Arranging a comfortable retirement income, or at least the best one financially possible in your personal circumstances, isn’t easy. It requires planning and effort.

Start by working out how much income you need. Prepare a budget. Make a list of all regular expenses, using a spreadsheet if you can. If not, make a list and convert each weekly, monthly or quarterly payment into an annual cost.

List the regular expenses, the daily living costs and fixed overheads, without any special extras. This will set a base level. Then add a little extra for personal discretionary items, hobbies and luxuries, things you would like to spend money on ongoing.

Do not include large one-off costs such as overseas trips or new cars. They should not go in the annual, regular budget. They should be funded by occasional one-off withdrawals from investments when needed.

Work out the budget based on current costs, without worrying about future increases. The desired income will need to increase with inflation but that can be set up when choosing investments.

There are several potential sources of retirement income. The Age Pension is available from age 67, if you pass the means tests. Consider investments that can increase pension eligibility. Work out how much you are entitled to.

Government workers may be eligible for lifetime super pensions paid by government super schemes. Account-based pensions are a very commonly used source of income, set up using superannuation savings. They pay a regular income that can be varied up or down.

Some people have ongoing assured income from rental properties. Shares pay regular dividends. Managed funds can be set up to pay a fixed, regular withdrawals for reliable income.

Add up all the regular income already in place including the expected age pension amount. Then deduct that figure from the amount of income desired. The shortfall will need to be funded from new investments.

Add up the amount of uncommitted bank balances and superannuation held. Next work out what percentage the income shortfall from above is of the uncommitted capital. If it is five per cent or less your income goals can be met. If it is well above five per cent there is a problem.

This tells us if we should reduce our desired income, or if we could perhaps increase it. Next we choose the best investments for the uncommitted capital, to generate the required income. They will need to have some growth potential so the value can increase, and the future income generated will be higher.

Professional advice can help. Once the income plan is set up ongoing monitoring is wise.