Give some thought as to where your money will come from in retirement. Photo:

One thing most of us need in retirement -- besides hobbies and senior-citizen discounts -- is income. Once you stop working and your paychecks stop arriving, you'll need some money coming in with which to pay bills and live a comfortable life. Retirement income is critical, and it's up to you to plan where it's going to come from.

There are plenty of possibilities besides Social Security, such as retirement accounts, regular investment accounts, dividends, and annuities. Let's review these.

Social Security
The average Social Security benefit, as of September 2015, was $1,338 per month, or about $16,000 per year. Clearly, that's not going to be enough to sustain most of us. That's just the average, though. If you've been an above-average earner, you'll receive above-average benefits in retirement -- but they still won't look anything like the paychecks you used to receive.

Retirement accounts
Ideally, you will have been regularly socking money away in tax-advantaged retirement accounts such as IRAs and 401(k)s. These will provide retirement income in various ways. Most of these accounts, such as traditional IRAs, SIMPLE IRAs, SEP IRAs, and most 401(k)s, including Roth 401(k)s, have "required minimum distributions" (RMDs) that begin when you're 70 1/2. Roth IRAs are an exception -- you can take as much or as little from them at any time without penalty once you've had the account for at least five years and are age 59 1/2 or older. There are online calculators that can help you estimate how much you'll need to withdraw. The one from the Financial Industry Regulatory Agency, for example, spits out an RMD of about $7,800 for a 72-year-old with a balance of $200,000 in the account.


Other investment accounts and dividends
There's a good chance that you have other investment accounts, besides your tax-advantaged retirement accounts. If so, these can also be a great source of retirement income. It can be hard to know how much to withdraw per year so that you don't run out of money, but one rule of thumb is to aim for 4% in the first year and then to adjust subsequent withdrawals to keep up with inflation. That will give you $12,000 in your first year if your account is worth $300,000, and if inflation is running about 3% as it has averaged over many decades, then your second year's withdrawal would be $12,360. Don't just follow this rule of thumb blindly, though. If the market tanks before you start your withdrawals, you would do well to withdraw less or perhaps even delay your retirement a bit.

Dividends are also a great retirement income source, and they have the terrific habit of being increased over time, too, when they're coming from healthy, growing companies. Imagine, for example, that your $300,000 investment account is kicking out $6,000 in dividends to you this year. That's an overall yield of about 2% -- not bad! But if those payouts are upped by an overall annual average of 5% over a decade, they'll approach $9,800 in 10 years. Dividends don't officially offer inflation protection, but they do often grow at a faster rate than inflation, which can be very welcome in retirement.

An often overlooked retirement income option is the annuity. There are lots of kinds of them -- some of them quite problematic, such as indexed annuities and even many variable annuities. But immediate fixed annuities are well worth consideration. They involve your forking over a big bundle of money to an insurance company, but in return you can receive income for life (including your spouse's life, if you pay a bit more) -- and peace of mind. That income can be indexed to inflation, too, and can have other attractive features. Annuities are especially good retirement income generators because once you set them up, you don't have to manage them. Your ability or interest in managing money and investments will likely diminish over time, but the checks will still keep coming.

A deferred annuity (also referred to as longevity insurance) can also be smart. It's a fixed annuity, but one that doesn't start paying immediately. Instead, the insurer agrees to start paying at a future point, such as when you turn 80. You can set up a deferred annuity as a hedge against running out of money late in life.

Don't leave your retirement income up to chance or just to Social Security. Give the topic some thought and come up with a plan for how you'll support yourself in retirement. Consult a fee-only financial planner too, if you're not comfortable planning on your own.