How to Build a Sustainable Retirement Income Plan
Retirement isn’t just about stopping work. It’s about replacing a paycheck—with a plan. A sustainable retirement income plan helps you cover your expenses, handle taxes, and avoid running out of money.
At the end of the day, cash flow is the lifeblood of retirement.
Here’s how to build yours.
1. Know Your Spending Needs
Start with the basics: how much do you need each year?
Break your expenses into two buckets:
Fixed needs: housing, food, insurance, healthcare
Lifestyle wants: travel, hobbies, gifts, upgrades
Don’t use rules of thumb like “80% of pre-retirement income.” Use actual numbers. Build in inflation (3–4%) and rising healthcare costs. A lot of the time spending can actually increase in retirement.
2. Map Out Your Income Sources
Your income likely comes from a mix of:
Social Security
Pensions (if any)
Rental income or part-time work
Annuities or other insurance-based income
Each source has a different tax treatment, risk level, and flexibility. Your plan needs to coordinate them.
Once you know what these totals are and what your expenses total, you can find your income GAP. This is the amount of money you will need to pull from your Investment accounts (brokerage, IRAs, Roth IRAs) to fund your lifestyle.
3. Sequence Withdrawals Intelligently
Don’t just pull money randomly to fill your GAP. Smart withdrawal sequencing can:
Stretch your portfolio longer
Reduce lifetime taxes
Avoid high Medicare premiums
Types of accounts:
Taxable accounts (brokerage)
Tax-deferred (IRA, 401(k))
Tax-free (Roth IRA)
But this changes if you’re doing Roth conversions or managing capital gains. Strategy depends on tax bracket, RMD age, and legacy goals.
4. Minimize Taxes Strategically
Your tax bracket in retirement isn’t fixed—it moves year to year. Use that to your advantage.
Tools to reduce lifetime taxes:
Roth conversions before RMDs kick in
Qualified charitable distributions (QCDs) from IRAs
Donor-advised funds (DAFs) to front-load charitable giving
Capital gain harvesting in low-income years
Filing jointly while both spouses are alive—don’t wait to act
Good tax planning increases net income without needing to earn more.
5. Build Income Buckets
Separate money by time horizon:
Now (1 year expenses/withdrawals on hand): cash or money market
Soon (1-10 years): CDs, short-term bonds, alternatives, conservative funds, income funds
Long-term (10+ years): growth investments
This keeps you from selling stocks during downturns. You cover today’s needs while investing for tomorrow.
6. Plan for Longevity and the Unexpected
You might live 30+ years in retirement. Your plan needs to last that long. Include contingencies for:
Market downturns
Health events
Long-term care
Widowhood or divorce
Stress-test the plan. Use conservative return assumptions. Monitor it yearly.
Final Tip: Coordinate All the Pieces
Investments, taxes, income, and estate planning are linked. If you're only looking at one area, you're missing the full picture.
A real plan connects:
Cash flow
Tax strategy
Investment allocations
Withdrawal schedules
Legacy and gifting goals
This is how you retire confidently—not just comfortably.
Retirement income planning isn’t about hitting a number—it’s about making your money last, keeping taxes low, and staying in control. Without a clear strategy, you risk overspending early or under-living out of fear.
The difference between a good retirement and a great one? A coordinated plan that integrates your income, tax, and investment decisions.
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About the author: Finn Price, CPFA, CEPA, is a business owner and wealth manager at Railroad Investment Group. He helps successful entrepreneurs & individuals with concentrated stock positions in their 30s, 40s and 50s build, organize, protect and transfer their wealth.
Note: this article is general guidance and education, not advice. Consult your money person or your attorney for financial, tax, and legal advice specific to your situation.
Securities and advisory services offered through LPL Financial, a registered investment Advisor, Member FINRA/SIPC.
