Case Study
Building a retirement paycheck, step by step.
A hypothetical household shows the decisions involved in turning savings into a retirement paycheck. It illustrates the process, not results. No returns, income amounts, or outcomes are shown or implied.
The hypothetical household
Where they start
- Household
- A hypothetical married couple in their early 60s
- Timing
- Both plan to stop working within two years
- Savings
- Traditional IRAs, a smaller Roth IRA, and a taxable brokerage account
- Income sources
- Social Security not yet claimed; one small pension that starts later
- Priorities
- Travel while healthy, help family, stay in their home
The process
Five stages, and the decisions in each
These follow the same five stages described in our onboarding process. Stages can overlap, and time-sensitive items can be handled first.
Stage 1 · What matters to you
Start with the life the money has to support
The couple describes what a good retirement looks like, what worries them, and which milestones matter: an early travel window, help for a grandchild's education, and staying in their home as long as practical.
Decisions to make
- Which goals come first if tradeoffs are needed?
- Which spending is essential and which is flexible?
Stage 2 · See the big picture
Put every account and income source in one place
Together we list each account and its tax type, the pension and Social Security options and their possible start dates, current spending, insurance coverage, and existing estate documents and beneficiary designations.
Decisions to make
- When could each income source begin?
- Which documents or designations have not been reviewed in years?
Stage 3 · Explore your options
Compare scenarios before choosing a direction
We compare different retirement dates, Social Security claiming ages, and spending levels. Each scenario is tested against assumptions for inflation, taxes, fees and other costs, and a significant market decline early in retirement. Assumptions are estimates, and results in real life will differ.
Decisions to make
- How much flexible spending could be reduced after a decline?
- Which tax questions should go to their tax professional?
Stage 4 · Give every dollar a job
Organize savings around Cash, Income, and Growth
Cash is sized for near-term bills, known one-off costs, and unexpected expenses. Because they plan to stop working before Social Security and the pension begin, the plan also sets aside money to bridge that gap from savings, and the taxes on those withdrawals are included. Income is coordinated from the income sources they choose and planned withdrawals. Growth holds money for later years, invested with attention to the risk they can afford to take.
Decisions to make
- How long is the bridge, and which accounts fund it?
- Is a dependable income floor worth its costs and tradeoffs for them?
Stage 5 · Put your plan into action
Agree on next actions and who does what
The couple authorizes a scheduled monthly transfer from their investment account to checking, subject to available cash and custodial processing. Doug implements the portfolio within the agreed discretionary strategy. The couple's tax professional reviews the withdrawal and conversion questions, and their attorney reviews beneficiary and estate updates.
Decisions to make
- What changes would trigger a review before the next scheduled meeting?
- Who is responsible for each open item?
Built into every scenario
What the plan has to account for
The bridge
Retiring before income sources start means those years are funded from savings. The bridge is planned explicitly rather than assumed away.
Taxes
Withdrawals from traditional accounts are generally taxable. We provide tax planning by modeling financial alternatives, including account placement and withdrawal timing; the couple's tax professional determines transaction tax treatment and gives tax advice.
Fees and costs
Advisory fees, fund and product expenses, and any other costs reduce what the plan has to work with, so they are included in the analysis.
Inflation
Spending is expected to rise over time. The plan is reviewed rather than set once.
Liquidity
Money needed in the next few years stays accessible so a market decline does not force a sale at a bad time. This reduces, but does not remove, market risk.
Insurance and annuities
An annuity is one option some households explore, with tradeoffs in cost, flexibility, and reliance on the issuing insurer. It is never required. Doug may receive insurance and annuity commissions, which are separate from and do not reduce or offset advisory fees. Applicable fees, other costs, and commissions are disclosed before engagement or implementation, as applicable.
What this example does not show
A process, not a promise
This example does not show investment returns, income amounts, or how long savings would last, and it does not predict results for any household. Every plan depends on assumptions that will not match what actually happens, which is why it is reviewed as life, markets, and rules change.
Learn more about retirement income planning, withdrawal planning, and our fees and conflicts of interest.
The household on this page is hypothetical and shown for educational and informational purposes only. It does not represent any actual client and is not investment, tax, or legal advice. All investing involves risk, including loss of principal. Annuity guarantees are subject to the claims-paying ability of the issuing insurer and are not FDIC insured. Advisory services provided by Financial Thinking Partner® Wealth Advisors, a Colorado-registered investment adviser; insurance and annuity products offered through Annuity Strategy Center. Form ADV disclosure documents are available at adviserinfo.sec.gov.
Want to see how these decisions apply to you?
A 30-minute introductory call, complimentary and with no preparation needed.
Or reach out to Doug directly by sending him an email at doug@financialthinkingpartner.com.