7 Income Planning Tips for Retirement

7 Income Planning Tips for Retirement

July 25, 2023

Planning for retirement goes beyond simply saving money. It's essential to consider your income needs during your retirement years. By shifting your focus from solely saving for retirement to effectively managing your income, you can prepare for a fulfilling post-career life. Here are some key tips to help you in your retirement income planning journey:

1. Assess Your Income Requirements:

While saving a specific amount, such as $1 million, by the age of 65 may be a goal, it's equally important to evaluate your monthly expenses and determine if your retirement savings will adequately cover them. Consider factors such as downsizing, frequent travel plans, or potential financial support for loved ones, as these can significantly impact your income needs.

2. Adjust Your Retirement Withdrawals:

Recognize that your retirement needs may change over time. Regularly review your withdrawal rate, at least once a year, to ensure you're withdrawing an appropriate amount. For example, you might discover that your initial withdrawal rate is too high or too low a few years into retirement. Being flexible and adjusting your withdrawals accordingly will help you maintain a sustainable income stream.

3. Evaluate Social Security Timing:

Contrary to popular belief, delaying Social Security benefits may not always be the best option. Factors such as your health, marital status, and overall financial situation should guide your decision. Assess whether claiming Social Security earlier or later aligns better with your specific circumstances and goals.

4. Understand Tax Implications:

Different retirement accounts have distinct tax rules. Familiarize yourself with how your withdrawals will affect your tax bracket. Consider prioritizing withdrawals for required minimum distributions (RMDs) and explore options like Roth IRA conversions to optimize your tax situation. Careful tax planning can help you maximize your retirement income.

5. Explore Annuities:

Fixed-indexed annuities can be an attractive option for retirees seeking a combination of income and safety. Backed by the claims-paying ability of the issuing insurance company, annuities provide protection during market downturns. By withdrawing from an annuity during challenging market periods, you can avoid liquidating other investments at low share prices. The benefits of a fixed-income annuity include guaranteed lifetime income streams and assurance from the insurance company that you won't outlive your payments.

6. Implement a Withdrawal Laddering Strategy:

Consider staggering the maturity dates of your fixed-income investments, such as certificates of deposit (CDs) and bonds. This "laddering" approach enables you to maintain a steady stream of income over time. Additionally, be mindful of Required Minimum Distribution (RMD) schedules for assets subject to such requirements. By strategically choosing the order of liquidating investments, you may generate more retirement income by leaving those investments with the potential for higher returns until later stages.

7. Diversify Investment Vehicles:

If you anticipate a retirement lasting 20 years or more, diversifying your investment vehicles with varying withdrawal dates can help extend your retirement income. Annuities can be structured to provide income throughout your lifetime and, if applicable, your spouse's lifetime.

By incorporating these retirement income planning tips into your financial strategy, you can prepare for an enjoyable post-career life. Remember, consulting with a qualified financial advisor can provide personalized guidance tailored to your specific circumstances and goals.

Ready to take control of your retirement income? Our team is here to help. Contact us today for a personalized consultation and let us assist you in creating a comprehensive retirement income plan that aligns with your goals and needs.

The opinions voiced in this article are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which strategies or investments may be suitable for you, consult the appropriate qualified professional prior to making a decision.

Fixed and Variable annuities are suitable for long-term investing, such as retirement investing.  Gains from tax-deferred investments are taxable as ordinary income upon withdrawal. Guarantees are based on the claims paying ability of the issuing company. Withdrawals made prior to age 59 ½ are subject to a 10% IRS penalty tax and surrender charges may apply.  Variable annuities are subject to market risk and may lose value.