After a lifetime of working and saving, retirement is the light at the end of the tunnel. Most of us envision it as a time of rest and relaxation, where we enjoy the fruits of our labor. We envision a steady source of income without the need to go to work each day.

It’s a great vision, but generating income without going to work tends to be a murky concept during our working years. We know what we want, but aren’t totally sure how it will happen. So, how exactly will you turn your nest egg into a steady flow of cash during your retirement years? These concrete strategies can help.

See our tutorial: Retirement Planning Basics.

1. Immediate Annuities

Purchasing an immediate annuity is an easy way to convert a lump sum into an ongoing income stream that you can’t outlive. Retirees often take the money they saved up during their working years and use it to purchase an immediate annuity contract because the income stream starts immediately, is predictable and is unaffected by falling stock prices or declining interest rates. (For related reading, see Immediate Payment Annuity.)

In exchange for the cash flow and security, an immediate annuity buyer accepts that the income payment will never increase. The greater concern for most immediate annuity purchasers is that once you buy one, you cannot change your mind. Your principal is locked in forever, and upon your death, the insurance company keeps the balance remaining in your account.

Annuities are complicated products that come in a variety of forms. Before you rush out and buy one, do your homework. (Read Getting the Whole Story on Variable Annuities for insight into several types of annuities.)

2. Strategic Systematic Withdrawals

Even if you’ve got millions of dollars sitting in your bank account, taking it all out at once and stuffing it in your mattress is not a strategic method of maximizing and safeguarding your income stream. Regardless of the size of your nest egg, taking out only the amount of money that you need and letting the rest continue to work for you is the smart strategy. Figuring out your cash flow needs and taking out only that amount of money on a regular basis is the essence of a systematic withdrawal strategy. Sure, taking out the same amount of money each week or month can also be categorized as systematic, but if you don’t match your withdrawals to your needs, it sure isn’t strategic.

One way or another, most people implement a systematic withdrawal program, liquidating their assets over time. Equity holdings, such as mutual funds and stock in 401(k) plans are often the largest pools of money tapped in this manner, but bonds, bank accounts and other assets should all be considered as well. A properly implemented drawdown strategy can help ensure that your income stream lasts as long as you need it.

“For retirees who are pulling retirement money out of traditional IRAs (not Roth…