If retirement is on the horizon, now is the time to take a closer look at where your income will come from once you stop working. For many Americans, retirement income is not a single paycheck replacement. Instead, it is often a combination of several income sources that work together to support lifestyle needs, healthcare expenses, travel plans, and unexpected costs.

Understanding these income streams can help you feel better about your financial future and identify any gaps before retirement begins.

Social Security: A foundation for retirement income

For many retirees, Social Security serves as a key income source. The amount you receive depends on factors such as your earnings history and when you choose to claim benefits.

While you can begin collecting benefits as early as age 62, claiming before your full retirement age generally results in a reduced monthly payment. On the other hand, delaying benefits beyond full retirement age can increase your monthly benefit amount.

Because Social Security decisions can have a lasting impact on retirement income, it is important to consider your overall financial picture, health, and retirement goals before deciding when to claim benefits.

Employer-sponsored retirement plans

Workplace retirement plans, such as 401(k) and 403(b) accounts, are often among the largest retirement assets people accumulate during their careers.

These accounts allow contributions to grow over time through investments in stocks, bonds, mutual funds, and other assets. As retirement approaches, many people begin evaluating how they will convert these savings into dependable income.

Withdrawal strategies matter. Taking too much too soon can increase the risk of outliving your savings, while taking too little could limit your lifestyle unnecessarily. A thoughtful distribution plan can help balance current income needs with long-term financial security.

Individual Retirement Accounts (IRAs)

Traditional and Roth IRAs can provide another valuable income source during retirement.

Traditional IRA withdrawals are generally taxed as ordinary income, while qualified Roth IRA withdrawals are typically tax-free. Having both taxable and tax-advantaged accounts may provide greater flexibility when managing retirement income and taxes.

Reviewing how your retirement accounts are structured before retirement can help you make more informed decisions about withdrawals and tax planning.

Personal savings and investments

Many retirees supplement their income with personal savings, brokerage accounts, certificates of deposit, or other investments.

These assets can provide flexibility for large purchases, emergency expenses, or lifestyle goals that exceed regular retirement income. Maintaining an emergency fund and a diversified investment approach may help support greater financial stability throughout retirement.

As retirement nears, it can be helpful to revisit your investment strategy to ensure it aligns with your time horizon, risk tolerance, and income needs. Generally, you'll adopt a more conservative approach the closer you get to retirement.

Pension benefits and other income sources

While less common than in previous generations, pensions continue to provide retirement income for some workers. Pension plans may offer guaranteed monthly payments, helping create a predictable income stream.

Other potential income sources can include part-time employment, rental property income, annuities, or benefits from a spouse's retirement plan. Even modest supplemental income can help preserve retirement savings and provide additional financial flexibility.

Final thoughts

The transition from earning a paycheck to generating retirement income requires careful planning. Understanding how Social Security, retirement accounts, investments, pensions, and other assets fit together can help you create a sustainable income strategy tailored to your needs.

If you're nearing retirement, now is an ideal time to evaluate your expected retirement income sources and begin planning how they will work together.

At National Bank of Arizona, we understand that retirement planning involves more than saving. It's about creating a strategy designed to support your goals, priorities, and wellbeing. Working with knowledgeable financial professionals can help you prepare for the next chapter with greater confidence and clarity.

Schedule an appointment with a banker today to begin the conversation.