Income planned to last
Retirement Income Planning
Thirty years of saving builds one set of habits. Drawing an income from what you have built asks for a different one, and it deserves a plan of its own.
Retirement income planning determines how much you can comfortably spend, which accounts to draw from, and when to claim Social Security. Monument Group models your plan across a wide range of market outcomes and agrees on a spending range with you, along with the limits at which that range should be revisited, so the decisions are made calmly and in advance.
From accumulating to drawing an income
For several decades the instruction is straightforward: earn, save, invest, repeat. Discipline is very nearly the whole skill, and the households who do this well are the ones who make a habit of it.
Retirement asks for the opposite habit, and the discipline that built the balance is what makes drawing on it feel imprudent. We regularly meet couples with ample resources who are spending well below what their plan would support, largely because they have never been given a figure they could trust.
Giving them that figure is what this work does. The answer is not a general reassurance that the money will last, but a specific sustainable range, tested against difficult markets, with an agreed signal for when it should change.
An agreed spending range
A single fixed withdrawal percentage assumes that the decades ahead will resemble the long-run average, and real markets vary a great deal around it. We plan for that variation instead of assuming it away.
The arrangement is straightforward. Together we set a spending level, and we agree on an upper and a lower limit around it. If the portfolio grows past the upper limit, your spending can rise. If it falls below the lower one, a modest reduction brings the plan back into its range.
Much of the value lies in having agreed all of this in a calm year, because the decision in a difficult year has then already been made. In practice the adjustment required is usually small, and considerably smaller than a falling market tends to suggest.
What the plan works through
- Sustainable spending range
- A specific number with a margin of safety, stress-tested across a wide range of market environments.
- Withdrawal sequencing
- The order your accounts are drawn from each year, coordinated with your tax bracket and the distributions that will be required later.
- Social Security timing
- Claiming age modeled for both spouses jointly, including survivor implications, rather than in isolation.
- Healthcare and Medicare
- Bridging coverage before 65 and managing income around Medicare premium thresholds afterward.
- Longevity
- We plan to a long life rather than an average one, because that is the assumption which leaves a household in a good position under either outcome.
- Sequence-of-returns risk
- Structuring the early retirement years so that the plan can absorb a weak first decade and recover from it.
Who this is for
The question that brings most people here is a version of the same one: can I stop, and if I stop, what can I comfortably spend? It is usually asked somewhere between five years before retiring and two years after.
It suits people who have saved diligently and now need a different skill from the one that got them here. It suits anyone whose retirement income will arrive from several places at once, because the sequencing question only exists where there is more than one account to draw from — and that is precisely where the largest gains are available.
What a spending framework is worth
In the absence of an agreed figure, households tend to fall back on one of two defaults: spending roughly what they earned before, because that is the number they know, or spending well below their means, because no number feels safe. The second is much the more common among the people we meet, and it is the more costly of the two.
A framework replaces both with a tested range. It gives you permission to spend in the years you are healthiest — the travel, the help with a first house, the whole family in one place — with evidence behind the decision. It also gives you something specific to check against when a falling market makes you want to change course, which is when a plan earns most of its value.
An agreed range settles one more thing, and people raise it more often than we expect. Two partners frequently hold different views about what is comfortable to spend, and without a shared figure the more cautious view tends to prevail by default. Agreeing the range together, in advance, turns that into a single good conversation rather than an annual one.
From the Spending with Confidence case study“They weren’t stuck because they lacked resources. They were stuck because the decisions were interdependent — and they didn’t yet have a framework that tied everything together.”
Retirement Income Planning
Questions about retirement income planning
How much can I safely withdraw from my portfolio in retirement?
There is no single correct percentage. A sustainable rate depends on your time horizon, your allocation, your other sources of income, your tax position and how much room you have to adjust. We model your own plan across many market environments and give you the answer as a range, with the upper and lower limits at which it should be revisited, rather than as a fixed number.How do you decide when my spending should change?
We agree on an upper and a lower limit around your spending level at the outset. If the portfolio grows past the upper limit, your spending can increase; if it falls below the lower one, a modest reduction restores the plan. Because both limits are agreed while markets are calm, the decision in a difficult year is already made and is usually a small one.What is sequence-of-returns risk?
The risk that poor market returns early in retirement do lasting damage, because withdrawals during a decline permanently remove shares that would have recovered. Two retirees with identical average returns can end up in very different positions depending on the order those returns arrive.Am I ready to retire?
It comes down to whether your assets can fund your intended spending through a long retirement across a range of market conditions, with room for the unexpected. That is a modeling question with a specific answer, and it is usually the first thing we work through with anyone approaching this decision.Should I pay off my mortgage before retiring?
Sometimes. It reduces required cash flow and simplifies the plan, but it also consumes liquidity and may forfeit a low fixed rate worth keeping. The answer depends on the rate, your bracket, and how much flexibility you would be giving up.What happens to my spending plan if the market falls sharply early in retirement?
That scenario is modeled before it happens, which is why the limits are agreed in advance. A significant decline usually means holding spending flat rather than reducing it, because the plan was never built on an assumption of steady returns. Having agreed the response while markets are calm is what makes it possible to follow when they are not.
Talk through retirement income planning
Every plan starts with a conversation about what’s actually on your mind.
Schedule a time to discuss whether our approach is the right fit for you.