REITs), hedge funds and commodity investments, life insurance cash value or other investments.

When you begin drawing on your assets, it's critical to remain aware of the effects of market volatility and inflation. Investing some of your assets in bonds and other fixed-income vehicles can help reduce your portfolio's overall volatility, and protect the value of your investments against inflation and stock market downturns.

Estimating how long your money will last

You may have heard that stock market returns average about 9% over the long run. While that's fairly accurate, it does not necessarily mean you can withdraw as much as 9% of your savings each year. Taking out that much makes it very likely that you will outlive your savings — especially if the financial markets suffer an extended downturn early in your retirement. Choosing a more conservative withdrawal rate may help your assets last longer.

Another way to estimate how long your savings will last is by making projections with a retirement planning calculator. By plugging in your estimated numbers, you can see how long your money will last in thousands of possible market scenarios. If you find that your money might run out too soon, you may need to adjust your savings strategy or retirement plans. Here are some suggestions:

• Sell your house and move to a less expensive home or area to save on taxes, maintenance and other costs.
• Delay retirement or plan to work during retirement, at least part-time, to earn extra income and enjoy the benefits of remaining active.
• Consider a reverse mortgage, which allows you to borrow against the value ("equity") built up in your home if you are 62 or older. For more information about evaluating a reverse mortgage, read Reverse Mortgages: Avoiding a Reversal of Fortune, published by the Financial Industry Regulatory Authority (FINRA).

As retirement approaches, it's critical to work with an Ameriprise financial advisor to develop a strategy for converting your assets into income, and deciding what to do if your potential expenses will exceed your savings.