Many of us are no stranger to money worries—36% of people1 are kept awake at night thinking about our financial woes, and most (yes, most) of us are actually more frightened of running out of money than we are of death.2 Our worst fear? Not having enough funds to afford retirement.

How do we get over it? Crossing your fingers and hoping for the best (good health and good markets) isn’t the answer. Neither is buying a ticket for the Mega Millions or Powerball. But there are ways you can organize your financial life to help avoid outliving your savings—and leave yourself feeling better about your prospects. One to consider is lining up diverse income streams, at least some of which offer protected income for retirement.

Here are five tips aimed at helping you to stop worrying and get some shut-eye. 

"Setting up multiple income streams does require a fair amount of planning, which is why your first step of getting a handle on your finances is so important."

Tip #1: Build-Your-Own Income Stream.

Remember the old Choose-Your-Own Adventure books? The term comes to mind whenever I refer to annuities* as essentially a way to “build-your-own” income stream. Consider creating your own income stream via an annuity. Often called “protected lifetime income”† products, annuities are insurance products that can be structured to pay a set monthly amount which can last for a specific period of time or for life, depending on the options you choose. Annuities may be particularly appealing to women who live, on average, five years longer than men and may want to make sure their income streams are guaranteed to last.3

If you’re in a position where you’re planning to rely on funds from a retirement account like an IRA or 401(k) and social security, you may want to consider taking a portion of your 401(k) to fund an annuity.†† One option would be to purchase an annuity that’s able to fund your essential expenses every month—housing, healthcare, and food. You may be surprised to find how much peace of mind you’ll feel when you know your fixed expenses are taken care of for life.

Tip #2: Consider Delaying Social Security.

Social Security is a dependable income stream that lasts as long as you do. Many people assume it’s simple—one reason so many start taking their benefits at age 62—to their own detriment. From age 62 to age 70, for every year that you delay claiming Social Security, your benefit increases by 6-8%.4 That’s a guaranteed rate of return that is tough to beat in any other way. With most financial matters, early action is advised so you don’t get behind the 8-ball, but ironically, taking a hands-off approach with Social Security—by waiting as long as you can before you claim—is the best method for earning more. (One note on this: Having a spouse, being widowed or divorced makes the Social Security decision even more complicated. There are software tools out there such as that found at designed to help you figure out the claiming strategy that might work best for you.)

Tip #3: Have Both Taxable and Non-Taxable Buckets of Money.

Having both taxable and non-taxable accounts can be key when it comes to helping you keep your tax bill low in retirement. While most of our incomes will be lower in retirement than they are in our working lives, it’s easy to underestimate how much we’ll be paying in taxes each year as we draw down on our savings. (As much as we might wish taxes disappeared after age 70, they don’t.) For example, if your required minimum distribution demands that you pull a certain amount of money out of your 401(k) in a year when you have income from other sources, you might be forced into a higher tax bracket. But if you have a mix of taxable and non-taxable accounts, you can adjust your withdrawals in an effort to ensure you are controlling taxes where possible. One non-taxable account that retirees often forget about is a health savings account, or an HSA. You can withdraw money from your HSA tax free at any time to pay for eligible medical expenses—no matter when those expenses occurred.5 All you need to do is keep your receipts.

While that may sound like an odd strategy, postponing your withdrawals allows any earnings in your HSA more time to accumulate. You may also be able to place your HSA funds into a mutual fund or other investments with growth potential. However, you must remember that these types of investments are subject to risk, so you could lose money.

Tip #4: Maintain Money In Cash Equivalents.

In retirement, maintaining money in cash equivalents can be a good idea—both inside and outside of retirement accounts—in case the markets fall. Many financial advisors recommend their clients keep a full three to five years’ worth of living expenses in cash equivalents in the event of another recession. You don’t want to be forced to draw down on your portfolio while the markets are at a low point—your account balances would take a double hit since you’d be withdrawing funds that haven’t yet had time to potentially rebound from the downturn. 

Tip #5: Schedule Regular Check ups with Your Advisor.

As you head towards retirement, look to get frequent snapshots of your current and future net worth. A financial advisor or planner can help you understand exactly what options you have available to you and how much money you should be putting into all your savings buckets. Setting up multiple income streams does require a fair amount of planning, which is why your first step of getting a handle on your finances is so important. If you don't have a financial advisor yet, consider speaking to someone. Learn more about the benefits of an advisor in a previous post, How to Find the Right Financial Advisor for You.

Kathryn Tuggle contributed to this story.


1 “This is the No. 1 Reason Americans are Losing Sleep,” Bankrate, August 16, 2018.

2 “What Happens if We All Run Out of Money for Retirement,” US News, May 30, 2018.

3 “Women and Financial Wellness: Beyond the Bottom Line,” Merrill Lynch, April 2018.

4 “If You Can’t Wait Until 70, This is the Next Best Age to Claim Social Security Benefits,” CNBC, July, 2018.

5 “Health Savings Account,” Blue Cross, Blue Shield of Kansas, 2018-19.  


*What is an annuity?

Annuities are long-term, tax-deferred investments designed for retirement. Variable annuities involve risks and may lose value. Earnings are taxable as ordinary income when distributed and may be subject to a 10% additional tax if withdrawn before age 59½. Optional benefits are available for an extra charge in addition to the ongoing fees and expenses of the variable annuity.

Annuities are not for everyone. And, it’s important to remember that these products are meant to be long-term investments designed for retirement, so there are restrictions in place to discourage you from withdrawing all of your money at once or taking withdrawals before age 59½. However, most annuities do allow for exceptions based on specific circumstances such as a terminal illness or other emergencies.

† Optional benefits are available for an extra charge in addition to the ongoing fees and expenses of the variable annuity. Guarantees are backed by the claims paying ability of the issuing insurance company. 

†† Tax deferral offers no additional value if used to fund a qualified plan, such as a 401(k) or IRA, and may not be available if owned by a “non-natural person” such as a corporation or certain types of trusts.

The opinions and forecasts expressed are those of the author and individuals quoted and should not be construed as a recommendation or as complete.

More from Author


The Top 5 Mistakes Even Smart People Make in Planning for Retirement

Whether you’ve just opened your first 401(k) account or you’re already mentally composing the invite list for your retirement party, making mistakes when it comes to retirement planning can have a long-term impact on your golden years. Knowing where the pitfalls are is the first step in making sure that you can avoid them. Learn more at the Financial Freedom Studio.


The Number One Financial Question to Ask (And Answer) In Your 20s, 30s, 40s, and 50s

We all know that keeping our finances on track is key to reducing stress and making progress toward life goals like retirement. Asking yourself a few key questions can help make that you’re on track and keep stress at a minimum. Learn more at the Financial Freedom Studio.


How to Interview a Financial Professional

Choosing the right person to guide you toward your money goals can feel overwhelming. Picking the right financial professional may take some legwork on your end but spending the time upfront can ensure that you select the right person to help you create and implement your financial plan. Learn more at the Financial Freedom Studio.