Your Account Balance Is One Number. What Monthly Income Could It Support?

Saving for retirement gives you a number to watch. You can see your account balance grow over time. That progress matters. But as retirement gets closer, a different question becomes useful: How much monthly income could those savings provide?

An account balance does not come with a monthly paycheck. To turn savings into income, you need to decide how much to take out, when to take it, and how long the money may need to last. A large balance can feel reassuring, but the same balance may support different amounts of income depending on your age, spending needs, investment results, and other sources of income.

Start with the income you already expect. Social Security pays a monthly benefit, and the age when you claim affects its amount. Pensions, if you have one, may add another payment. The Social Security Administration lets you estimate your benefit at different claiming ages, so you can use your own figures instead of guessing.

Then look at the gap between income and expenses. What will you need each month for housing, food, health care, and the life you want to live? How much of that is covered by Social Security or a pension? Your savings may need to cover the rest, including costs that change over time.

There is more than one way to use savings for income. You might take planned withdrawals from investments. Some people also consider an annuity that provides periodic payments, potentially for life. Annuity terms, costs, and access to your money vary, so the details deserve a careful review.

Your balance tells you what you have today. An income plan helps you see how it might work tomorrow. If you have been watching the balance grow, now may be a good time to ask your financial advisor: “What monthly income could this support, and what would need to happen for that income to last?”