Want a steady income in retirement? These overlooked tools can help and may make a big difference

You’ve spent decades building your nest egg, but how do you turn that lump sum into a long-lasting paycheck? According to a 2025 study by the Nuveen Institute and TIAA, nearly all 401(k) plan participants (93%) say they want retirement plans to provide guaranteed income options for life, but most 401(k) plan participants do not.

Dealing with accumulation accounts — how to withdraw savings without running out of them — is one of the biggest blind spots in retirement planning. While lifetime income instruments are gaining more attention, the foundation of a secure retirement still lies in a smart withdrawal strategy — one that balances your need to live well today with the reality of financing a future that can last for decades.

Why are smart accumulation strategies difficult?

Retirement fundamentally flips the scenario for workers. “After decades of saving, people are suddenly expected to know how to spend their savings in a way that lasts,” says Mark Stancato, founder of VIP Wealth Advisors. “There’s no built-in structure, there’s no salary, and there’s a lot of uncertainty.”

Between market volatility, taxes, and rising health care costs, many retirees feel ill-prepared to make this transition. Lack of structure can lead to over-withdrawal in the early years or over-conservation and loss of purchasing power over time.

Build your salary from savings

A solid first step toward a great accumulation strategy is building a foundation of guaranteed income. “We start by identifying fixed expenses and setting a minimum basic income using reliable sources, such as Social Security or pensions,” says Stancato.

From there, you can organize your income sources and assets using what is known as the bucket strategy. Short-term spending needs are covered with cash or bonds, while medium- and long-term needs can be based on stocks and other growth-oriented investments, giving your portfolio room to grow while continuing to support near-term liquidity needs.

What about pensions and other income instruments?

For retirees looking to secure income, fixed annuities, which convert a lump sum into a predictable monthly stipend for life, are often the first option considered. In fact, a Nuveen study shows that 90% of 401(k) plan participants would consider using fixed annuities to create fixed retirement income, and increasingly, plan sponsors are exploring ways to include fixed annuities in their 401(k) plans. However, they are not your only option.

“There are more tools now than ever before,” says Stancato. For example, some retirement plans offer managed payment options or guardrail-based withdrawal strategies, while technology can help automate distributions and make spending more dynamic, adapting to market downturns or personal circumstances.

You can also explore newer instruments such as target-date funds with income features or variable annuities with income riders, although these often come with additional complexity and cost. The key is to match your plan to your lifestyle, something a one-size-fits-all product can’t always do.

Taxes matter more than you think

Even with the best foundation, one of the most overlooked aspects of retirement income planning is the order in which you withdraw from accounts. To move your money around efficiently, Stancato recommends following a tax-conscious sequence: Start with taxable accounts, then move to tax-deferred accounts, and save tax-exempt assets like Roth individual retirement accounts for last. “Oftentimes, that tax-free bucket becomes a reserve for legacy or long-term health care,” he adds.

This sequence helps reduce tax burdens over time and provides more flexibility to adjust as life or tax policy changes.

Bottom line

Turning a small amount into retirement income takes more than just withdrawing money — it takes intention, strategy, and adaptability. “The biggest mistake people make is treating every dollar the same,” says Stancato. “You need to know the purpose of each account and when you will need it.”

A thoughtful plan that matches your income sources with your spending needs, tax profiles and lifestyle goals will help you make the most of your retirement years.