The Complete Retirement Income Planning Guide

Retirement is less a destination than a 25-30 year set of decisions. This guide walks through the major ones in sequence: the approach to retirement, the first five years, the middle years, and late retirement.

Stage 1 — Approaching retirement (ages 55-65)

The final decade of accumulation is the highest-stakes stretch of your working life. Priorities:

• Maximize catch-up contributions. 401(k) at $30.5K (with $7.5K catch-up at 50+), IRAs at $8K. At 60-63, SECURE 2.0 raises catch-up to $11,250 for many employees.
• Build the cash/short-term bucket. 2-3 years of expenses in cash or short bonds by age 60 is standard retirement-income planning — reduces sequence-of-returns risk at retirement.
• Plan Social Security claiming. For married couples, this alone can swing $100-300K of lifetime benefits.
• Evaluate long-term care insurance. Late 50s/early 60s is the pricing sweet spot. Probability of needing LTC in retirement is ~70% for some period.

Stage 2 — First five years of retirement

Statistically the highest-risk years. Sequence-of-returns risk is concentrated here. What to do:

• Start with modest withdrawal rate (3.5-4.5%). Inflation-adjust annually. Use a bucket strategy — cash for year 1-2 expenses, bonds for years 3-7, stocks for years 8+.
• Delay Social Security if possible. Each year of delay from 62 to 70 increases benefit ~8%. At 70 the benefit is 76% higher than at 62.
• Aggressive Roth conversions. You're likely in your lowest tax bracket since young adulthood. Converting traditional IRA to Roth now reduces future RMDs and lifetime tax.
• Medicare setup. At 65, Original Medicare (Parts A+B) vs Medicare Advantage is a big decision. Specialist advisors coordinate with CMS expertise.

Stage 3 — Middle retirement (years 5-15)

• RMDs begin at 73 (72 for those who reached 72 before 2023). Plan the glidepath — if you haven't done Roth conversions, your RMDs could push you into 32%+ bracket.
• Review asset allocation. Not automatic "bonds-heavier with age." Modern retirees often need growth exposure for the full 30-year horizon, not just the first 10.
• Estate planning update. Trust documents drafted at 55 may be outdated. SECURE Act changed inherited IRA rules substantially — old estate plans may not reflect.

Stage 4 — Late retirement (75+)

• Qualified Charitable Distributions (QCDs). Once 70½, can donate up to $105K/yr directly from IRA to charity, counts toward RMD, bypasses income entirely.
• Healthcare cost rises. Typical retiree spends $300-500K on healthcare over retirement, concentrated in the 80s. Plan for IRMAA Medicare premium surcharges if income exceeds thresholds.
• Cognitive decline planning. Designate financial power of attorney + trusted contact. Many retirees make their worst financial decisions in early-stage cognitive decline.

Common mistakes

• Claiming Social Security at 62 "because I paid in" — ignores the 76% lifetime increase from waiting to 70.
• Staying 100% equities or 100% bonds — neither is right for most retirees.
• Paying off a 3% mortgage with portfolio assets — often mathematically worse than keeping both.
• Not doing Roth conversions — biggest missed opportunity for most retirees with $1M+ in traditional accounts.
• Underestimating healthcare costs and IRMAA surcharges.
• Holding too much employer stock from their working years — concentrated risk magnifies into retirement.