The paycheck replacement
Turning a balance into a paycheck is a different skill from growing one.
For forty years the question was how much you accumulated. It is now how much you can safely draw, from which account, in what order, and what happens to that answer if you live longer than you planned to.
- Discipline
- Investment
- PILOT layers
- Portfolio Positioning · Income & Tax Strategy
- Starts with
- A Clarity Map Session
What you probably arrived with
The questions this answers.
If none of these is your question, this is likely the wrong page, and one of the other five is probably the right one.
How much can we take out each year without running out?
Which account do we draw from first, and does the order really matter?
When should we claim Social Security, and does it depend on which of us outlives the other?
How do we cover health insurance if one of us retires before Medicare?
The thing almost everyone believes
What is assumed
“Retirement income is a withdrawal rate. Pick a sustainable percentage and take it.”
What is actually true
A rate assumes every dollar is taxed the same and every year is average. Neither is true. The same withdrawal rate, drawn from different accounts in different orders, produces materially different amounts of spendable money, and a downturn in the first few years of drawing does damage a downturn later does not.
What we actually do
Four pieces of work, in this order.
Mechanisms rather than benefits. Each of these is a thing somebody sits down and does, and you can tell whether it has been done.
Establish what the accounts will actually produce
Not a projected average, a sequence: what comes out, from where, in which year, and what is left of it after tax. A number without a sequence attached cannot be planned around.
Set the withdrawal order deliberately
You hold taxable, tax-deferred and possibly Roth money, each taxed differently on the way out. The order you draw them in changes the total tax paid across a retirement, and the default order is whatever is easiest rather than whatever is right.
Decide the Social Security claim as a joint decision
It is not one decision, it is two, and they interact: the higher earner’s claim usually becomes the survivor’s benefit. That makes the claiming date part of the widow’s income plan as much as the couple’s.
Name the floor
Work out which expenses must be covered no matter what markets do, and cover those separately from the discretionary ones. Knowing where the floor is turns a bad year from a crisis into an inconvenience.
Decided alongside this one
These three change the answer here.
Which is the entire argument for a family office: none of the six can be settled properly on its own.
Plain answers
What people ask about retirement income.
Is there a safe withdrawal rate?
There are rules of thumb, and they are useful for an order of magnitude and nothing more. They assume a fixed spending pattern, an average market and a single tax treatment, and your retirement will have none of those. The useful answer comes from modeling your actual accounts and their actual tax treatment against a bad sequence, not from a percentage.
We still have a mortgage and a car payment. Should we clear them first?
It depends entirely on where the money to clear them would come from. Paying off a loan with tax-deferred money can cost more in tax than the interest saved, and it permanently removes the money from the plan. It is a tax question disguised as a debt question, which is why it belongs here rather than on a page of its own.
What happens to our income when one of us dies?
One Social Security benefit stops, the filing status changes, and the survivor’s brackets narrow, usually all in the same year. It is the most predictable financial event in a marriage and the one least often planned for. Any income plan that has not been run for both survivorship cases is only half finished.
Start here
This is one of six services, and they are decided together.
Which is why the first step is the same whichever page brought you here: a Clarity Map Session, showing where your income, your future tax bill and your estate documents actually stand. Free, no obligation.
30 minutes · No cost · No obligation