Creating Income in Retirement: It Might Be Simpler Than You Think

For decades, many of us get used to a steady rhythm: a paycheck arrives every week or two, bills are paid, savings are built, and life carries on. That simplicity is comforting. But when retirement comes, that regular paycheck disappears, and with it, the predictability we’ve leaned on for so long.

Suddenly, you're not earning income, you're creating it. And while that shift can feel overwhelming, the good news is that generating income in retirement can be simpler than you think.

From Paycheck to Portfolio: Replacing Your Income

Once you retire, your income won’t come from your employer—it will come from your investments, savings, and other sources like Social Security or pensions. One common approach is to invest in income-producing assets and live off the cash they generate. This might include:

• Bonds or bond funds
  
  
  

• Rental properties
  
  
  

• Dividend-paying stocks
  
  
  

• Annuities that provide monthly payments
  
  
  

These can provide stability, but they aren't always enough—nor are they guaranteed to keep pace with inflation or changes in your spending needs over time.

The Balance Between Income and Growth

Here’s a key truth about retirement: it’s not just about preserving your nest egg—it’s about making sure it lasts. That’s why retirees often need a mix of income and growth. Even if you’re no longer contributing to your investments, you’re likely not withdrawing everything at once either.

If you retire at 60 or 65, your retirement could last 30 years or more. And over that time, your costs will rise, the market will go through cycles, and unexpected needs will pop up. That’s where stocks and growth-oriented investments still play a critical role.

Even if the market dips early in retirement, having a portion of your portfolio in stocks, alongside more stable income sources, allows you to recover and grow over time. Historically, stocks have done well in outpacing inflation, which helps protect your future purchasing power.

Creating a Retirement Paycheck

So how do you turn your portfolio into a paycheck?

It can be as simple as setting up an automatic withdrawal once or twice a month. Just like the direct deposit you used to get from work. But first, you need to figure out a sustainable withdrawal amount.

What’s a Safe Withdrawal Rate?

This is the million-dollar question (sometimes literally). You may have heard of withdrawing a modest percentage of your portfolio each year. Common guidance includes:

• 3% Rule: Very conservative
  
  
  

• 4% Rule: The traditional standard
  
  
  

• 5%+ Withdrawals: Riskier, but doable with flexibility and strong market returns
  
  
  

So, with a $1 million portfolio:

• 3% = $30,000 per year
  
  
  

• 4% = $40,000 per year
  
  
  

• 5% = $50,000 per year
  
  
  

The right number for you depends on your other income sources and your flexibility.

Know Your Fixed vs. Flexible Expenses

If you’re fortunate enough to cover your basic expenses (housing, food, utilities) with Social Security or a pension, your investments only need to cover discretionary spending—travel, hobbies, gifting, etc. In that case, you may have more room to increase your withdrawal rate safely.

On the other hand, if your portfolio is responsible for your core lifestyle, you’ll want to be more conservative with withdrawals.

Consistency Is Comfort

For many people, the appeal of a steady retirement income comes down to emotional comfort. Predictable monthly income helps avoid the fear that often comes with dipping into savings. It brings back the feeling of getting a paycheck—one you can count on, regardless of market swings.

That’s why it’s essential to choose a withdrawal number you’re comfortable sticking with, even in down markets. If you’ve done the homework to confirm it’s sustainable, you can spend with confidence.

You Saved to Use It—So Use It

One common mistake retirees make is being afraid to spend. They watch their portfolios grow, and while that’s a great outcome, the truth is: you saved that money to use it.

The key is balance. Avoid withdrawing too much too quickly, like 10% of your portfolio per year and instead aim for a sustainable rate that preserves your principal over time.

For example:

• A $2 million portfolio withdrawing $200,000/year (10%) is risky and likely unsustainable.
  
  
  

• That same portfolio withdrawing $100,000/year (5%) may offer long-term security, especially if you adjust during market downturns.
  
  
  

Flexibility = Security

Finally, consider your own flexibility. Are you okay spending more in good years and cutting back in bad ones? That’s one approach. But if you’re the type of person who values predictability and stability, pick a conservative number and stick with it.

Just like you adjusted to a regular paycheck during your working years, you can adjust to a regular income in retirement. Once you do, your financial life can return to that same sense of rhythm and normalcy you’ve known for decades.

Bottom Line

Retirement doesn’t have to be financially complicated. At its core, it’s about living within your means, being thoughtful about withdrawals, and letting your savings do the job you spent decades preparing them to do: provide for you.

The information in this blog is the opinion of Nathan Tomkiewicz and does not reflect the views of any other person or entity unless specified. The information provided is believed to be  reliable and obtained from reliable sources, but no liability is accepted for inaccuracies. The information provided is for informational purposes and should not be construed as advice. Advisory services offered through Tomkiewicz Wealth Management, LLC, an investment adviser registered with the State of New York.