Creating a Schedule of Income for Retirement

Now is the time to put numbers down on paper to see where you stand. Without this information, you can't decide whether you should continue to work or whether you need to increase your retirement income in some other way.

It's important to understand that some sources of income may be monthly, some twice a year, and some just once a year. You have to know when it's coming in to know how much income you have to spend each month.

You can arrange to have income paid to you from certain sources when you want it. You just have to know how. The following are some scenarios you can use to arrange for income payments: If you have money in mutual funds, contact the fund to ask how to arrange for monthly checks. You'll find the fund's toll-free number on your monthly statements from the fund. Usually you must send them some paperwork to arrange for monthly checks.

If you have an IRA, you can arrange investments so that you can then set up monthly payments. Again, if the IRA is invested in mutual funds, contact the fund to arrange for monthly payments. If the IRA is in a bank CD, you can't arrange for monthly payments.

If you have money in savings accounts, payments to you will not be automatic. You simply withdraw an amount that you require for income each month. You may be able to arrange for automatic transfers to a checking account so it's more convenient to pay your bills. If you're not happy with how your monthly income plays out, you might want to reposition your holdings. For example, you can use your CDs and Treasury bonds, which don't necessarily pay you monthly income, in order to buy a commercial annuity. The annuity can then be tailored to begin paying you monthly benefits. This is called an immediate annuity because you start to get benefits from the time you pay for the contract. You'll continue to earn income on your investment and can be guaranteed a monthly income for life. You can even arrange for the annuity to continue paying income to your spouse if you die first.

In choosing a commercial annuity, be sure to check the rating of the insurance company selling you the contract. There are several independent rating systems (though A.M. Best Co. is the best known). You can find a list of these rating systems at your local library.

When buying a commercial annuity, understand that you're paying a price (a commission). This eats into what's being invested for your return.

One source of retirement income can come from interest on municipal bonds bought over a period of years. The trouble with municipal bonds is that they pay interest just twice a year (six months apart), and the months of payment may be different for different bonds. Now put your income together to see what's coming in each month. Create a Social Security benefits column and you'll be able to enter a fixed amount. Next list a Pensions and IRAs column, you may or may not be able to enter a fixed amount. The last column will be the Personal savings column, the amounts may vary from month to month. You may have particular flexibility in this column to adjust your income needs. Then add the columns across to find your total monthly income.

As you review your monthly income, you may notice that it varies. Income in some months may be larger than in others. You need to adjust your budget to account for these variations. For example, you may need to save some income from one month to cover large expenses in the next month. Or you may need to withdraw more of your savings in a low-income month. In retirement, you can't rely on a stable paycheck for monthly income. Your monthly income is, to a large extent, up to you to determine.