Creating a paycheck in retirement is about designing a reliable income strategy that will ensure you have enough money to cover your expenses while maintaining financial security throughout your retirement years. We have broken down the basics of creating a paycheck in retirement and reviewing various incomes sources but it’s important to take the time to meet with a Financial Advisor to develop a strategy that works for you based on your goals and objectives.
Non-Portfolio Income Sources
Social Security Benefits
Your Social Security benefit amount is based on your work history and when you elect to begin receiving income. This source of income pays on a monthly basis.
Pensions, Annuities, Rental Income, Part-Time Work
Many retirees may have these sources of income to cover a portion of their spending in retirement. This is typically pays on a monthly basis.
Consolidated Investment Portfolio
Taxable Investment Accounts
A taxable investment account or brokerage account is a flexible, non-retirement account that is used to buy stocks, bonds, and mutual funds. This can pay on a recurring basis or as needed.
Pre-Tax Retirement Account
Pre-tax retirement contributions are funds deducted from an employee’s paycheck before federal and state taxes are applied, lowering current taxable income. Examples of a pre-tax retirement account are the UNC Optional Retirement Program (ORP), the UNC 403(b) and the UNC 457(b). Ordinary income taxes are withheld on distributions. These accounts can be paid on a recurring basis or as needed.
Roth Accounts
Roth retirement accounts are a tax-advantaged account funded with after-tax dollars, meaning there is no up-front tax deduction. It’s primary benefit is that earnings grow tax-free and qualified withdrawals during retirement are tax-free. Examples of a Roth retirement account are Roth IRA or Roth 401(k). You can choose to make Roth after-tax contributions to the UNC 403(b) and the UNC 457(b) plans. These accounts can be used as supplemental income to minimize taxes.
Tools and Resources are Available
Take the next step in securing your financial future. Financial Consultants are available from CAPTRUST at Work and TIAA at no-cost to UNC System employees. To schedule a virtual appointment with CAPTRUST at Work, click here. To meet virtually with TIAA, click here.