PhotoAs more Baby Boomers get closer to retirement every day, policymakers worry that too many of them are not prepared.

To be prepared, you need a strategy for supporting yourself once the paychecks stop. Yet survey after survey shows a lot of people who aren't getting any younger are not socking away enough money, if they're saving anything at all.

At the core of any retirement strategy is a continuing income stream to replace a salary. There are many different ways to achieve that stream.

Once upon a time, people who worked for 30 years might expect to walk away with a defined benefit pension, but pensions went out with the VCR. Today, most workers have to rely on what they can save in an Individual Retirement Account (IRA) or company-sponsored 401(k).

Social Security

Everyone who has been in the workforce has access to Social Security, and while that's an important part of any retirement strategy, it's only part. Yet a survey from the Bankers Life Center for a Secure Retirement, released just last week, found 38% of Baby Boomers believe Social Security will be their primary source of income in retirement.

Wealth managers like Fidelity Investments say your retirement strategy should be based on four things:

  • You're probably going to live a long time so you're going to need more money than you think
  • During retirement, there's going to be inflation, so the money you have won't buy as much
  • The market is going to go up and down
  • You're going to have to figure out when, and how much to withdraw from savings

Take advantage of employment savings plans

If you work at a company that offers a 401(k) program, you need to be participating, especially if the company also contributes. The money grows and is only taxed when you start to make withdrawals.

In addition, you can establish an IRA and save a certain amount of money in it each year. A Traditional IRA is tax-deferred like a 401(k), but in recent years many wealth advisors have recommended a Roth IRA.

Contributions to a Roth IRA are taxed but the earnings they produce are not. When you start making withdrawals in retirement, it's tax-free income.

Other income

So a retirement strategy for producing income includes Social Security and earnings on savings and investments. What else?

How about income from a part-time job? If your idea of retirement is one of endless leisure, then continuing to work probably holds little appeal. But if you're doing something you enjoy, instead of going to a job you hate, maybe it could be a fulfilling aspect of retirement.

Reducing expenses can be another effective way to make your money go farther. If living expenses go down, there's more money in the budget -- money that is essentially tax-free.

Moving to a state where the cost of living is low can also stretch your money in retirement. If that idea appeals to you, here are five retirement destinations that can stretch your savings.


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