If you’re fortunate enough to enjoy good health and a reasonable level of financial security, your retirement years can be a truly golden period of your life.

But many people look forward to their last day at work with trepidation rather than pleasant anticipation, and this anxiety is often only due to a lack of proper planning.

Making a sound retirement income plan need not be a difficult or stressful process, but there are a number of things you need to think about before you bank that final paycheck.

Of course, as a minimum you need to know exactly how much income you will have to replace your earnings. But you also need to consider what your tax liability will be and how to minimize it, how to protect yourself against inflation and perhaps how to invest for increased income in the future.

The Essentials of Effective Retirement Income Planning

Review Your Situation

It’s increasingly rare for people to retire with a comfortable private sector pension derived from many years’ service with the same organization; and most of today’s retirees are likely to find their future income is derived from a number of pensions, 401(K)s, IRAs and other investments.

So the first step in planning is to conduct a detailed audit of all your savings plans, whether they are designed for income or capital accumulation, to determine the value of each.

And you should include in your calculations any income from Social Security or other benefits to which you may be entitled.

Clearly the longer before retirement you can carry out this audit the better; since you will then have more time to make any necessary changes in the amount you are saving. But even if you are close to retirement it is important to know exactly where you stand.

When you have an accurate idea of the amount of capital you will have to fund your retirement, the next step is to assess how much income you will need, and how much capital you can afford to leave invested.

Assess Your Living Expenses

You obviously first need to ensure that you will have sufficient income to cover your basic expenses such as housing, utilities, food, transport and health insurance, but these may be flexible if you are thinking of moving to a lower cost, lower tax state, or perhaps downsizing to a smaller home.

You should also include in your calculations the income you will need to fill your retirement years with vacations, entertainment and leisure activities.

Choose a Retirement Income Plan

Once you have a comfortable target income in mind, probably the best way to secure it is by using part of your capital to buy a fixed annuity which will guarantee you that income for life.

Numerous annuity products are available from many different providers, so it’s vital to take independent advice and shop around to ensure that you get the best deal.

The boon of ever increasing life expectancy means that many people can now look forward to decades rather than years of retirement.

But while your income may be fixed, your expenses will almost certainly increase, and even relatively low “headline” levels of inflation can significantly erode your real spending power over this length of time.

Invest for Future Income

It’s therefore important that you invest any remaining capital with the aim of producing extra income, bearing in mind that with interest rates at historic lows, it’s very difficult to make any meaningful return simply by leaving money on deposit at the bank.

Fortunately there are numerous other ways of investing for income, including stocks, bonds, real estate and various kinds of managed funds. Selecting the portfolio that’s right for you will involve the consideration of a number of factors including your personal circumstances, any provision you may wish to make for children or grandchildren and your general attitude to risk.

This is a complex area which may involve weighing up a number of apparently attractive options, so it’s important to allow time for thorough research and to take advice before committing any of your capital.  

Find Out More

It’s only been possible here to offer a brief and basic guide to planning your retirement income.

There are many other important issues such as estate and tax planning which we have not touched on at all, and on which professional advice is really indispensable if you’re to make the most of this special time in your life.

At Fortified Retirement we produce retirement planning seminars designed to make the detailed knowledge of leading industry experts freely available to all, and you can get details of our forthcoming free events in your area by calling us on 833-542-6300 or signing up online here.


Licensed Insurance Professional. Provides general information about insurance and retirement-related products and services. These products and services may not be specific to a particular state. Information provided on this website, in seminars or through printed or other published materials are not intended as specific legal, accounting or investment advice to an individual’s particular situation. By providing your information to us, you agree that we may contact you regarding the potential sale of annuity and/or insurance products. Information provided by Licensed Insurance Professional does not necessarily represent that of the individual professionals presenting this information. All the information presented is believed to be accurate and is secured from reliable resources, however, no guarantee is made to the completeness or accuracy of the information presented. Any opinions expressed are those of the author and the material presented is for educational and informational purposes only and is not intended as legal, investment or tax-related advice