Your Retirement Paycheck: Know Each Stream

The story: Four questions for every stream

Walt and Grace list their retirement income streams and check how each one behaves over time and after a death.

1. Narrator: Walt and Grace list what will pay them each month: two Social Security checks, Walt’s pension, Grace’s teacher pension and their savings.
2. Walt: Add it all up and we’re fine. Isn’t the total what matters?
3. Narrator: The total matters. So do four traits: how much, how long, whether it rises with prices, and who keeps it after a death.
4. Grace: My pension rises a little each year. Walt’s never does. And Walt’s stops when Walt dies, unless we picked a survivor option.
5. Narrator: Social Security lasts for life and usually rises with prices. Savings are flexible, but not guaranteed.
6. Walt: So two checks the same size today could be worth very different amounts later.
7. Narrator: For each stream, know four things: how much, how long, whether it rises, and who keeps it.

What you’ll learn

1. Guaranteed streams

   Social Security, pensions and income annuities pay for life no matter what markets do, which makes them a steady base for must-pay bills. Social Security gets a cost-of-living raise in years when prices rise; many private pensions do not.

2. Flexible and earned streams

   Withdrawals from savings are flexible: you choose how much, but nothing is guaranteed and markets move. Part-time work or a small business adds income for as long as you want to work. Rentals and family help are other streams some people have.

3. Four traits for every stream

   For each stream, ask: How much? How long does it last? Does it rise with prices? Does it keep paying after a death, in full, in part or not at all? Two streams of the same size can be very different.

   Example: two $1,500 pensions. One rises with prices and pays a survivor; the other stays flat and stops at a death.

4. Where to find each stream’s rules

   Your Social Security statement at SSA.gov shows your estimates. Pension rules are in your plan’s benefit statement and summary plan description. Annuity terms are in the contract. Write each stream’s traits on your money map.

Key words

guaranteed income

money paid for life no matter what markets do

cost-of-living adjustment

a raise to keep up with prices

Also called: COLA

survivor benefit

what keeps paying after a death

Remember this

For each stream, know four things: how much, how long, if it rises, who keeps it.

Try it: List each income stream

1. List every income you expect in retirement.
2. For each one, write the amount and the start date.
3. Mark whether it rises with prices, lasts for life and keeps paying after a death.

No account: list each income stream on one sheet of paper.

Live facts

Numbers that change over time, with when they were last checked and where they come from.

• Your Social Security statement and estimates

  Source: SSA.gov(opens in a new tab)

• This year’s cost-of-living adjustment (COLA)

  Source: SSA.gov(opens in a new tab)