Straight answers about retirement income

It is the process of figuring out how you will pay for retirement once a paycheck stops. It looks at your income sources, your expected expenses, taxes, inflation, and healthcare costs, and puts together a plan for when and how to draw on each source.

A common rule of thumb is that many people need roughly 70% to 80% of their pre-retirement income, but it varies widely. Housing, healthcare, debt, travel, and family needs can all push the number up or down. A good starting point is to add up what you actually spend today and adjust from there.

Social Security, pensions, savings in 401(k) and IRA accounts, other investments, income from insurance-based products, part-time work, and sometimes the value of a home. Most people use a mix. See the Social Security FAQ for more on that piece.

Ideally several years before you retire, because many of the key decisions, such as when to claim Social Security and how to prepare for healthcare, have to be made ahead of time. It is never too late to get organized, though.

It is the risk of outliving your savings. Many people live into their 90s, so a retirement that starts at 65 may need to be funded for 30 years or more. Planning for a long retirement helps reduce the chance of running short.

Prices tend to rise over time, so income that feels comfortable today buys less each year. Over a long retirement, even modest inflation makes a real difference, which is why a plan should look at income that can keep up, not only income that starts out high enough.

It is the risk that the stock market drops early in your retirement while you are also withdrawing money. Withdrawing from a shrinking balance can do more lasting damage than the same drop happening later. Some people reduce this risk by keeping part of their income on a more predictable footing.

Healthcare is one of the largest and least predictable retirement expenses. Medicare covers a lot but not everything, so premiums, deductibles, and uncovered care should be part of your income estimate. See the Medicare FAQ for the basics.

It is a widely cited guideline suggesting that withdrawing about 4% of your portfolio in the first year of retirement, then adjusting that dollar amount for inflation, has historically lasted about 30 years. It is a starting point and not a promise. Markets, your spending, and your time horizon can all change the result.

Yes. Some insurance products issued by insurance companies are designed to provide a stream of income that can continue for as long as you live. They come with terms, fees, and limits on access to your money, and they are not right for everyone. Guarantees are backed by the claims-paying ability of the issuing insurance company. I can walk you through the pros and cons and how they compare with other approaches.

Once you reach a certain age, the IRS generally requires you to begin taking withdrawals from traditional IRAs and most employer retirement plans. The starting age is currently 73 for some people and 75 for others, depending on the year you were born. The rules can change, so confirm the current rules with a tax professional.

Different accounts are taxed differently. Withdrawals from traditional IRAs and 401(k)s are generally taxed as ordinary income, qualified withdrawals from Roth accounts are generally not taxed, and part of your Social Security benefits may be taxable. The order in which you draw from each can affect how long your money lasts. A tax professional can help with the details.

We start with a conversation about your goals, your income sources, and your concerns. Then I review options across coverage, income, and legacy and explain them in plain English, so you can decide what fits. The first conversation is at no cost and there is no obligation.