It’s time to rejuvenate your “to-do” list.

Scratch off the early-morning business meetings, the late-night strategy sessions, the conference calls, the red-eye flights.

Add your burning ambitions, your life-long dreams. Breakfast in Paris, dinner in Milan. Sailing the Mediterranean. A jet of your own. Funding a scholarship at your alma mater. Summers in Nantucket, winters in Bermuda.

Your retirement agenda is an open book, bound only by your imagination — and the income generated by your investment portfolio.

“Maintaining a comfortable level of income during retirement means you need to take a proactive, realistic approach,” suggests Connie Shipley, wealth strategist with Northern Trust.

“Your retirement assets may have to last 20 years or more. Making the most of those assets requires the same effort, intelligence and adaptability that helped you throughout your career.”

Your retirement nest egg should help you meet two important needs:

• Cash flow, or the assets you need now to help meet your day-to-day expenses, and
• Purchasing power, or the return potential you’ll need over time to maintain your standard of living.

Invest to boost your cash flow
Short-term investments can supplement your monthly income when you’re no longer receiving a regular paycheck. Depending on your timeframe and risk tolerance, you may choose from:

• Money market funds, which pay dividends on your money while providing a relatively safe place to park cash for immediate needs, such as paying bills, taxes or other day-to-day expenses.
• Fixed income securities, such as individual government, corporate and municipal bonds and short-term bond funds, which are “riskier” than money market funds but offer higher return potential. They generally offer monthly or quarterly yield distributions.
• Dividend-paying stocks or preferred stocks, which generally are more volatile than most fixed-income securities but offer greater appreciation potential. They also pay dividends to supplement your current income.

Invest to preserve your purchasing power
When retirement rolls around, it’s tempting to unwind and start living off the nest egg you’ve accumulated, budgeting your expenditures as you go to make your money last throughout your retirement.

The wild card in this equation, though, is the rising cost of living. Year after year, inflation drives up the prices of goods and services. Inflation won’t be going away, so it’s best to try to offset its effects on your purchasing power.

Look at it this way: The average price of a new car increased from $26,150 in 2002 to $28,400 in 2005. If you simply kept your retirement savings in a standard bank account during that three-year period, the interest you earned would have fallen short of the increase in vehicle prices (see chart at bottom). You would have lost purchasing power.

Look to stocks
One way to maintain and strengthen your purchasing power is to keep a portion of your assets invested in growth investments, such as common stocks. Stocks may help offset the effects of inflation over time, giving you the purchasing power you’ll need to enjoy a lengthy retirement.

Historically, stocks have returned about 8% a year, easily outpacing the average annual inflation rate of about 3%.

“By adding a growth component to your retirement income portfolio, you may be able to increase the savings you’re counting on — and buffer your purchasing power from the impact of rising prices,” says Shipley.

Set a withdrawal rate
Perhaps the easiest way to manage your retirement income is to withdraw money from your savings at a steady rate each month. But how much should you withdraw? And for how long? Should the amount change from year to year?

“Establishing a reasonable withdrawal rate is one of the most vital steps in your retirement income planning process,” notes Shipley.

Many financial advisors rely on sophisticated analytical programs, such as Monte Carlo, to evaluate different financial scenarios. Such programs analyze dozens of factors, including investment return rates, inflation, health-care costs and more, to help you establish a safe, long-lasting withdrawal rate for the life of your retirement.

Use mutual funds to manage income
The bottom line?

“Work with your advisor to calculate a withdrawal rate you can be comfortable with over time,” says Shipley. “And simplify the process as much as possible.”

That’s where mutual funds can be useful. Using your mutual fund company’s systematic withdrawal feature, you can arrange for a set distribution to be paid to you from your fund account monthly or quarterly. You may choose a set dollar amount — if you’re targeting a specific annual withdrawal from your savings—or a fixed percentage of your account balance, whichever fits your plan.

Your advisor can help you implement a retirement income investment plan. Who knows? Maybe you can figure out a way to give yourself a raise every year during retirement.

Sure beats working.