5 keys to a retirement income plan
Understand the risks and know your needs for long-term security.
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1
Estimate your spending needs
List essential expenses (housing, health care, food) and discretionary spending. A realistic budget is the foundation of any income plan.
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2
Map income sources
Identify expected income from Social Security, pensions, rental properties, dividends, and portfolio withdrawals.
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3
Plan for inflation
Living costs tend to rise over time. Your plan should assume purchasing power will erode unless income grows with inflation.
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4
Account for health care
Medical costs often increase in retirement. Include premiums, out-of-pocket expenses, and potential long-term care in your projections.
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5
Understand withdrawal strategies
Decide how much to withdraw each year. Common approaches balance portfolio longevity with lifestyle needs.
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6
Manage sequence-of-returns risk
Poor market returns early in retirement can deplete savings faster. Holding cash reserves or reducing withdrawals in downturns may help.
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7
Diversify income streams
Relying on a single source increases risk. A mix of guaranteed and market-based income can improve resilience.
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8
Consider tax efficiency
Withdraw from taxable, tax-deferred, and tax-free accounts in an order that minimizes lifetime taxes where possible.
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9
Plan for longevity
Retirement may last 20–30 years or more. Your plan should aim to support you even if you live longer than expected.
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10
Review and adjust regularly
Markets, tax laws, and personal circumstances change. Revisit your income plan at least annually with updated assumptions.
