You spent your whole working life filling a bucket. Every paycheck, every 401(k) contribution, every year of saving went into it. One day you're employed, and the next you're retired. It's not a small transition, and the mental shift to go from saving to spending (and still saving!) is harder than many think. Now that same bucket has to pour out a paycheck without ever running dry.
Over the last 30 years, your retirement plan most likely went from Social Security and a pension to Social Security, your 401(k) or IRA, your savings, maybe a pension, and whatever else you've built. Retirement income planning is making sure all of those pieces work together rather than against each other.
So what does your income "working together" look like?
- Social Security is about timing. When you turn it on matters. The difference between claiming early and waiting can be tens of thousands of dollars over the course of your retirement. Taking it soon and living a long life may cost you all those deferred pay raises, but waiting too long and passing away early costs you all those years you didn't get a check. We look at your situation and find the timing that makes sense for you.
- Pensions are all about decisions. If you're lucky enough to have a pension, the choices you make when you start it are usually permanent. We make sure you understand the tradeoffs for you (and possibly your spouse) before you lock anything in.
- Withdrawing from your assets is about strategy. The order you pull money from your accounts affects how much you keep and how much goes to taxes. Pulling from the wrong account at the wrong time is one of the most common, and most expensive, mistakes in retirement.
- Tax coordination is about efficiency. Every income source is taxed differently. When we plan the income, we plan the taxes right along with it, so you aren't handing more to the government than you have to. We can loop your CPA into this discussion, or even have you meet with one of our CPA partners if you'd like to take a deeper look at your taxes overall.
The goal is simple: Let's get you a paycheck in retirement that's as steady and predictable as the one you had while you were working, and is built to last as long as you do.
Common Questions
What is retirement income planning?
Think of it as a "what, when, and how" for taking retirement income. What assets or sources are going to provide our income? When should we start Social Security or pensions or withdrawals? How much do I need? How does this affect my taxes, portfolio, liquidity, and legacy? The difference between worry and confidence in retirement is being able to answer questions like those.
Will I run out of money in retirement?
It might not be surprising to you that running out of money in retirement is the top fear of most retirees. They actually fear it more than dying itself. It's also the question I tend to get asked the most. The good news is that running out of money in retirement is less about how much you have and more about protecting against the things that put your assets at risk. Planning adequately for changes in the market, a healthcare event, or a rise in inflation or taxation is the most effective way to mitigate those risks.
When should I start planning my retirement income?
Sooner is almost always better, but the sweet spot is the five to ten years before you plan to retire. That's when we typically go from "suggestions" to "decisions." Waiting until you're already retired doesn't mean it's too late, it just means fewer options are still on the table. The earlier we start, the more levers we have to pull.
How much income will I actually need in retirement?
There's no magic percentage, no matter what an online calculator tells you. The old rule of thumb was 70 to 80 percent of your working income, but changes in inflation or taxation make that a "starting point of thumb" rather than a hard and fast "rule." My process starts by looking at what you need in retirement and guaranteeing that to the best of our ability, usually by incorporating Social Security, pensions, and annuities. Then we build all your retirement wants on top of it. That way, no matter what you want to do or how much it costs, you'll still be able to pay your healthcare costs, your mortgage, and your bills. The key to enjoying the money you saved is knowing that no matter what, you're not going to outspend what you need to keep a roof over your head.
Do I really need a plan if I already have savings?
Think about it like this: you can have a full tank of gas, but without a map, you can still get lost, take the long way, or run out before you ever reach where you're going. Your savings is the full tank. Your plan is the map. It tells you exactly how that money becomes income, how long it has to last, how it's taxed, and what happens if the market has a bad year right when you retire.
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The information provided is for educational purposes only and should not be construed as legal, tax, or investment advice. Please consult with qualified professionals regarding your specific situation.
Get a paycheck that lasts as long as you do.
It's free to have that first conversation, and you'll walk away knowing more about your situation than you did when you came in.