What Are All the Sources of Retirement Income? The Complete Inventory

What Are the Guaranteed Income Sources?

Guaranteed income — money that arrives regardless of market conditions — forms your retirement floor:

Social Security: Inflation-adjusted, government-backed. Average benefit in 2025 is about $1,900/month, maximum at age 70 is about $4,873/month. For couples, combined benefits can reach $7,000-9,000/month with optimal claiming.

Defined Benefit Pensions: Increasingly rare in the private sector but common in government (FERS, state pensions, military). Value depends on years of service, final salary, and COLA provisions.

Annuity Income: Purchased guaranteed income (SPIAs, DIAs). Converts portfolio assets into predictable payments.

The analysis engine calculates how much of your baseline spending is covered by guaranteed sources. The gap is what your portfolio must fill — and the smaller the gap, the higher your Monte Carlo success rate.

How Do Variable Income Sources Fit In?

Variable sources provide flexibility and growth potential but carry uncertainty:

Tax-deferred accounts (Traditional IRA, 401k, 403b, 457): Withdrawals are fully taxable as ordinary income. Subject to RMDs starting at 73-75.

Roth accounts (Roth IRA, Roth 401k): Withdrawals are tax-free. No RMDs during owner's lifetime. The most flexible income source — doesn't affect Social Security taxation, IRMAA, or ACA subsidies.

Taxable brokerage accounts: Capital gains taxed at preferential rates (0%, 15%, or 20%). No withdrawal restrictions or RMDs. Provides income before 59.5 without penalties.

HSA: Tax-free for medical expenses at any age. After 65, any-purpose withdrawals taxed as ordinary income.

Rental income: Relatively predictable but requires management. Depreciation provides tax benefits.

Part-time work or consulting: Highly variable but provides purpose and social engagement alongside income.

Why Does the Order of Withdrawals Matter So Much?

The order in which you draw from these sources — and the amounts — determines your lifetime tax bill. Drawing $80,000 from a traditional IRA might put you in the 22% bracket, while drawing $40,000 from the IRA and $40,000 from Roth keeps you in the 12% bracket.

The analysis engine models this year by year, considering: - Social Security benefit taxation (0%, 50%, or 85% taxable depending on provisional income) - RMD requirements (can't defer indefinitely) - Roth conversion opportunities (fill lower brackets) - Capital gains harvesting (0% rate up to ~$89,250 for couples in 2025) - ACA premium credit eligibility (pre-Medicare) - IRMAA thresholds (post-Medicare)

The optimal sequence changes every year based on your income mix. Static rules of thumb miss the interactions.

Want to See All Your Income Sources Coordinated?

The analysis at myaifinancialplan.com models every income source in your retirement — guaranteed and variable — and optimizes the withdrawal sequence year by year. Start free at myaifinancialplan.com.