09 Sep Retirement Income Planning: How to Create a Monthly Paycheck

How Do You Turn Retirement Savings Into a Monthly Paycheck?

You spent decades earning a paycheck.

Every few weeks, money arrived in your bank account. You used some of it to pay the bills, some to enjoy life, and hopefully some to save for the future.

Then retirement arrives.

The paycheck stops.

And suddenly, the money you’ve spent decades accumulating has a completely different job.

Instead of asking:

“How much should I save for retirement?”

you’re asking:

“How do I turn my retirement savings into income I can actually spend?”

That transition can be more difficult than it sounds.

Retirement income may come from Social Security, pensions, investments, cash reserves, retirement accounts, and other sources. The challenge is coordinating those resources into an income strategy that supports your spending while also considering market risk, inflation, taxes, and the possibility of living for decades after your final paycheck.

Saving for retirement answers, “How much have I accumulated?” Retirement income planning answers, “How do I use it?”

What Is Retirement Income Planning?

Retirement income planning is the process of determining how your available income sources and accumulated savings may be used to fund your spending throughout retirement. This can include coordinating Social Security, pensions, cash, investment accounts, retirement-account withdrawals, and other income while considering taxes, inflation, market conditions, longevity, and changing expenses.

The objective isn’t necessarily to make every source of retirement income behave like a traditional paycheck.

It’s to develop a process for answering questions such as:

• How much do we expect to spend?
• Which expenses are essential?
• How much income will Social Security provide?
• Do we have pension or other predictable income?
• How much will our investments need to provide?
• Which accounts should withdrawals come from?
• What happens if markets decline?
• How much cash should we maintain?
• How will taxes affect what we actually have available to spend?
• How should the strategy change as we get older?

Those questions turn a portfolio balance into something much more meaningful:

A plan for funding your life.

Why Does Retirement Change Your Relationship With Money?

During your working years, your investment portfolio generally isn’t responsible for paying your electric bill next month.

Your paycheck handles your current spending while your retirement savings are primarily focused on the future.

Retirement changes that relationship.

Your accumulated savings may now need to perform two jobs simultaneously:

1. Provide money for today’s lifestyle.
2. Remain invested for expenses that could be decades away.

Those two jobs can sometimes compete with each other.

Keeping everything in cash might make near-term spending feel more predictable, but it can introduce concerns involving inflation and long-term purchasing power.

Keeping everything invested for long-term growth may expose money needed for near-term spending to market volatility.

That’s one reason retirement shouldn’t necessarily be treated as one single investment time horizon.

Money needed next year may have a very different job from money intended to help fund expenses 15 or 20 years from now.

Why Are Some Retirees Afraid to Spend Their Savings?

One of the more interesting challenges in retirement isn’t necessarily getting people to save enough.

It’s getting some retirees comfortable spending what they’ve already saved.

The Barron’s article that inspired this discussion highlights research suggesting that many retirees maintain or even increase their wealth after leaving the workforce. The article describes a Corebridge Financial study in which 60% of retirees surveyed had more money than when they retired, while another 14% had approximately the same amount.

One possible explanation is fear.

What if I live longer than expected?

What if the market crashes?

What if healthcare gets expensive?

What if inflation stays high?

What if I spend too much now and regret it later?

Those are legitimate concerns.

But they can also create a strange situation:

Someone may have successfully accumulated enough money to support the retirement they planned for, yet remain reluctant to use it.

After decades of being rewarded for watching an account balance grow, seeing that balance decline—even because of planned retirement spending—can feel like failure.

But a retirement portfolio isn’t necessarily supposed to remain untouched forever.

Your retirement savings were accumulated to help support your retirement.

A retirement income strategy can help define how much of those savings is intended for spending, which may make the transition from saver to spender easier to understand.

What Is a Retirement Paycheck?

A retirement paycheck isn’t necessarily one check coming from one employer.

Instead, it can be helpful to think of retirement income as several resources working together.

For example:

Social Security

+

Pension income

+

Portfolio withdrawals

+

Cash reserves

+

Other income

=

Your retirement paycheck

Those sources don’t all have the same characteristics.

Social Security and certain pension benefits may provide relatively predictable recurring income, subject to the terms and rules governing those benefits.

Portfolio withdrawals are different. Their sustainability can depend on investment returns, withdrawal amounts, market conditions, taxes, inflation, and how long the assets need to last.

Cash is different again. It can provide readily available money for spending, but holding too much for too long can introduce inflation and opportunity-cost concerns.

Retirement income and guaranteed income aren’t necessarily the same thing.

Understanding where each part of your retirement paycheck comes from—and what risks apply to it—is an important part of building an income strategy.

Start With Your Retirement Spending, Not Your Portfolio

It’s tempting to begin retirement-income planning by looking at the investment account.

“I have $1 million. How much can I withdraw?”

But there’s another way to approach the problem.

Start with the life the money needs to support.

Suppose a household expects to spend $8,000 per month in retirement.

That doesn’t necessarily mean the investment portfolio needs to generate $8,000 every month.

The household might already receive:

• $4,500 per month from Social Security;
• $1,500 per month from a pension; and
• Other recurring income.

If Social Security and pension income total $6,000 per month, the portfolio may initially need to help address a $2,000 monthly gap rather than the entire $8,000 spending need.

That’s a very different planning problem.

Before deciding how much your portfolio should pay you, determine what portion of your lifestyle the portfolio actually needs to fund.

What Are Essential and Discretionary Retirement Expenses?

Another useful step is separating expenses based on how flexible they are.

Essential expenses might include:

• Housing;
• Utilities;
• Groceries;
• Insurance;
• Healthcare;
• Transportation; and
• Other recurring necessities.

More flexible expenses might include:

• Travel;
• Entertainment;
• Dining out;
• Large gifts;
• Some home improvements; and
• Other lifestyle spending.

This doesn’t mean discretionary spending is unimportant.

For many people, travel, hobbies, family experiences, and other discretionary expenses are exactly what they’ve been saving for.

But understanding which expenses could be adjusted temporarily can become valuable if investment markets or other circumstances change.

For example, postponing an expensive vacation during a significant market decline may be easier than reducing money available for housing or healthcare.

A retirement income plan shouldn’t only identify how much you expect to spend. It should also identify which parts of that spending are flexible.

How Much Retirement Income Will Social Security and Pensions Provide?

Once you’ve estimated retirement spending, the next step is understanding the income sources that don’t depend directly on selling investments each month.

For many retirees, Social Security will be an important component.

Others may also have pension benefits or other recurring income.

Suppose your expected retirement spending is:

$9,000 per month

And your expected recurring income is:

Social Security: $4,000 per month

Pension: $2,000 per month

Your remaining spending gap would be:

$3,000 per month

or approximately:

$36,000 per year

That $36,000 becomes an important number when evaluating how the investment portfolio may need to contribute to the retirement paycheck.

Of course, the calculation can be more complicated in real life.

Taxes matter.

Inflation matters.

Social Security claiming decisions matter.

Expenses can change.

And income sources may begin at different ages.

Still, the basic framework is useful:

Expected Spending – Other Retirement Income = Amount Your Portfolio May Need to Provide

What’s the Retirement Income Gap Your Portfolio Needs to Fill?

The difference between your expected spending and other available retirement income can be thought of as your retirement income gap.

A retirement income gap is the portion of your expected retirement spending that isn’t covered by Social Security, pensions, or other income and may therefore need to be funded from savings and investments.

Identifying this gap can make retirement planning more practical.

Instead of looking at a $1 million or $2 million portfolio and wondering:

“Is this enough?”

you can begin asking:

“How much does this portfolio need to provide each year, and for how long?”

That’s a much more useful question.

Once the income gap is understood, there are several ways someone might structure portfolio withdrawals.

Retirement Income Strategy #1: The Total-Return Approach

One common approach is to maintain a diversified investment portfolio and fund retirement spending through a combination of portfolio income and periodic asset sales.

This is often referred to as a total-return approach.

Rather than requiring the portfolio to produce all spending needs through dividends or interest alone, the retiree considers the portfolio’s overall return.

Money for spending may come from:

• Interest;
• Dividends;
• Cash already held in the portfolio;
• Rebalancing; and
• Selling investments when appropriate.

The Barron’s source describes a version of this strategy in which the portfolio is periodically rebalanced and proceeds from investments that have performed well can be used to help fund upcoming spending.

The advantage is flexibility.

The retiree can maintain exposure to investments intended to support long-term growth while periodically drawing money from the portfolio.

But there’s an important challenge.

Markets don’t provide the same return every year just because your bills arrive every month.

What Happens to Retirement Withdrawals When the Market Falls?

This is where retirement income planning becomes very different from simply accumulating investments.

Suppose your retirement plan calls for $50,000 of annual portfolio withdrawals.

Then the market falls significantly.

You still need money for groceries.

Your insurance premiums still arrive.

The electric company still expects to be paid.

But selling investments after a significant decline can mean liquidating more shares to generate the same amount of spending money.

And once those shares are sold, they are no longer invested to potentially participate in a later market recovery.

This interaction between portfolio withdrawals and market declines is one reason the order of investment returns can become particularly important after retirement.

A retirement income strategy needs to consider not only how much you’ll withdraw during good markets, but what you’ll do when markets aren’t cooperating.

Why Does Sequence of Returns Risk Matter for a Retirement Paycheck?

Sequence of returns risk is the risk that poor investment returns early in retirement can have a greater effect on a portfolio when withdrawals are occurring at the same time.

Two retirees can begin with the same amount of money, withdraw the same amount, and experience the same investment returns over time—but potentially have different outcomes if those returns occur in a different order.

That’s why a retirement paycheck generated from an investment portfolio isn’t necessarily equivalent to a guaranteed paycheck from an employer or insurance contract.

Portfolio income requires ongoing decisions.

Those decisions may include:

• Where withdrawals come from;
• Whether spending should temporarily change;
• How much cash is available;
• When investments should be rebalanced;
• Which assets should be sold; and
• Whether the long-term withdrawal plan remains sustainable.

The objective isn’t to predict the next bear market.

It’s to have a plan for what happens if one arrives.

Retirement Income Strategy #2: The Bucket Approach

Some retirees find it easier to think about retirement assets according to when the money may be needed.

This is often called a bucket strategy.

A retirement bucket strategy divides assets into groups based on different spending needs and time horizons, such as near-term spending, intermediate needs, and longer-term growth.

A simplified framework might look like this:

Bucket 1: Money for Now

This bucket may contain cash or other highly liquid assets intended to help cover near-term spending.

Its job isn’t necessarily to produce the highest possible return.

Its job is accessibility.

Bucket 2: Money for Next

This portion may contain investments intended for intermediate-term needs.

Depending on the individual’s strategy and risk tolerance, this could include certain fixed-income investments or other assets intended to provide a balance between stability, income, and potential return.

Bucket 3: Money for Later

This portion is intended for longer-term needs and may have greater exposure to growth-oriented investments.

Because this money isn’t expected to fund next month’s groceries, it may have more time to remain invested through periods of market volatility.

The exact investments, number of buckets, and amount assigned to each bucket will vary.

There is no universal rule requiring every retiree to keep a specific number of years of expenses in cash or fixed-income investments.

The important idea is that different portions of your retirement savings can have different jobs.

Why Can a Bucket Strategy Feel More Comfortable During Market Volatility?

The bucket approach isn’t only an investment concept.

It can also be a behavioral one.

Imagine the stock market is down significantly.

If every retirement dollar appears to be sitting in one investment account, watching the total balance fall can be unsettling—especially when you’re also withdrawing money for living expenses.

A retiree using a bucket framework may instead be able to see:

My near-term spending money is here.

My intermediate-term money is here.

My longer-term investments have more time.

That doesn’t eliminate investment risk.

It doesn’t guarantee that the portfolio will recover.

And a bucket strategy still requires monitoring, rebalancing, and decisions about how and when different portions of the portfolio are replenished.

But for some retirees, clearly identifying which assets are intended to fund which periods of retirement can make the overall plan easier to understand.

How Much Cash Should You Keep for Retirement Spending?

There isn’t one cash amount that’s appropriate for every retiree.

The Barron’s source discusses a bucket approach that can include several years of living expenses in cash and intermediate-term fixed-income investments, but the appropriate amount depends on the individual.

Factors to consider can include:

• Monthly spending;
• Social Security and pension income;
• Portfolio size;
• Investment allocation;
• Risk tolerance;
• Expected large expenses;
• Other available liquidity; and
• How comfortable you are with market fluctuations.

Too little cash can create pressure to sell investments at an inconvenient time.

Too much cash can create other risks, including inflation, lost purchasing power, and the opportunity cost of keeping long-term money out of growth-oriented investments.

Cash should have a job.

For a retiree, one of those jobs may be helping fund near-term spending without requiring every monthly expense to depend directly on what the stock market did yesterday.

Your Retirement Paycheck Doesn’t Have to Come From One Place

There is no requirement that retirement income come entirely from Social Security, entirely from investments, or entirely from an insurance product.

For many retirees, the eventual solution may involve several resources working together.

The important question isn’t simply:

“How do I replace my old paycheck?”

It may be:

“How do I coordinate the resources I’ve accumulated so I can confidently use them to support the life I planned for?”

That’s where retirement income planning begins.

Retirement Income Strategy #3: Guaranteed Income

For some retirees, part of the retirement paycheck may come from sources designed to provide recurring income that doesn’t depend directly on selling investments each month.

Examples may include:

• Social Security;
• Traditional pension benefits; and
• Certain annuity contracts.

These income sources don’t all work the same way, and the guarantees associated with them can differ significantly.

But they introduce an important retirement-planning question:

How much of your essential spending is already covered by relatively predictable income?

Consider two hypothetical retirees who each expect to spend $7,000 per month.

Retiree A receives $6,000 per month from Social Security and pension income.

Retiree B receives $3,000 per month from Social Security and has no pension.

They may have identical investment portfolios, but those portfolios have very different jobs.

Retiree A may initially need approximately $1,000 per month from investments to meet the expected spending target.

Retiree B may initially need approximately $4,000 per month.

That’s why the amount of retirement savings someone has doesn’t tell the entire retirement-income story.

The amount your portfolio needs to provide matters too.

Where Can Annuities Fit Into Retirement Income Planning?

An annuity is an insurance contract that can be structured to provide income, potentially including payments that continue for life depending on the type of contract and options selected.

The Barron’s article discusses annuities as one way retirees may attempt to recreate the experience of receiving a paycheck after employment ends.

But an annuity isn’t the only way to generate retirement income, and it isn’t necessarily appropriate for every retiree.

Different annuity contracts can vary significantly in areas such as:

• Income guarantees;
• Liquidity;
• Fees and expenses;
• Investment features;
• Inflation protection;
• Death benefits;
• Surrender provisions;
• Tax treatment; and
• Insurance-company guarantees.

Some retirees may value the predictability that certain annuity income can provide.

Others may place greater importance on liquidity, investment flexibility, access to principal, or leaving assets to heirs.

And some may use an annuity for only a portion of retirement assets while keeping the remainder invested.

The question doesn’t necessarily have to be, “Should I buy an annuity?”

A broader question may be:

“How much predictable income do I want, and what trade-offs am I willing to accept to create it?”

Any guarantees associated with an annuity are generally subject to the claims-paying ability of the issuing insurance company, and contract terms should be carefully reviewed before making a decision.

Do You Need an Annuity to Create a Retirement Paycheck?

No.

Annuities are one potential retirement-income tool, but retirees may also create recurring portfolio withdrawals from investment and retirement accounts.

For example, someone could establish a process in which a predetermined amount is transferred from an investment account into a checking account each month.

From the retiree’s perspective, that monthly transfer may feel similar to a paycheck.

But there is an important distinction:

A systematic portfolio withdrawal is not the same thing as guaranteed lifetime income.

The sustainability of portfolio withdrawals depends on factors such as:

• Investment performance;
• Withdrawal amounts;
• Inflation;
• Taxes;
• Market volatility;
• Longevity;
• Portfolio allocation; and
• Changes in spending.

That’s why setting up an automatic monthly transfer is only the mechanical part of creating a retirement paycheck.

The financial plan still needs to determine whether the withdrawal amount remains appropriate over time.

Retirement Income Strategy #4: A Hybrid Approach

Retirement-income planning doesn’t have to require choosing one strategy and rejecting all the others.

Many retirees may ultimately use a combination of income sources and investment strategies.

For example, a retirement paycheck might include:

Social Security

+

Pension or other recurring income

+

Cash for near-term spending

+

Systematic portfolio withdrawals

+

Longer-term investments

=

A coordinated retirement income strategy

For some individuals, an annuity or another source of guaranteed income could also be part of that combination.

The advantage of thinking this way is that every retirement dollar doesn’t need to perform the same job.

Some assets may be intended for current spending.

Some may provide recurring income.

Some may provide liquidity.

And some may remain invested with a longer time horizon.

The question isn’t necessarily which retirement-income strategy is best. It’s which combination of income sources fits the life you’re trying to fund.

Should You Withdraw 4% Every Year in Retirement?

The idea of withdrawing approximately 4% of a retirement portfolio is one of the better-known retirement-income guidelines.

Withdrawal-rate guidelines can be useful when estimating whether a portfolio may be able to support a certain level of spending.

But a guideline isn’t the same thing as a personalized retirement-income plan.

Real retirement spending rarely moves in a perfectly straight line.

One year might include:

• Normal household expenses;
• A major vacation;
• A new vehicle;
• A home renovation;
• Financial help for children or grandchildren; or
• Unexpected healthcare expenses.

The following year may look completely different.

Markets don’t provide identical returns each year either.

That’s why applying one withdrawal percentage mechanically without considering changing circumstances may miss important parts of the retirement picture.

A withdrawal-rate guideline may be useful as a starting point, planning assumption, or stress-testing tool.

But the appropriate withdrawal strategy depends on the retiree’s spending, income sources, portfolio, taxes, time horizon, risk tolerance, and other circumstances.

A retirement paycheck can be planned without pretending that retirement spending will be identical every year.

Should Your Retirement Paycheck Stay the Same Every Month?

Not necessarily.

Some retirees may prefer receiving the same amount from their portfolio every month because it resembles the paycheck they received while working.

Others may use a combination of regular monthly withdrawals and additional distributions for larger expenses.

For example, someone might establish a recurring monthly transfer to cover normal spending while separately planning for:

• Annual property taxes;
• Insurance premiums;
• Travel;
• Vehicle purchases;
• Home repairs;
• Charitable giving;
• Family gifts; and
• Other irregular expenses.

This can help separate the cost of the normal lifestyle from occasional larger purchases.

It can also make it easier to evaluate whether ongoing spending remains sustainable.

Can Flexible Spending Help Your Retirement Savings Last?

Spending flexibility can be an important part of retirement-income planning.

Imagine markets have a particularly difficult year.

A retiree whose entire spending budget is fixed may have little ability to reduce portfolio withdrawals.

Another retiree may have the ability to postpone a major vacation, delay replacing a vehicle, or temporarily reduce other discretionary expenses.

That flexibility could reduce the amount that needs to be withdrawn during an unfavorable market environment.

The opposite can also be true.

After particularly strong market periods, a retiree may decide that additional discretionary spending fits comfortably within the plan.

This doesn’t mean retirees should constantly change their lifestyles based on daily market movements.

It means a retirement-income plan can identify in advance which spending is essential and which spending has some flexibility.

Flexibility doesn’t mean living in fear of spending. It means knowing which levers you can pull if circumstances change.

How Do Taxes Affect Your Retirement Paycheck?

The amount withdrawn from an account isn’t necessarily the amount available to spend.

Taxes can make an important difference.

For example, retirement income might come from:

• Traditional IRAs or 401(k)s;
• Roth accounts;
• Taxable brokerage accounts;
• Social Security;
• Pensions; and
• Other income sources.

Those sources can receive different tax treatment.

That means a retiree who needs $60,000 available for spending may need to withdraw more than $60,000 from certain accounts depending on the applicable taxes.

Taxes can also affect decisions about which account to use for a particular withdrawal.

For example, taking additional money from a traditional IRA may have different tax consequences from selling investments in a taxable brokerage account or taking an eligible distribution from a Roth account.

Required minimum distributions can eventually add another consideration because some retirees may be required to take taxable distributions whether or not they need all of the money for spending.

Retirement-income planning and retirement-tax planning eventually become part of the same conversation.

Which Account Should You Withdraw From First in Retirement?

There isn’t one withdrawal order that’s appropriate for every retiree.

A commonly discussed approach may involve spending from taxable accounts before tax-deferred retirement accounts and preserving Roth assets for later.

But automatically following the same order every year can overlook individual circumstances.

The appropriate source of a withdrawal may depend on factors such as:

• Current taxable income;
• Capital gains and losses;
• Required minimum distributions;
• Roth conversion opportunities;
• Social Security;
• Charitable giving;
• Estate-planning goals;
• Expected future tax rates; and
• The investments held within each account.

Some years may present different opportunities than others.

That’s why the retirement paycheck shouldn’t necessarily be viewed separately from the tax plan.

How Do You Actually Pay Yourself Every Month in Retirement?

Once the retirement-income strategy has been developed, the mechanics can be relatively straightforward.

A retiree may establish recurring transfers from an appropriate account into a checking account on a monthly or other regular schedule.

For example:

Social Security → Checking Account

Pension → Checking Account

Planned Portfolio Withdrawal → Checking Account

Then normal household expenses can be paid from the checking account much as they were during the retiree’s working years.

This can provide structure.

Instead of deciding every week whether it’s safe to spend money, the retiree has an established amount intended to support the planned lifestyle.

But automation shouldn’t mean ignoring the plan.

The withdrawal amount and source should still be reviewed periodically.

How Often Should You Review Your Retirement Withdrawal Strategy?

A retirement-income plan shouldn’t necessarily be placed on autopilot for 20 or 30 years.

At least periodically, it may be appropriate to review:

• Current spending;
• Portfolio value;
• Investment allocation;
• Recent market performance;
• Inflation;
• Cash reserves;
• Social Security and pension income;
• Required minimum distributions;
• Tax circumstances;
• Healthcare expenses;
• Large upcoming purchases;
• Changes in family circumstances; and
• Whether the current withdrawal amount still fits the plan.

A particularly significant market decline, major spending change, death of a spouse, move, health event, or other major life change may also justify reviewing the strategy sooner.

The goal isn’t to react to every market headline.

It’s to make sure the retirement paycheck continues to reflect the retirement plan.

Frequently Asked Questions About Creating Retirement Income

How Do I Turn My Retirement Savings Into Monthly Income?

Retirement savings can potentially be converted into monthly income through planned withdrawals from investment and retirement accounts, combined with other income such as Social Security and pensions. Some retirees establish recurring transfers from their portfolio to a checking account, while others may also use cash reserves, annuities, or other income sources. The appropriate approach depends on spending needs, portfolio size, taxes, investment risk, longevity, and other circumstances.

How Much Monthly Income Can My Retirement Savings Provide?

The amount a portfolio may reasonably provide depends on factors including the starting balance, withdrawal rate, investment returns, inflation, taxes, asset allocation, retirement length, and spending flexibility. Rather than relying only on a portfolio balance, it can be helpful to calculate the gap between expected retirement spending and income already provided by Social Security, pensions, and other sources.

Do I Need an Annuity to Get Monthly Income in Retirement?

No. An annuity is one potential way to generate retirement income, but retirees may also establish systematic withdrawals from investment accounts. Annuity income and portfolio withdrawals have different risks, guarantees, liquidity characteristics, costs, and other considerations, so they shouldn’t be treated as interchangeable.

What Is a Retirement Bucket Strategy?

A retirement bucket strategy divides assets according to different spending needs and time horizons. One portion may be intended for near-term spending, another for intermediate needs, and another for longer-term growth. The appropriate amount and investments within each bucket depend on the retiree’s individual circumstances.

How Much Cash Should I Keep in Retirement?

There isn’t one appropriate cash amount for every retiree. Cash needs may depend on spending, recurring income, portfolio size, risk tolerance, expected expenses, and other available resources. Holding cash can provide liquidity for near-term spending, while holding excessive long-term cash may introduce inflation and opportunity-cost risks.

Is the 4% Rule Still a Good Retirement Withdrawal Strategy?

The 4% rule is a commonly discussed retirement-withdrawal guideline, but it isn’t a personalized guarantee that a particular withdrawal amount will be sustainable. Actual outcomes depend on market returns, inflation, taxes, retirement length, portfolio allocation, spending changes, and other factors. Withdrawal guidelines may be useful as planning tools, but the strategy may need to change as circumstances evolve.

Should I Take Retirement Withdrawals Monthly or Annually?

Either approach may be used depending on the retirement-income strategy. Some retirees prefer monthly transfers because they resemble a paycheck and make budgeting easier. Others may make larger periodic distributions or combine regular monthly income with separate withdrawals for major expenses. The frequency of withdrawals should fit the individual’s cash-flow needs and broader investment and tax strategy.

What Happens to My Retirement Paycheck During a Market Crash?

A market decline doesn’t necessarily mean retirement withdrawals must stop, but it may affect how those withdrawals are funded. Available cash, portfolio allocation, spending flexibility, rebalancing decisions, and other income sources may influence whether investments need to be sold during the decline. Planning for this possibility before a downturn occurs can be an important part of retirement-income planning.

Your Retirement Savings Were Meant to Support Your Retirement

For decades, retirement planning is largely about accumulation.

Save more.

Invest.

Let the account grow.

Then retirement arrives, and the objective changes.

The money you’ve accumulated now has to help support your life.

That doesn’t mean spending without limits.

And it doesn’t mean ignoring the possibility of living longer than expected, experiencing difficult markets, facing inflation, or encountering significant healthcare costs.

But retirement shouldn’t necessarily become a competition to see how much of your savings you can avoid using.

You spent decades building your retirement savings. The next question is how to turn those savings into a life you feel comfortable spending them on.

A thoughtful retirement-income strategy can help answer:

What can I spend?

Where should the money come from?

What happens when markets fall?

And how can the plan adapt as my life changes?

That’s what turns a portfolio into a retirement plan.

Do You Have a Plan for Your Retirement Paycheck?

Knowing how much you’ve saved is important.

Knowing how those savings may support your monthly lifestyle is a different question.

At Nova Wealth Management, we help individuals and families evaluate how Social Security, pensions, cash, investments, retirement-account withdrawals, taxes, and long-term financial goals can work together within a retirement-income plan.

If you’re approaching retirement—or you’re already retired and still wondering how much you can comfortably spend—it may be worth looking beyond the account balance and building a plan for how the money will actually be used.

Schedule a Meeting with Nova Wealth Management to discuss your retirement-income strategy.

Toll-Free: (888) 677-9910

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This article was developed using concepts discussed in the September 8, 2026 Barron’s article by Beth Pinsker regarding creating retirement income from accumulated savings, including total-return investing, bucket strategies, systematic withdrawals, and annuities. Nova Wealth Management has expanded upon the topic for educational purposes.

Disclosure: Nova Wealth Management, Inc. is a Registered Investment Advisor. This material is provided for general educational and informational purposes only and is not intended as personalized investment, tax, insurance, or legal advice. Examples are hypothetical and for illustrative purposes only. Retirement-income needs, appropriate withdrawal rates, asset allocations, and investment strategies vary based on individual circumstances. Systematic withdrawals do not provide guaranteed lifetime income and may reduce or exhaust investment assets. Investing involves risk, including the possible loss of principal. Annuities are insurance products, and guarantees are subject to the claims-paying ability of the issuing insurance company. Annuities may include fees, expenses, surrender charges, liquidity restrictions, and other provisions that should be carefully evaluated. No investment or retirement-income strategy can guarantee that assets will last throughout retirement. Individuals should consider their financial circumstances and consult appropriate financial, tax, legal, and insurance professionals before implementing a retirement-income strategy.