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By Mark McGregor CRPC®

One of the biggest mistakes I see in retirement planning is when people think of income too narrowly.

They may have done an excellent job saving in a 401(k) or IRA, but once retirement gets closer, the conversation often shifts. It is no longer just about how much you have accumulated. It becomes about where your income will come from, how reliable it will be, and how much of it you actually get to keep after taxes.

That is why I think it helps to stop viewing retirement income as a single stream. In many cases, the stronger approach is to build several streams that serve different purposes. One may provide stability. Another may create flexibility. Another may offer growth or tax advantages. The goal is not complexity for its own sake. The goal is resilience.

Why This Matters More in Retirement

When you are still working, a paycheck does a lot of the heavy lifting. In retirement, that burden shifts to your savings, your income sources, and the decisions you make around them.

That is where diversification takes on a different meaning. It is not just about owning different investments. It is also about having different types of income, taxed in different ways, with different levels of predictability. Roth IRAs, for example, are not subject to lifetime required minimum distributions for the original owner, while traditional retirement accounts generally are. And Social Security may become taxable depending on your combined income, including tax-exempt interest. Those details matter because they affect how much control you have over cash flow later on.

A Better Question to Ask

Instead of asking, “How much can I withdraw from my portfolio?” I think a better question is:

What combination of income sources gives me the most flexibility without putting unnecessary pressure on any one part of the plan?

That is where retirement income planning becomes more useful.

Five Ways to Broaden Your Retirement Income Strategy

1. Look beyond traditional retirement accounts
Traditional retirement accounts are still important, but they do not need to do everything on their own.

A more flexible plan may include a mix of tax-deferred accounts, Roth assets, taxable investment accounts, Social Security, cash reserves, and other sources of income. That kind of diversification can create options. In some years, you may want to lean more heavily on taxable assets. In others, Roth assets may provide helpful flexibility (read more about this in our guide on Tax-Free Income Streams for a Dream Retirement). In still others, required withdrawals from traditional accounts may shape the decision. The point is not to make retirement more complicated. It is to avoid being boxed into one tax treatment or one withdrawal approach.

2. Understand where annuities can fit
For some retirees, annuities can help create a more predictable income floor.

FINRA describes annuities as contracts with insurance companies that can help accumulate assets or convert savings into income, either immediately or later on. That can appeal to retirees who want a more pension-like stream to help cover core expenses. But this is an area where I think careful evaluation matters. Annuities vary widely, and FINRA notes they can involve complexity, fees, surrender charges, and different tradeoffs around liquidity and upside. Just as important, any guarantees depend on the financial strength and claims-paying ability of the issuing insurer.

So the real question is not whether annuities are good or bad. It is whether a specific annuity serves a clear purpose inside the broader plan.

3. Be realistic about real estate income
Real estate can be a valuable income stream in retirement, but it is not passive just because people call it passive.

Owning rental property may create cash flow, but it also brings management responsibilities, maintenance, vacancy risk, recordkeeping, and tax complexity. The IRS notes that Publication 527 covers rental income, expenses, depreciation, and passive activity rules, which is a reminder that real estate income often comes with more moving parts than people expect.

For retirees who want real estate exposure without managing tenants, publicly traded REITs may feel simpler. But even there, structure matters. Investor.gov notes that non-traded REITs can be illiquid and may not be easy to sell when cash is needed. So before adding real estate as an income strategy, I think it is worth asking whether you want hands-on involvement, public-market liquidity, or simply broader diversification.

4. Do not overlook earned income in retirement
Not all retirement income has to come from investments.

Part-time work, consulting, board service, or project-based work can be more valuable than people realize. In some cases, earned income reduces the need to withdraw from the portfolio early in retirement. It can also create more room for tax planning, especially if it allows you to delay larger withdrawals from retirement accounts.

There is one important planning detail here: the Social Security Administration says you can work while receiving retirement benefits, but if you are below full retirement age, benefits may be reduced if your earnings exceed the annual limit. Once you reach full retirement age, that earnings limit no longer applies. That does not make part-time work a bad idea. It just means the timing and structure should be considered carefully.

5. Build income ladders, not just withdrawals
This is where the planning piece really comes together.

A tax-efficient income ladder is not a product. It is a strategy for deciding which income sources to use, when to use them, and how they fit together over time. In practice, that may mean starting with more predictable sources such as Social Security and, where appropriate, annuity income, then layering in taxable accounts, traditional retirement accounts, or Roth assets depending on spending needs and tax exposure.

That coordination matters because different income sources affect taxes differently—a topic we recently covered in New Year, New Tax Laws: What to Know When Tax Planning. The IRS notes that Social Security benefits may be taxable depending on your combined income, while qualified Roth IRA distributions can be tax-free and Roth IRAs are not subject to lifetime RMDs for the original owner. When those pieces are managed intentionally, retirees often have more room to control their taxable income from year to year.

What This Looks Like in Real Life

In my view, the most effective retirement income plans are usually layered.

They do not depend entirely on market performance. They do not assume every expense will be predictable. And they do not force every dollar to come from the same bucket.

Instead, they tend to combine dependable income, flexible assets, and tax-aware withdrawal planning. That may not sound flashy, but it is often what gives retirees more confidence. And in retirement, confidence matters.

Final Thought

A secure retirement is rarely the result of one perfect account or one perfect product.

More often, it comes from building multiple income streams that can work together through changing markets, changing tax conditions, and changing life circumstances. The right mix will look different for different households. But the principle is usually the same: more flexibility tends to create a stronger plan.

That is where thoughtful retirement income planning can make a real difference.

If you'd like to get in touch, call 303.681.0113, email mark@mgswealth.com, or schedule a meeting online.

About Mark

You probably have people helping with your investments, legal matters, and taxes...but who makes sure you are getting all the benefits you're owed? I do. My name is Mark McGregor. I scour federal, state, local, and corporate databases to find benefits you are owed but NOT receiving. That's what I do. Yes, we do all the other things as well, such as providing investment management, tax planning, long-term care planning and other services. Those are the big things, but I also help to make sure the little unknown things are taken care of for you. It's also making sure that the little things don't become big problems for you down the road.

I got into this business to fill a void I noticed after the passing of one of my friends' parents who was experiencing hardship due to poor planning. I saw the issues they had to deal with firsthand, and this left me feeling that there were lots of financial salespeople, but not many true advisors making sure people were getting all the available benefits they had worked so hard for.

I use the skills I gained from my bachelor's degree from California Polytechnic State University and 24 years of industry experience to get all the benefits my clients are owed. I live in Castle Rock, and we are actively involved in sports and charitable organizations, such as Unbound, which provides personal attention and direct benefits to children, youth, the aging, and their families so they may live with dignity and achieve their desired potential and participate fully in society.

Disclaimer: Investment advisory services offered through Brookstone Wealth Advisors, LLC (BWA), a registered investment advisor and an affiliate of Brookstone Capital Management, LLC. BWA and McGregor Wealth Management are independent of each other. Insurance products and services are not offered through BWA but are offered and sold through individually licensed and appointed agents. Mark McGregor and/or McGregor Wealth Management are not affiliated with or endorsed by the Social Security Administration or any other government agency. This content is for informational purposes only and should not be construed as legal, tax, or investment advice. Investing involves risk, including the potential loss of principal. Annuity guarantees rely on the financial strength and claims-paying ability of the issuing insurer. Individuals should consult their financial professional, tax advisor, or attorney regarding their specific situation.

Frequently Asked Questions

Why is it important to have multiple income streams in retirement?

Having multiple income streams in retirement can help reduce reliance on any one account, market condition, or withdrawal strategy. A mix of Social Security, investment accounts, Roth assets, annuity income, real estate income, or part-time earnings may create more flexibility and make it easier to manage taxes and cash flow over time. That kind of coordinated planning is a big part of the retirement conversations Mark McGregor has with clients.

Are annuities a good way to create guaranteed retirement income?

Annuities can play a useful role for some retirees who want more predictable income, especially for essential expenses. But they are not automatically the right fit for everyone. FINRA notes that annuities can differ significantly in structure, costs, liquidity, and features, and any guarantees depend on the claims-paying ability of the issuing insurer. That is why annuities are usually best evaluated as part of a broader retirement income strategy with guidance from someone like Mark McGregor.

What is a tax-efficient income ladder in retirement?

A tax-efficient income ladder is a way of coordinating different income sources so you are not drawing every dollar from the same kind of account at the same time. It may involve balancing Social Security, taxable accounts, traditional retirement accounts, and Roth assets based on your bracket, spending needs, and long-term goals. Because Roth IRAs and traditional accounts are treated differently under tax and RMD rules, the order of withdrawals can make a meaningful difference, which is why this is a planning area McGregor Wealth Management focuses on closely.