When it comes to retirement planning, savings often dominate the discussion. But, saving for retirement is only part of the picture. Establishing an income plan for retirement—one that addresses how and when to translate those savings into income—is just as important.

There is no one-size-fits-all solution for achieving this balance. However, these tips can help you navigate the many considerations that go into a retirement income plan.

1. Put a Price Tag on Your Ideal Retirement

Start by asking yourself, how much will your desired retirement cost per year? This will include your basic expenses like housing (mortgage payment, home maintenance and repair expenses, association fees and property taxes), medical expenses (insurance premiums and co-pays and prescription costs), transportation expenses, debt payments, utilities and food (both dining in and dinging out).

Next, how will you spend your time while you aren’t working?  Chances are whatever you will do in your leisure time will come with a cost. And be realistic. Though you may plan to spend conservatively during the transition into retirement, more than half of retirees actually spend more money during their first three years sans paycheck.

2. Calculate Your Anticipated Fixed Income

When you are retired you could have many different sources of income including defined benefits like Social Security or pension payments and the money you’ve saved for retirement. 

Begin by calculating your fixed income, including Social Security or pension benefits.  You should also include things like fixed annuities if you have them, or wages from part time work. Any gap between your annual income from these fixed sources and your annual retirement expenses will need to be made up by withdrawing from your retirement savings.

3. Optimize Your Investment and Withdrawal Strategies

Being smart about the source and timing of your withdrawals can have a big impact on the longevity of your savings. Conventional wisdom says that retirees should aim to withdraw 4 percent annually, adjusting for inflation each year. However, you shouldn’t just accept that number without question. Consider whether it makes sense for your overall financial picture. Depending on your risk tolerance, you might want to withdraw more during high-return years, for example, and then cut back when the market is down. Finally, don’t forget to factor in tax considerations. Taxes can have a substantial impact on your withdrawal strategy.

4. Stay Flexible 

Retirement income planning isn’t a one-and-done deal. Life is always throwing us curveballs, so don’t get too locked into a single plan or approach.

Keep in mind, too, that your financial needs will change over time. It may be helpful to have a plan for your savings based on when in retirement you will need it. During early retirement, you will likely rely on stable, low-risk sources of income while the money set aside for your long-term needs twenty or thirty years down the road, may warrant a higher-risk, higher-yield strategy.

Think of your retirement income plan as a living, breathing tool. You’ll want to revisit it frequently, making updates and adjustments as you go. A financial advisor can help you shape the right plan and provide ongoing guidance for life’s changing circumstances.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

By thinking through these options now rather than waiting until retirement, you’re already ahead of the game. Just don’t do anything drastic without first consulting a trusted financial advisor.


This article originally appeared in Pioneer Press on June 15, 2019. You may view the article here.

By Bruce Helmer and Peg Webb, Financial Advisors at Wealth Enhancement Group and co-hosts of “Your Money” on KLKS 100.1 FM on Sunday mornings. Email Bruce and Peg at yourmoney@wealthenhancement.com. Securities offered through LPL Financial, member FINRA/SIPC. Advisory services offered through Wealth Enhancement Advisory Services, LLC, a registered investment advisor. Wealth Enhancement Group and Wealth Enhancement Advisory Services are separate entities from LPL Financial.

Bruce Helmer

Bruce Helmer

Co-Founder, Financial Advisor and Author, Speaker and Host of the "Your Money" Radio Show

Series 7 & 63 Securities Registrations,1 Series 66 Advisory Registration, † Insurance License Bruce has been in the financial services industry since 1983 and is one of the founders of Wealth Enhancement Group. Since 1997, he has hosted the “Your Money” radio show, a weekly program that focuses on delivering financial advice in a straightforward, jargon-free manner. Bruce also hosts with the "Mid-Morning" crew on WCCO-TV each Tuesday morning to...Read More