Planning your retirement paycheck is one of the most important steps to ensure a comfortable and financially secure retirement. With traditional pensions becoming rare and Social Security only covering a portion of your expenses, it’s essential to create a strategy that turns your savings into steady income. Here’s how to build your retirement paycheck with five key tips:
When you start claiming Social Security can make a huge difference in how much you receive each month. Claiming early at age 62 reduces your benefit by about 30%, while waiting until age 70 increases it by roughly 30% compared to your full retirement age. Finding the best time to claim should fit into your overall retirement income plan to maximize your benefits over time.
Once retired, deciding the order in which you withdraw from your accounts is critical. Should you tap taxable accounts first, then pre-tax accounts like 401(k)s and IRAs, or begin with Roth accounts? Your withdrawal sequence affects how long your money lasts and how much you pay in taxes. A well-planned strategy helps you keep more of your savings working for you.
Market volatility can be especially harmful in the early years of retirement if you have to withdraw money during a downturn. Taking funds out while the market is down reduces your portfolio and its ability to bounce back. Using strategies like the “bucket approach” — where you separate your savings into short, medium, and long-term buckets — can help shield your income from market ups and downs.
Starting at age 73, the IRS requires you to take minimum withdrawals from your retirement accounts, regardless of your needs. Planning for RMDs and considering Roth conversions can lower your tax burden and give you more control over your money. Roth accounts don’t have RMDs and offer tax-free withdrawals, making them a useful tool for managing taxes in retirement.
The best retirement paycheck is one tailored to your unique goals, expenses, and risk tolerance. Whether you’re just starting to plan or already retired, developing a comprehensive income strategy helps ensure your savings last and your lifestyle is secure. Consider working with a financial advisor to create a plan that balances income, taxes, and investment risks.
Building your retirement paycheck takes thoughtful planning—but it’s one of the best investments you can make for your future. Ready to create a retirement income strategy that works for you? Let’s get started today.
Financial advisor for those who have saved $1,000,000 or more for retirement