Monthly Retirement Income Estimator
How to Build a Sustainable Monthly Retirement Paycheck
Most people spend decades building a retirement portfolio and relatively little time thinking about how to convert it into reliable monthly income. The shift from accumulation to distribution is one of the most underplanned transitions in personal finance — and one of the most consequential.
The Three Income Streams of Retirement
For most Americans, retirement income comes from three sources: Social Security, personal savings (401k, IRA, taxable accounts), and possibly a pension. Social Security provides an inflation-adjusted, guaranteed base. Portfolio withdrawals provide flexibility but require active management. Pensions provide predictability but no inflation hedge in many cases. Understanding how these interact — and when each kicks in — is the core of retirement income planning.
Sequence-of-Returns Risk: The Hidden Threat
The single biggest risk in retirement income planning is not average returns — it's the order of returns. Retiring into a bear market and being forced to sell shares to fund living expenses early in retirement can permanently damage a portfolio's longevity, even if average returns over 30 years are perfectly adequate. A common solution: keep 1–2 years of expenses in cash or short-term bonds, so you never have to sell equities during a downturn. Explore how different withdrawal rates affect sustainability with the full retirement calculator, and use the RMD calculator to plan mandatory withdrawals from traditional accounts after 73.
Tax-Smart Withdrawal Sequencing
Which accounts you draw from first matters enormously for lifetime tax burden. Many planners recommend: draw from taxable brokerage accounts first (favorable capital gains rates), then traditional 401k/IRA (ordinary income, delay as long as practical), then Roth accounts last (tax-free, and no RMDs). This sequencing can add years of additional portfolio longevity. Use the Roth IRA calculator to see how tax-free assets complement this strategy, and the Social Security calculator to time your SS claim around your other income sources to minimize overall tax exposure.
Retirement Income FAQs
How do I calculate my retirement income?
Add all monthly income sources: Social Security benefit + pension (if any) + portfolio withdrawal (annual portfolio value × withdrawal rate ÷ 12). For example: $1,900 SS + $3,000 portfolio withdrawal (4% of $900,000 ÷ 12) = $4,900/month gross. Subtract estimated taxes on traditional 401k/IRA withdrawals and Social Security (up to 85% of SS may be taxable depending on total income). The result is your spendable monthly income.
What is a good monthly retirement income?
Most financial planners target 70–80% of pre-retirement income to maintain your lifestyle. For someone earning $80,000 before retirement, that's $56,000–$64,000 per year, or $4,667–$5,333 per month. The average Social Security benefit ($1,907/month in 2024) covers a portion; the rest must come from savings. Use the full retirement calculator to model your specific gap between Social Security and your target income.
How long will my retirement savings last?
At a 4% withdrawal rate on a $1 million portfolio, you withdraw $40,000 in year one, adjusting for inflation annually. Historical data from Bengen's 1994 study and subsequent research shows this lasts 30+ years in the vast majority of market scenarios going back to 1926. For 40+ year retirements, 3–3.5% provides similar durability. For more conservative scenarios, use the early retirement calculator with a 3% rate.
Should I take a lump sum or monthly pension payments?
This depends on your health, other income sources, investment confidence, and dependents. Monthly pension payments provide predictable income for life; a lump sum gives you control, investment upside, and the ability to leave a bequest. A common break-even calculation: divide the lump sum by the annual pension amount to find the years needed to "break even." If that number exceeds your expected lifespan, the lump sum may be preferable. A financial advisor can run this analysis with your specific numbers and health profile.