Retirement Income Planning

Most of us tend to think of retirement planning as simply having enough money to quit working. But, retirement income planning takes on many new dimensions that never had to be considered by earlier generations.  Retirement income planning should begin long before you retire – and it doesn’t stop at retirement.

Retirement income planning is a key component of wealth preservation simply because there’s more involved than simply achieving a decent return.  Tax law changes, inflation, as well as unexpected expenses can wipe out years’ of savings.  Many people fail to consider how retirement income coming from tax deferred accounts can impact their Medicare premiums – a good reason to plan for minimizing the amount of your taxable retirement plan distributions well in advance of those distributions becoming mandatory later.  The most common concerns, of course, are:

Knowing how to turn savings into retirement income that lasts and keeps pace with inflation requires a skill set not all who call themselves advisors possess.   It’s not simply about where to invest, it’s also about how to ‘locate’ your money.  In December 2022, congress passed a second version of The SECURE Act, dubbed SECURE Act 2.0, and it made some changes both to retirement savings and retirement income taxation.  While there are over 100 provisions – yes, it can be rather confusing – there are FOUR key areas that most people need to be aware of.

Want to learn more about retirement income planning? Grab some coffee: here’s a 30-minute video that will walk you through the 4 key areas of SECURE Act 2.0 you might find helpful.  You can download a fact sheet and see some short videos about the Act here.

A Key issue for many is longevity risk. People are living longer. A person who turns 65 today could be expected to live as many as 20 years in retirement – and some as long as 30 years – as compared to a retiree in 1950 who lived, on average, an additional 15 years. Generating enough capital to produce an income for two people over thirty years of inflation and tax-law changes is no easy feat.  Longer life spans have created a number of new issues that need to be taken into consideration when planning for retirement.

Do you remember 1966?  There was no recession or depression.  No dot-com bust. No credit melt-down; yet, it turned out for many to be a terrible year to retire.  No one can predict the future, but one way to keep your retirement plan from going spinning out of control might be to install some “Guardrails” in your retirement income planning for those years when you’re drawing down assets.  You can view my video here

Paying for Retirement

Retirees who have prepared for their retirement usually rely upon three main sources of income: Social Security, individual or employer-sponsored qualified retirement plans, and their own savings or investments. A sound retirement plan will emphasize qualified plans and personal savings as the primary sources with Social Security as a safety net for steady income. The key to financial success is, of course, having a plan – and doing it early!

The Lifetime Retirement Income Need is larger than most believe.

As noted above, it takes a lot of money to support two people for thirty years of inflation and tax law changes. Retirees need to be concerned with maintaining their lifestyle by building a rising stream of income.  While many think it’s all about choosing the right investments, they might be surprised to learn it’s more about how assets are arranged. We can’t control the markets or politicians; but, we exercise some control over a process that keeps an eye on cost, risk, and tax optimization.

Social Security

When should you claim your Social Security benefits? Choosing the correct claiming strategy can mean hundreds of thousands of dollars over a lifetime! Social Security was established in the 1930’s as a safety net for people who, after paying into the system from their earnings, could rely upon a steady stream of income for the rest of their lives. Unfortunately, few incorporate Social Security optimization planning as part of their total financial plan… a mistake that can cost money, but can impact your loved ones, as well.  You can learn more on IFG’s Social Security page.

Your 401(k)

What should you do with your 401(k)?  Should you stay or go?  It’s not the simple decision many believe.  Depending on your situation, you can have up to six options available to you – and all come with their own advantages and disadvantages. I created a series of videos that goes through all six options – I think you’ll find it well worth your while to do your homework before you make your decision.  You can find them here.  Enjoy!

Understanding Investments and Diversification

Investment management requires a basic understanding of the principles of diversification and knowing how investment returns are computed.  In addition, it’s important to understand the costs of various investment options.  The most popular investment option in most retirement plans is the mutual fund.

Here’s some reading on all three you might find helpful:

IFG has been helping people plan retirement for more than 22 years. For more information on retirement income needs and income sources, please contact IFG today.

Interested in becoming an IFG client?  Why play phone tag?  Schedule your 15-minute introductory phone call!


Jim Lorenzen, CFP®, AIF®

Jim Lorenzen is a CERTIFIED FINANCIAL PLANNER® professional and An Accredited Investment Fiduciary® in his 21st year of private practice as Founding Principal of The Independent Financial Group, a fee-based registered investment advisor. He is also licensed for insurance as an independent agent under California license 0C00742.  IFG helps specializes in crafting wealth design strategies around life goals by using a proven planning process coupled with a cost-conscious objective and non-conflicted risk management philosophy.

Opinions expressed are those of the author.  The Independent Financial Group does not provide legal or tax advice and nothing contained herein should be construed as securities or investment advice, nor an opinion regarding the appropriateness of any investment to the individual reader. The general information provided should not be acted upon without obtaining specific legal, tax, and investment advice from an appropriate licensed professional.


Schedule Your
20-Minute “Right Fit” Introductory Call Now!

Jim's picture
Jim Lorenzen is a CERTIFIED FINANCIAL PLANNER® professional and An Accredited Investment Fiduciary® in his 21st year of private practice as Founding Principal of The Independent Financial Group, a fee-based registered investment advisor. He is also licensed for insurance as an independent agent under California license 0C00742.

Schedule Your 20-Minute
“Right Fit” Introductory Call Now!