How do I turn my savings into income?
Common ways include planned withdrawals, using interest and dividends, and turning part of savings into guaranteed annuity income. Many people combine approaches.
Retirement income basics
Retirement Income vs. Retirement Savings: What's the Difference?
Retirement savings is the total you have built up in accounts like IRAs, 401(k)s and annuities. Retirement income is the money that actually arrives each month to pay your bills. A large balance can feel secure, but what matters in retirement is how much steady monthly income your savings, Social Security and pensions can reliably produce, and for how long.
Written and reviewed by Dan Hopwood, Retirement Income Specialist · Retirement Income Knowledge Center · Last reviewed
Why a big number can be misleading
A $750,000 balance sounds like a lot. But if it must last 30 years, cover taxes and keep up with rising prices, it translates into a much smaller monthly amount. Thinking in monthly income makes it easier to compare with your real bills.
Illustrative translation
- Savings balance
- $750,000
- Rough 4% first-year withdrawal
- $30,000 / year
- About per month, before tax
- $2,500
Illustration only, using the 4% rule of thumb as a rough guide. It is not a safe-withdrawal promise.
Income sources work together
- Social Security and pensions pay monthly without drawing down savings.
- Annuity income can turn part of savings into a monthly paycheck for life.
- Withdrawals from savings fill the rest, and their size affects how long savings last.
Taxes change the picture
A dollar in a traditional IRA is not the same as a dollar in a Roth IRA. Withdrawals from tax-deferred accounts are generally taxable, so the spendable income from the same balance can be lower.
Savings vs. income
| Retirement savings | Retirement income | |
|---|---|---|
| Measured as | A balance | Monthly dollars |
| Answers | How much do I have? | Can I pay my bills? |
| Main risk | Market drops | Running short over a long life |
Educational comparison.
See your own monthly retirement income picture
Enter the income you want and the income you expect from Social Security, pensions and other sources. The calculator estimates any monthly gap in about two minutes.
Open the Retirement Income Gap CalculatorFree • Results on-screen right away • No email required
Common questions
Why do calculators ask for monthly amounts?
Because your bills are monthly. Comparing monthly income with monthly spending shows whether there is a gap.
Is a bigger balance always better?
More savings helps, but taxes, fees, withdrawal timing and how long you live all affect how much income it really provides.
How much monthly income will my savings provide?
It depends on how fast you withdraw, how long the money must last, returns, fees and taxes. As an illustration only, $500,000 withdrawn at 4% a year is about $1,667 a month before taxes. A calculator can show your own estimate.
Why does monthly income matter more than my account balance?
Your bills arrive monthly, so a balance is only useful once you know how much income it can reliably provide. Looking at monthly income also shows how Social Security and pensions fit alongside your savings.
How much monthly income can $250,000 or $300,000 provide?
Illustration only: a 4% yearly withdrawal from $250,000 is about $833 a month, and from $300,000 about $1,000 a month, before taxes. Withdrawing more raises the chance of running short. An annuity quote may show a different lifetime amount, with guarantees subject to the claims-paying ability of the issuing insurance company.
How much monthly income can $750,000 in savings produce?
Illustration only: at a 4% yearly withdrawal, $750,000 supports about $2,500 a month before taxes. Actual results depend on returns, fees, taxes and how long the money must last. Adding Social Security gives a truer picture of total monthly income.
How much monthly income can $1.5 million provide in retirement?
Illustration only: a 4% withdrawal from $1.5 million is about $5,000 a month before taxes. That is a starting estimate, not a guaranteed amount. Market drops early in retirement can reduce what a balance can safely support.
How much monthly income can $2 million produce?
Illustration only: a 4% withdrawal from $2 million is about $6,667 a month before taxes. Larger balances still face taxes, inflation and market timing. How that income fits with Social Security and other sources matters more than the balance alone.
Authoritative sources
This page is educational and general in nature. RetirementLeverage™ and Retirement Planning Store, Inc. do not provide individualized investment, securities, tax, or legal advice; please consult a qualified tax professional or attorney about your own situation. Insurance products and services may not be available in every state, and any guarantees are subject to the financial strength and claims-paying ability of the issuing insurance company.