Income

You have a unique personality and preferences. Shouldn’t these elements be integrated into your retirement income strategy?

Your retirement is more than an investment strategy. Guaranteed income is high on the list and taxes shouldn’t be overlooked.

With multiple streams, you reduce reliance on one income outlet, while maximizing earning potential.

Your retirement income strategy should be crafted with the end-goal of providing lifelong income. Amidst recent risk factors such as inflation and market volatility, one way to guarantee that income is by leveraging annuities.

Your income plan might be the most vital part of your retirement plan. However, when it comes to spending, the majority of financial planning tools don’t capture the reality of how flexible your income needs could be (if needed) as you move through retirement.

If your retirement goal is to step away from full-time work in your 50s or even earlier, the most important step is ensuring you have a paycheck replacement.

Despite the effects inflation and volatility can have on retiree income, new research through Morningstar suggests a “safe starting point” withdrawal rate for new retirees in 2023 is 3.8 percent, up from 3.3 percent a year ago.

While your taxes could be lower in retirement than your working years, the reality is, the more income you have, the more taxes you will owe. The first step to mitigating the amount of dollars that go to Uncle Sam is understanding what income is taxed and how.

Here, past podcast guest, Wade Pfau, highlights how to strategize the withdrawal order between your three tax buckets (taxable, tax-deferred, tax-exempt) by utilizing two different distribution methods: The adjusted gross income (AGI) threshold strategy versus the incremental average tax rate method.

In this article, two of my favorite retirement researchers, past podcast guest Wade Pfau and Alex Murguía, highlight what is known as the RISA (Retirement Income Style Awareness) Framework. This profile is created by pinpointing the two strongest factors that determine your overall income preference style.

To determine if you are a constrained investor, you would calculate the ratio of your minimum annual living expenses to the value of your net investment assets. If the outcome is more than three percent, you could be classified in the constrained category.

Bucket strategies are immensely popular in the realm of retirement planning strategies, but as with any financial approach, they have their naysayers too.