Here's Exactly How I Plan to Spend My Social Security Checks in Rtirement

After decades of saving and investing, it's time to make tough retirement decisions. It's up to you to determine whether you want to downsize your home or relocate to another state. It's you who's responsible for coming up with a spending plan that ensures your money will be available for as long as you need it. And it's you who decides how to use different sources of retirement income, including Social Security.

You're not alone. Nearly nine out of 10 Americans age 65 and older receive Social Security, meaning there are millions of others making the same decisions. I've planned how I want to spend Social Security, and here's what I came up with:

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Guaranteed income

Since I tend to be financially conservative, I've decided to let my retirement accounts ride as long as possible. I'll begin taking required minimum distributions (RMDs) by the time I'm 75, but until then, the goal is to live on guaranteed income, and that's where Social Security comes into play.

Guaranteed income refers to a steady stream of income you can rely on to cover living expenses in retirement. While I have no way of knowing whether Congress will come up with a way to shore up Social Security or if I'll receive as much as I expect by the time I begin collecting benefits, I still consider it part of my guaranteed income plan. Here are some other common sources of guaranteed income:

• Bonds
• Some types of life insurance
• Part-time employment
• Annuities
• Pensions
• Stocks
• Real estate
• Royalties
• Home equity (when needed)

I am counting on Social Security, a pension, royalties, and -- since I never want to stop working entirely -- part-time employment. This is the money I'll use to pay living expenses and to cover some of the fun things I suspect my husband will want to do after he finally retires.

Why this plan works for me

When I was younger, I imagined throwing everything -- including guaranteed income and withdrawals from our retirement accounts -- into a single pot and using that money to live. It was my favorite compound interest calculator that changed my mind.

Let's say I begin collecting Social Security at age 67, and for illustration purposes, imagine that I have $200,000 in a retirement account. I could begin drawing it down at that point, or I could leave it alone until I'm legally required to take my first RMD at age 75. If my retirement account earns an average annual return of 7% and I leave my mitts off it, it will be worth $343,637 by the time I make my first RMD -- and that's if I never add another dollar to the account.

Planning to live on guaranteed income means not feeling pressured to raid our retirement accounts. Granted, I could die in those eight years while my account grows. However, I'll die knowing I'm leaving a little extra for my husband.

Post-retirement budget

Once I started planning for decumulation (that period during retirement when we start spending the money we've saved and invested), it didn't take me long to realize that living on guaranteed income for a few years works best for my worry-wart personality. If something huge happens, like a serious health issue, I know I have those retirement accounts in my back pocket. I can always draw from one if I need to do so.

In the meantime, the post-retirement budget I've come up with is based only on the guaranteed income we'll have coming in. Not counting on every dollar we have access to works for a couple of reasons: I won't have to draw from a 401(k) or IRA unless there's an issue too serious to handle with guaranteed income. And whoever is left standing when the other dies won't be left with a bloated budget.

I'm aware that both my plan and our budget may need to be tweaked from time to time, but as of now, maximizing Social Security benefits and planning to use those before I ever touch our retirement accounts strike me as sensible.

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