9 Retirement Income Sources You Can Combine to Fund Your Retirement

09.28.2026 | 10 min. read

Reviewer: Mark Zagurski, CLU®, ChFC®, CMFC® and CRPC®

Key takeaways:

Retirement income can come from Social Security, pensions, retirement accounts, investments, annuities, real estate, cash value life insurance, bank accounts and CDs, and work.
There is no single best source of retirement income. The mix that makes sense depends on your expenses, taxes, available assets, comfort with risk and other sources of income.
Some income may be more predictable, while investment, real estate and work income can change over time.
Withdrawals from 401(k)s, IRAs and other retirement accounts can be an important part of monthly retirement income, but tax and distribution rules vary by account type.²
A retirement income plan should consider when each source begins, how much it may provide and how the pieces work together to cover your expected expenses.

What is the best source of retirement income?

There is no single best source of retirement income. Most retirees rely on a combination of income sources, and the right mix depends on factors such as living expenses, taxes, available assets, risk tolerance and when different sources become available.

Mark Zagurski, CLU®, ChFC®, CMFC® and CRPC®, director of strategy and communications at Mutual of Omaha Advisors, explains, “While accumulating assets is critical to your retirement success, having a plan to generate income in retirement is the name of the game.”

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From Saver to Spender: The Mindset That Shapes Retirement

Video Transcript

You've spent your entire adult life saving. Every paycheck, every decision, every bit of discipline, all building towards one moment: retirement.

And then it happens.

You stop working. The paychecks stop. And then suddenly, after 30 or 40 years of saving, you're supposed to start spending.

That shift from saver to spender is one of the hardest mental transitions retirees face. Not because the math doesn't work, but because the mindset does.

Today on Make It Personal, we're unpacking why spending can feel so uncomfortable and how to move from anxiety to confidence when it's time to enjoy the life you worked so hard for.

Let's start with the moment this hits people.

Meet John and Karen.

John is 67, newly retired after four decades as an engineer. Karen taught school for 30 years. They lived below their means, maxed out their 401(k)s and celebrated each savings milestone along the way.

Their adviser told them, "You're in great shape. You can comfortably spend $7,000 a month."

But they couldn't do it.

Every time they transferred money from their investment account to checking, John said it felt wrong.

"I spent my whole life watching this balance go up, and I'm supposed to watch it go down."

Logical, yes.

Emotional, no.

And that tension is where so many retirees get stuck.

So, what's really going on here?

Saving isn't just a habit. It's an identity.

If you've been a disciplined saver your whole life, it's tied to your sense of security, responsibility and even pride. You did things the right way. You prepared. You took care of your family.

So, when someone says, "It's time to spend," your brain doesn't hear permission. It hears risk.

For decades, your reward system has been wired to celebrate saving, watching balances grow, feeling safe and being in control.

Spending flips that script and triggers loss aversion, that instinctive discomfort when resources shrink.

And this happens in everyday life, too.

A coworker recently told me how excited they were for a Disney trip they'd saved for all year. But when it came time to write that check to the travel agent, they felt resistance, almost a protective instinct over the pile of money they'd carefully built.

I felt that too.

We've saved money for remodeling work at home. And even though the project is planned, I feel myself hesitating. Not because of the mess, but because those savings took effort to build, and parting with them takes emotional energy.

If you've ever felt it, you're not alone.

Here's the mindset shift that changes everything.

Think of your savings like a battery.

You spent years charging it. That was its job then.

But once you retire, the purpose of that battery changes.

Its job is no longer to keep charging. Its job is to power your life.

Retirement isn't about abandoning discipline. It's about redirecting purpose.

Your money's job has changed, and so has yours.

So, how do you move from saver to spender confidently?

There are four practical ways to make the transition easier emotionally and financially.

First, create a retirement paycheck.

Automatic withdrawals from your portfolio into checking create rhythm and predictability. It turns withdrawals into income, not depletion.

Second, use the bucket strategy.

Short-term, midterm and long-term buckets.

The short-term bucket is designed to be spent. The long-term bucket stays invested for growth.

This creates visual separation and reduces guilt and fear.

Third, define your enough.

Uncertainty fuels anxiety.

An adviser can help you visualize the sustainability of your plan. And that confidence gives you permission to enjoy what you've already saved.

Fourth, spend with purpose.

You're not spending down savings. You're converting savings into experiences, memories and security.

Purpose reframes spending as intentional, not irresponsible.

Here's the beautiful part.

The same discipline that made you a great saver can make you a great spender if you aim that discipline toward joy instead of accumulation.

You didn't save just to build a number on a screen.

You saved for freedom.

For time.

For choice.

For life.

This chapter isn't about building wealth. It's about using it wisely and meaningfully.

So, if you're standing at the edge of retirement, excited but nervous, remember this:

You didn't save all those years just to keep watching the balance rise.

You saved to buy back your time, to live freely, to finally do the things that mattered all along.

Your money has a purpose.

And so do you.

Thanks for joining me on Make It Personal. If today's episode resonated, share it with somebody who's approaching retirement, or maybe somebody who's already retired and still learning how to give themselves permission to enjoy what they've earned.

And a special shoutout to Betsy, one of our listeners who inspired this episode. Keep the questions coming in.

Until next time, make it personal.

It's your money. It's your plan. It's your future.

Disclosure

This podcast is for educational purposes only and may include references to concepts that have legal and/or tax implications. Mutual of Omaha Investor Services, Inc. does not provide tax or legal advice. Please consult with the appropriate professional regarding your personal situation prior to making any financial decisions.

Strategies discussed may not be suitable for everyone.

Securities and advisory services offered through Mutual of Omaha Investor Services, Inc., member FINRA and SIPC.

Mutual of Omaha Advisors is a division of Mutual of Omaha Insurance Company.

Rather than looking at each income source on its own, it can be helpful to consider how predictable income, retirement account withdrawals and other sources can work together over time.

9 common sources of retirement income

Retirement income often comes from a combination of sources rather than one account or benefit. Nine common sources include:

Retirement income source

How it may provide income

1. Social Security

Monthly retirement benefits based on your earnings history and when you begin claiming.

2. Retirement account withdrawals

Money withdrawn from 401(k)s, 403(b)s, IRAs and other retirement savings accounts.

3. Pensions

Regular payments from an employer-sponsored defined benefit plan, if you have one.

4. Investment income

Dividends, interest, fund distributions or money from selling investments.

5. Annuities

Income payments based on the terms of an insurance contract.

6. Real estate

Rental income or, for homeowners, ways to access home equity.

7. Cash value life insurance

Access to available cash value from certain permanent life insurance policies. Death benefit may be decreased if cash value is accessed.

8. Bank accounts and CDs

Interest earned on savings and certificates of deposit.

9. Work income

Wages, consulting, freelance or self-employment income.

These sources differ in predictability, access, risk and tax treatment. The sections below explain how each one may fit into a broader retirement income plan.

1. Social Security: A foundational income stream

Social Security can provide monthly income throughout retirement. Your benefit is based in part on your earnings history and the age when you begin receiving benefits.

You can begin receiving retirement benefits as early as age 62, but claiming before full retirement age reduces your monthly benefit. Waiting beyond full retirement age increases the benefit for each month you delay, with those increases stopping at age 70.¹ When you claim your Social Security benefits can therefore affect how much of your retirement income comes from Social Security each month.

Consider these factors when deciding when to claim:

Current health and family longevity history
Immediate financial needs
Other sources of retirement income
Spouse’s earnings and claiming strategy

If you’re weighing these factors, learn more about when to claim Social Security benefits to learn how different claiming ages can affect your monthly benefit.

2. Retirement account withdrawals: Turning savings into income

A 401(k), 403(b), IRA or other retirement account starts as savings, but in retirement those assets can become another source of income. After age 59 ½, you can generally take withdrawals as needed without penalty or set up regular distributions to create a more paycheck-like schedule. Regular income taxes may still apply.

How withdrawals are taxed depends on the account:

Traditional IRA distributions are generally taxable, while qualified Roth IRA distributions generally are not.
Traditional IRAs are also subject to required minimum distribution rules beginning at the applicable age, while Roth IRAs do not require distributions during the original owner's lifetime.²

The amount and timing of withdrawals can affect taxes and how long your savings last, so your retirement withdrawal strategy should account for what Social Security, pension income and other sources already cover.

If you want to better understand how these accounts differ, learn more about the differences between an IRA and a 401(k).

3. Pension income: Regular payments from an employer plan

If you have a traditional pension, it may provide another regular source of retirement income. Defined benefit pension plans generally determine benefits using a plan formula and most commonly pay a designated monthly amount in retirement.³

Depending on your plan, you may have decisions to make about how benefits are paid. Review whether your pension offers options such as lifetime monthly payments, survivor benefits or a lump sum, and ask your plan administrator how each option would affect the amount you receive.³

Pension income can then be considered alongside Social Security, retirement account withdrawals and other sources when you map out your monthly cash flow.

4. Investment income: Dividends, interest and fund distributions

Investments can provide retirement income through dividends, interest, fund distributions or the sale of assets. The amount may change with market conditions, so investment income generally requires more flexibility than a fixed monthly benefit.

Because investment income can change with market conditions, your mix of income-producing and growth investments should reflect how much you need from the portfolio, when you'll need it and how much market volatility you're comfortable with.

Stocks, bonds, mutual funds and ETFs can all contribute to retirement income through dividends, interest or distributions. These payments can change over time and are not guaranteed.⁴ A retirement portfolio may also include investments with growth potential, depending on how much income you need, when you expect to use the money and how comfortable you are with changes in value.

Take a deeper look at stocks, bonds, ETFs and how different investments can work together over time.

5. Annuities: Contract-based income options

An annuity is a contract with an insurance company that can provide scheduled income payments beginning immediately or at a later date. Features, risks, fees and access to your money vary by contract, so it is important to understand what a particular annuity is designed to do before considering how it might fit with other retirement income sources.⁵

Fixed annuities: Generally credit interest according to the terms of the contract and may provide options for future income payments.
Immediate annuities: Generally begin income payments relatively soon after the contract is purchased.
Deferred annuities: Begin income at a later date, allowing the contract to remain in an accumulation phase first.

Some annuity contracts offer lifetime income options, while others provide payments for a defined period. Contract guarantees, where applicable, depend on the financial strength and claims-paying ability of the issuing insurer.

If you're considering an annuity, understanding how annuities work — including when payments begin, how long they may last and what access you have to your money — can help you compare a contract with your other retirement income sources.⁵

6. Real estate: Rental income and home equity options

Real estate can contribute to retirement cash flow through rental income or give homeowners ways to access equity they have built over time. These approaches come with different costs, risks and responsibilities.

Rental property income

Owning rental properties can provide monthly income, but consider these factors:

Property management responsibilities
Maintenance and repair costs
Vacancy periods and tenant turnover
Local rental market conditions
Property taxes and insurance costs

Real estate investment trusts (REITs)

Real estate investment trusts, or REITs, provide another way to invest in real estate without directly owning rental property. Some REITs distribute income to shareholders, but their value and distributions can change. REIT investing also carries risks such as market volatility, interest-rate sensitivity, liquidity considerations and fees.

Ways to access home equity

Home equity is different from recurring income from an investment, but some homeowners consider it another financial resource in retirement. Options may include:

Downsizing to a smaller home and investing the difference
Home equity lines of credit (HELOC) for flexible access to funds

Home Equity Conversion Mortgages, the most common type of reverse mortgage, are available to eligible homeowners age 62 and older. A reverse mortgage is a loan rather than investment income, and the amount owed generally grows over time.⁶

7. Cash value life insurance: A potential supplemental source of funds

Certain permanent life insurance policies build cash value that the policyowner may be able to access through withdrawals or policy loans. That cash value can be considered alongside other available assets in retirement, but accessing it can affect the policy and death benefit.

How cash value life insurance works

Permanent life insurance policies, such as whole life or indexed universal life insurance, build cash value over time.

Depending on the policy, available cash value may be accessed through loans or withdrawals. Before doing so, review how the transaction affects the policy and ask about potential tax consequences.⁹

With cash value, it’s important to consider these additional factors:

Premiums are typically higher with cash value than term life insurance
Loans and withdrawals can reduce available cash value and the death benefit.
Policy features, costs and performance vary by policy.
A policy with an outstanding loan may require additional attention to avoid unintended lapse or tax consequences. Talk with a tax professional about your individual situation.⁹

8. Bank accounts and CDs: Liquid savings and interest income

Savings accounts and certificates of deposit, or CDs, can provide interest while keeping part of your retirement assets outside the stock market. Interest rates, access to funds and early-withdrawal rules can vary by account.

Emergency fund importance

An emergency fund can give you readily available money for unexpected expenses. The amount you keep in cash will depend on your expenses, other income sources and how much liquidity you want.

Laddering CDs

Staggering maturity dates can provide regular opportunities to access funds or reinvest them. Compare interest rates, maturity dates and early-withdrawal penalties before choosing CDs.

High-yield savings accounts

High-yield savings accounts may offer a higher interest rate than some traditional savings accounts while keeping money relatively accessible. Savings accounts and CDs at FDIC-insured banks are covered by deposit insurance up to applicable limits. The standard amount is $250,000 per depositor, per insured bank, for each account ownership category.⁷

9. Work income: Part-time, consulting or freelance work

Retirement does not necessarily mean giving up earned income altogether. Part-time work, consulting, freelance work or a small business can provide additional income while allowing some retirees to stay involved in work they enjoy.

Before returning to work, consider the schedule, taxes and how earned income could interact with Social Security if you're receiving benefits before full retirement age.¹ The type of work and amount you earn can then be weighed alongside your other retirement income sources.

How to combine retirement income sources into a monthly plan

Having several possible income sources is only part of the picture. The next step is deciding when each source begins and how much of your monthly spending it may cover.

1. Estimate your monthly retirement expenses

Start by listing the expenses you expect to have each month in retirement, including:

Housing costs (mortgage, rent, taxes, insurance)
Healthcare expenses
Daily living expenses
Travel and recreation
Unexpected costs

Separate recurring expenses from costs that may come up only a few times a year. That can make it easier to see how much dependable monthly income you want and how much flexibility you need for larger expenses.

Health care costs can also change over time, so include premiums and out-of-pocket expenses in your budget and leave room for costs that may not stay the same from year to year.

2. Match your income sources to your expenses

Next, list the income you expect to receive from Social Security, pensions and any other more predictable sources. Compare that amount with your expected expenses to see how much may need to come from retirement account withdrawals, investments, savings, work or other sources.

Look at when each source begins, how much it may provide and whether the amount is expected to stay relatively consistent or change over time.

Your comfort with investment risk can also affect how much you rely on market-based investments for current income. Consider which sources are more predictable, which may fluctuate and which assets you want to keep accessible.

3. Review how the pieces work together

From there, consider how decisions such as when you claim Social Security, how much you withdraw from retirement accounts and how your investments are allocated may affect your overall income plan.

Taxes are another part of the picture. Retirement income sources can be taxed differently, so consider how withdrawals from different accounts may affect your overall income and talk with a tax professional when deciding how taxes factor into your withdrawal plan.⁸

Your spending, investment balances, tax situation and other income sources can change after retirement. Revisit how the pieces fit together regularly rather than assuming the same approach will work every year.

Understanding how to turn retirement savings into retirement income can also help you think through the transition from building savings to using those assets for monthly expenses.

Frequently asked questions about income sources for retirement

When should I plan my retirement income strategy?

The best time to plan for retirement is now. The earlier you plan, the better. Ideally, begin thinking about retirement income strategies in your 40s or 50s. This gives you time to build multiple income sources and make adjustments as needed. However, it’s never too late to improve your retirement income plan.

How much income will I need in retirement?

Financial professionals generally recommend that you have enough savings at the end of your working life to replace 70% to 85% of pre-retirement income. Many recommend saving around 15% of your pre-tax income for retirement. However, your specific needs may vary based on your lifestyle, healthcare costs, and other factors. Consider creating a detailed budget that accounts for all your expected retirement expenses. Also keep this in mind: if you have ample savings, saving 15% of your income may be unnecessary. However, if your savings are low, you might need to save more to get on track.

What is the $1,000-a-month rule for retirement?

The $1,000-a-month rule is a rough planning shortcut for estimating how much savings may be needed to create $1,000 in monthly withdrawals. One version uses a 5% annual withdrawal assumption: 5% of $240,000 is $12,000 a year, or $1,000 per month. That does not mean a 5% withdrawal rate is appropriate for everyone. Investment returns, inflation, taxes, retirement length and your other income sources can all change how much you may be able to withdraw.

How can you make $1,000 a month in retirement?

There is no single way to create $1,000 in monthly retirement income. It might come from one source or from a combination of Social Security, pension payments, retirement account withdrawals, investment income, an annuity, rental income or work. Start with the income you already expect to receive, then compare it with the amount you want each month to see what still needs to come from savings or other sources.

How can you generate passive income in retirement?

Some retirement income sources require less ongoing work than others. Dividends, bond interest, fund distributions, certain annuity payments and rental income managed by someone else may provide cash flow without a traditional job. However, these sources still involve investment, market, contract, property or management considerations, and their payments may not always stay the same.

Disclosures:

Annuity guarantees are backed by the claims-paying ability of the issuer.

Registered Representatives offer securities through Mutual of Omaha Investor Services, Inc., Member FINRA/SIPC. Investment Advisor Representatives offer advisory services through Mutual of Omaha Investor Services, Inc. Mutual of Omaha Advisors is a division of Mutual of Omaha Insurance Company.

All investing involves risk, including the possible loss of principal, and there can be no assurance that any investment strategy will be successful.

Mutual of Omaha and its representatives do not provide tax and/or legal advice, and the information provided herein is general in nature and should not be considered tax and/or legal advice.

Not all Mutual of Omaha agents are registered representatives or financial advisors.

Sources:

Social Security Administration, You Can Receive Benefits Before Your Full Retirement Age, accessed Aug. 2026. https://www.ssa.gov/benefits/retirement/planner/applying2.html
Internal Revenue Service, Publication 590-B (2025), Distributions from Individual Retirement Arrangements (IRAs), accessed Aug. 2026. https://www.irs.gov/publications/p590b
Pension Benefit Guaranty Corporation, How Are Pensions and 401(k)s Different?, updated May 2026, accessed Aug. 2026. https://www.pbgc.gov/about/advocate/resources/pensions
U.S. Securities and Exchange Commission, Investor.gov, Fund Distributions – Investor Bulletin, Aug. 19, 2026, accessed Aug. 2026. https://www.investor.gov/introduction-investing/general-resources/news-alerts/alerts-bulletins/investor-bulletins/fund-distributions-investor-bulletin
U.S. Securities and Exchange Commission, Investor.gov, Annuities, accessed Aug. 2026. https://www.investor.gov/introduction-investing/investing-basics/investment-products/annuities
Consumer Financial Protection Bureau, Reverse Mortgage Loans, Jan. 12, 2026, accessed Aug. 2026. https://www.consumerfinance.gov/consumer-tools/reverse-mortgages/
Federal Deposit Insurance Corporation, Deposit Insurance at a Glance, accessed Aug. 2026. https://www.fdic.gov/consumer-resource-center/deposit-insurance-glance
Internal Revenue Service, Publication 554 (2025), Tax Guide for Seniors, accessed Aug. 2026. https://www.irs.gov/publications/p554
Internal Revenue Service, Publication 525 (2025), Taxable and Nontaxable Income, accessed Aug. 2026. https://www.irs.gov/publications/p525

Reviewed by: Mark Zagurski, CLU®, ChFC®, CMFC® and CRPC®

Mark is Mutual of Omaha Advisors’ Director of Strategy & Communications. With more than 30 years of experience, he has worked extensively in advisor development, strategy, and communications, focusing on helping advisors and their clients make informed financial decisions. He is also the host of the Mutual of Omaha Advisors podcast, “Make it Personal,” which explores personal finance and strategies to help you take control of your money and future.