Whether you're looking to retire early or after a long and fulfilling career, you'll have to find a way to replace your salary when you're no longer collecting a paycheck.

Depending on your age, you may be able to collect Social Security, and a fraction of people can count on income from a pension.

But for millions of Americans, funding a retirement either means living off your savings or relying on some form of passive income. The former often involves gradually withdrawing money from your retirement portfolio. The latter conjures all sorts of images, from renting out vacation properties to affiliate marketing.

That's where a portfolio based around dividend-paying stocks can be a lifesaver, says Brian Bollinger, founder of Simply Safe Dividends. By relying on your stocks' payouts, rather than the profits you earn when you sell them, you can mitigate much of the risk of depleting your portfolio, he says. And unlike, say, owning rental properties, there is truly minimal work involved in collecting your payouts.

"In terms of passive income, it's pretty much as close as it gets," Bollinger says.

Here's how dividend strategies work.

The risk of withdrawal strategies

The 4% rule, an investing rule of thumb, states that you can safely withdraw about 4% of the value of your portfolio per year, adjusted for inflation, and be relatively certain you won't run out of money over the course of a 30-year retirement.

The rule assumes that a generally upward-trending market will buoy the value of your portfolio as you continue to nibble at its edges for income. The one major issue there is timing.

Say the market experiences a sharp dip in the early years of your retirement. Now you have to sell more of your investments than you thought to cover your expenses, leaving you with a smaller-than-expected portfolio and fewer assets whose growth could help you make up the shortfall. In the retirement planning world, this is known as "sequence of returns risk."

Simply put, if you plan on selling investments within your retirement portfolio to raise money to live on, a down market at the beginning of your retirement vastly increases the likelihood that you'll run out of money.

How income-producing stocks can help

One way to negate this risk is to build a retirement portfolio centered around a dividend income strategy, rather than one based around withdrawals.

Many companies that earn excess profits choose to return some of that cash to shareholders in the form of a dividend. The measurement of how much the company distributes is known as the dividend yield, found by dividing the annual payout by the share price. If a stock costs $100 and pays $1 in dividends per year, it yields 1%.

If you need 4% of the value of your retirement portfolio to live on, you could theoretically construct a portfolio that yields roughly that amount, as long as you choose well-heeled companies that have a long track record of raising or maintaining their payouts.

"That kind of removes the market's ups and downs from that calculus, and makes a passive income stream that I think a lot of people feel better about," says Bollinger. "Because you don't have to check in on, 'Hey, what's happening right now to [the S&P 500]? Are my stocks down? When should I sell?'"

And because different stocks pay (usually quarterly) dividends at different times, you could set things up to bring in income every month, says Sam Stovall, chief investment strategist at CFRA.

"You could be setting yourself up quite nicely," he says. "Because not only do stocks pay a dividend, but they might increase the dividend, and they could benefit from price appreciation as a result of improving earnings outlook and so forth."

In other words, just because you're taking your dividends as cash instead of reinvesting them doesn't mean your stocks won't rise alongside the rest of the market over time.

Dividend strategies aren't risk-free

Like any investing strategy, building a dividend portfolio comes with its own risks.

Generally speaking, higher yielding stocks have more precarious dividends, since companies must use more of their resources to pay them out. Should companies you own drastically cut or eliminate their dividends, you could get the double-whammy of a decline in stock price and a loss of income.

That's why it's essential to thoroughly research any investments — possibly with the help of a professional — to determine whether they'll fit into your income portfolio. You're generally looking for highly profitable companies with a long history of raising their dividend, and with plenty of cash on hand to cover their payout.

Should you pull this off, you're ideally setting yourself up for a steady stream of income that requires little more effort than clicking around your brokerage website each month.

"It's really about finding companies that can pay safe and rising dividends over time," Bollinger says. "And as long as that holds true over your retirement horizon, that's a pretty, pretty nice thing to have."

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