Navigating Retirement Income: A Personalized Approach to Your Financial Future

Retirement planning advice places great emphasis on saving enough, but there’s another crucial element to consider: spending. While a retirement savings plan is essential to building a nest egg, a retirement spending plan helps ensure you can maintain the lifestyle you want with as little stress as possible.

As you transition from your working years to retirement, one of the most important questions you’ll face is: “How do I create a sustainable income stream that will last throughout my retirement?” It’s a question we’ve helped many clients answer over the years. With thoughtful planning and a personalized approach, you can create a retirement income strategy designed to support your long-term financial needs and goals.

Beyond the Rules of Thumb

You’ve likely heard of the 4% rule—a strategy that suggests withdrawing 4% of your retirement portfolio in the first year, then adjusting that amount annually for inflation. While this approach offers simplicity and has served as a helpful starting point for many retirees, it has limitations. Originally developed using historical data from 1926 onward (and then revised as market and economic realities evolved), the 4% rule was designed for a specific scenario: a 30-year retirement period with a balanced portfolio of stocks and bonds.

However, your retirement isn’t a historical backtest—it’s unique to you, your goals and your dreams. Furthermore, market conditions, inflation and your spending needs will likely fluctuate throughout retirement. So, let’s explore a few options.

Fixed-dollar withdrawals: These offer the predictability of a regular paycheck, taking the same amount each month regardless of market conditions. While this provides peace of mind, it doesn’t adapt to changing market environments or inflation, potentially putting your long-term financial security at risk.

Systematic withdrawal plans: With this approach you withdraw only the interest and dividends your portfolio generates, leaving the principal untouched. This conservative strategy reduces the risk of depleting your funds, but it may not provide sufficient income during periods of low market returns, potentially limiting your ability to maintain your desired lifestyle.

Other strategies: Some retirees are in the enviable position of having enough resources saved elsewhere to defer withdrawals from retirement saving accounts until the required age of 73, and they can then use IRS life expectancy tables to calculate annual required minimum withdrawals. This strategy allows for continued tax-free growth of those dollars and it can be coupled with using qualified charitable distributions (QCDs) to make gifts directly to IRS-approved charities. While limited to $108,000 in 2025 (indexed to inflation), this technique is an effective way to continue and even increase your philanthropy in retirement, reducing pretax income on gifts you otherwise might have made with after-tax dollars.

All these options come with unique considerations that must be weighed carefully against your individual circumstances.

Key Questions Your Strategy Should Answer

Before we dive into creating your personalized retirement income plan, it’s helpful to consider the fundamental questions any effective strategy should address:

• Will the strategy meet my goals? Does it allow me to maintain my desired quality of life, to finance travel or a hobby, to leave enough for my heirs, or to cover the purchase of a new home?
• How do I keep up with or outpace inflation?
• Will I have enough to cover medical expenses and end-of-life care?
• Will I be able to absorb a shock to the stock or bond market?
• Do I have a buffer for unanticipated expenses like replacing a car, a home repair or a lengthy hospital stay?
• How much liquidity will I have?
• How will my tax planning change when I start drawing down my retirement accounts?
• What are the risks and opportunities?

These questions highlight why cookie-cutter approaches could fall short. Your retirement income strategy needs to be robust enough to handle life’s uncertainties but flexible enough to adapt to changing market conditions.

Our Personalized Approach

At RWA, we believe there’s no one-size-fits-all solution to retirement income planning. That’s why we start with what matters most: understanding your unique situation, goals and concerns, which includes addressing the questions above. Our process begins with comprehensive cash flow planning, typically projecting three to five years ahead to establish a foundation for your retirement income strategy.

“One conceptual framework I often use with clients is to avoid stressing about budgeting,” explains Andrew Busa, director of financial planning for our Private Wealth division. “Instead, focus on the big picture—in retirement, how much can you reasonably spend? We can help figure out that variable with short- and long-term cash flow planning.”

We take your current spending patterns and project them into retirement, incorporating planned lifestyle changes along the way. Perhaps you’re aiming to travel more initially, downsize your home, or increase your charitable giving. We factor in these changes, along with potential end-of-life care needs, to create a comprehensive picture of your retirement expenses.

Our approach goes beyond simple withdrawal rate calculations. We examine all your income sources—Social Security, pensions, other savings, potential inheritances—and integrate them with your investment portfolio. Using our planning software, we assign projected returns to different asset classes and create a weighted average return for your total portfolio. Then we model various scenarios to help evaluate how your plan may perform under different market conditions.

Dynamic, Tax-Efficient Implementation

When it comes to generating your retirement income, we use a dynamic approach that adapts to changing circumstances. Rather than mechanically follow a predetermined withdrawal rate, we evaluate your needs on a year-by-year basis and make strategic decisions about where to source your income.

Tax efficiency plays a crucial role in this process. We typically prioritize withdrawals from taxable accounts first so cost basis can be recovered tax-free and capital gains receive favorable treatment. We generally preserve tax-deferred retirement accounts until required minimum distributions begin, with the goal of maximizing the tax-advantaged growth of these assets.

Asset location strategy becomes particularly important in retirement. Accounts you’ll draw from in the near term might be invested more conservatively, while accounts like Roth IRAs—which offer tax-free growth and no required distributions—might be invested more aggressively to help maximize long-term growth potential.

Frank Sennott, our senior director of family office financial planning, notes that this approach includes balancing “tactical year-by-year decisions with the strategic long-term view using our planning software. For optimal withdrawals, we aim to ‘come down the mountain’ in the smartest, most tax-efficient way.”

Ongoing Partnership

We recognize that retirement planning isn’t a “set it and forget it” endeavor. Your circumstances, the markets and tax laws will all change over time. That’s why we work with you throughout your retirement to regularly review and adjust your income strategy.

If market conditions suggest it’s time to rebalance by selling appreciated stocks, we’ll make that tactical decision. If bonds become more attractive during a market downturn, we might draw from that portion of your portfolio instead. These ongoing adjustments are intended to help protect your portfolio while also supporting your income needs.

Your Retirement, Your Way

The heart of retirement planning lies in aligning your financial resources with your personal vision of retirement. While money matters, a truly fulfilling retirement encompasses your social and emotional well-being as well as your financial security.

Remember, the “right” withdrawal strategy isn’t found in a textbook or a rule of thumb—it’s found in a plan that’s designed specifically for you, your goals and your circumstances. We can help you create that strategy and find the confidence to feel financially prepared for whatever retirement brings.