Planning for retirement involves more than saving money. It’s about making sure that money lasts and supports your lifestyle goals. A sustainable retirement income strategy allows you to create reliable income streams that work for the long haul.

Set Financial Goals

Every plan starts with a clear goal. To create a sustainable and effective retirement income strategy, you must picture what you want that era of your life to look like. Ask yourself the following questions:

• At what age do you want to retire?
• Where do you want to live?
• What kind of lifestyle do you want to live?
• What activities or hobbies do you plan to pursue during retirement?

Your answers to these questions can help you estimate how much you need to retire comfortably.

Assess Your Financial Situation

Evaluate your current financial situation to see how much you have and may still need to save or invest before retirement. This information can help you anticipate future expenses and adjust current spending habits.

Take full inventory of your assets and liabilities, which can include the following:

• Investments
• Savings
• Retirement accounts
• Monthly expenses
• Debt

Learn About Potential Income Sources

When you retire, your regular paychecks will stop coming, but your expenses will continue. Establishing retirement income sources ensures your survival and allows you to fund your desired lifestyle.

It’s also important to diversify these sources. Doing so allows you to manage risks and market fluctuations. If one income source stops working for you, you still have a few more to get by.

Here are some retirement income sources you may want to explore:

• Social Security: Many Americans rely on Social Security benefits to fund their retirement. Try its calculator to seehow much you can get based on your retirement plan.
• Retirement accounts: Tax-advantaged retirement accounts like your Roth IRA or 401(k) will likely form a large portion of your income.
• Investments: Well-placed stocks and bonds can provide a passive income stream, further supporting your retirement income. Artificial intelligence can increase your rate of success to up to 60%.
• Pensions: Public and private employers may offer pension plans as part of their benefits package, or you can apply for one yourself. They are muchmore flexible than traditional retirement accounts and can accommodate bigger contributions.
• Annuities: Consider your options and assess whether purchasing an annuity fits your budget and desired lifestyle.
• Rental income: Owning real estate provides an additional income source if you manage your properties well.

Manage Your Withdrawals

Having enough cash to fund your retirement is half the battle — the other half involves planning your withdrawals to make it last. Here are some strategies.

The 4% Rule

This method involves withdrawing 4% of your portfolio in your first year of retirement. If you have $2 million in your retirement account, you’re going to withdraw $80,000 for that year’s expenses. You’ll then adjust the amount you withdraw each year, depending on the inflation rate.

The Bucket Strategy

The bucket approach divides your portfolio into two or more buckets for different time horizons. Many follow a three-bucket approach, dividing their funds into short-term, medium-term and long-term buckets to maximize their portfolio’s interest potential.

Fixed-Dollar Strategy

The fixed-dollar approach is probably the simplest withdrawal strategy. You withdraw the same amount from your portfolio each year, allowing you to estimate how long your current funds will last more accurately.

Account for Inflation

Inflation is a reality of the economy and will affect your purchasing power, especially during a decades-long retirement. Experts predicthigher inflation rates in 2025, which you may need to budget for if you plan to retire soon.

This is where diversification shines. Multiple income sources and investments can help you outpace inflation and continue to fund your desired retirement lifestyle. Notable businessman Warren Buffettrecommends investing in real estate to continue earning despite rising inflation rates.

Plan for Emergencies

You never know when an emergency will come. Whether it’s a trip to the hospital or an unexpected home repair, preparing for these expenses is necessary. Experts recommend setting aside at leasta year’s worth of expenses for emergencies, as retirees often don’t have the option of taking on a new job to supplement their income.

Consider Health Care Costs

As you get older, your health care needs and expenses will likely increase. You must put aside money for these to ensure peace of mind for yourself and your loved ones. Aside from saving for a healthcare fund, pay your Medicare premiums and apply for long-term care insurance to minimize out-of-pocket payments.

Use Tax-Efficient Strategies

Taxes can make quite a dent in your retirement savings, so proper planning is essential, especially when making withdrawals. Most experts recommendwithdrawing from taxable accounts first to ensure tax-deferred or tax-free accounts have more time to grow. Roth IRAs, for example, offer tax-free withdrawals once you reach 59.5 years old and after you have held the account for at least five years.

Secure Your Financial Future

The earlier you start planning your retirement, the better. Understanding your goals, financial situation and income options allows you to create a sustainable plan to live your golden years fulfilled. Consider doing so a gift to your future self.