Turning Retirement Savings Into Income With a Retirement Income Planning Advisor
Saving for retirement and drawing income during retirement involve different financial decisions. Once regular employment income ends, a household may rely on several sources to cover ongoing expenses, from Social Security and pensions to retirement accounts and taxable investments.
A retirement income planning advisor can help organize these resources around expected spending, available assets, tax considerations, and the length of time those resources may need to support retirement needs.
Map Out Your Retirement Income Sources
A useful starting point is identifying the resources that may provide income during retirement.
These may include:
Social Security
Pension benefits
Traditional 401(k)s and IRAs
Roth accounts
Taxable investments
Cash reserves
Annuities, when applicable
Other income sources
Each source may begin at a different time and have different tax characteristics or distribution requirements.
Some advisory firms, including VestGen Wealth Partners, incorporate retirement income needs into broader financial planning, providing one example of how retirement resources can be reviewed together.
Estimate Spending Throughout Retirement
Understanding expected expenses provides context for determining how much income may be needed.
Start with recurring costs such as housing, food, transportation, insurance, and utilities. Then consider expenses that may vary over time, including travel, healthcare, family support, home improvements, and charitable giving.
Inflation also deserves consideration because the cost of goods and services may change during a retirement that lasts several decades.
A retirement plan can use reasonable assumptions to evaluate different scenarios and be updated as actual spending and circumstances evolve.
Develop a Withdrawal Strategy
Retirees may have assets spread across taxable accounts, traditional retirement accounts, and Roth accounts. Deciding when and how to use those resources can involve several considerations.
Traditional retirement account withdrawals are generally taxable. Qualified Roth distributions generally receive tax-free federal treatment. Required Minimum Distributions can also affect withdrawal decisions once they apply.
A retirement income planning advisor may help evaluate how different accounts fit into an income strategy while identifying tax questions that should be discussed with a qualified tax professional.
Firms such as VestGen Wealth Partners may incorporate retirement, investment, and tax considerations within the same planning process.
Connect Income Needs With Investment Decisions
A retirement portfolio may need to support both current withdrawals and expenses that occur years later.
Investment discussions can consider liquidity needs, time horizon, asset allocation, diversification, and risk tolerance. The amount and timing of anticipated withdrawals may also influence how different portions of a portfolio are positioned.
Investing involves risk, and future market performance cannot be predicted. Periodic reviews can help determine whether assumptions about spending, withdrawals, and investments still reflect current circumstances.
Consider Social Security Alongside Other Resources
The age at which Social Security benefits begin affects the monthly benefit amount. Employment history, marital circumstances, other income sources, and retirement timing may all be relevant when evaluating claiming decisions.
Viewing Social Security alongside pensions, investments, and retirement accounts can provide a fuller picture of available retirement resources.
Advisory firms including VestGen Wealth Partners may address Social Security considerations as part of broader retirement planning.
Revisit the Plan During Retirement
Retirement income planning continues after the first withdrawal is made.
Changes in spending, health, family circumstances, investments, tax rules, or charitable priorities may create reasons to revisit the strategy.
Regular reviews can provide an opportunity to update assumptions and consider whether adjustments may be appropriate.
Conclusion
A retirement income planning advisor can help organize Social Security, pensions, retirement accounts, investments, taxes, and spending into a retirement income framework.
The appropriate approach depends on each retiree's resources, expenses, timeline, and priorities. Firms such as VestGen Wealth Partners represent one example of an advisory model where retirement income planning can be considered alongside investment management and other financial planning needs.
Frequently Asked Questions
What does a retirement income planning advisor do?
An advisor may help evaluate retirement spending, income sources, account withdrawals, investments, Social Security, and related tax considerations.
When should retirement income planning begin?
Planning can begin before retirement so anticipated income sources, spending, and withdrawal decisions can be reviewed before employment income ends.
How often should a retirement income plan be reviewed?
The plan may be reviewed periodically and when spending, investments, tax rules, health, family circumstances, or other financial factors change.