Income Planning
Generating sustainable income from a portfolio
Week 25 Day 1: The Two Ways to Get Cash From Your Portfolio
You can live off dividends and interest (income investing) or sell shares as needed (total return withdrawal). Both work. Neither is clearly better. The right choice depends on your psychology.
Read commentary →Week 25 Day 2: The 4% Rule Revisited: How Much Can You Spend?
The 4% rule says you can withdraw 4% of your portfolio in year one of retirement, then adjust for inflation each year, and your money should last 30 years. It has survived 100 years of backtesting.
Read commentary →Week 25 Day 3: Sequence of Returns Risk: Timing Matters in Retirement
Getting bad returns early in retirement is devastating because you are selling shares at low prices to fund living expenses. The same average return in a different order can mean the difference between wealth and ruin.
Read commentary →Week 25 Day 4: The Bucket Strategy: Organize Your Money by When You Need It
Divide your retirement portfolio into three buckets: cash for 1-2 years, bonds for 3-7 years, and stocks for 8+ years. Spend from the cash bucket and refill it from the others as needed.
Read commentary →Week 25 Day 5: Social Security: Your Government-Backed Annuity
Social Security is an inflation-adjusted income stream guaranteed by the federal government for life. Delaying benefits from 62 to 70 increases your monthly payment by 77%. That is the best guaranteed return in finance.
Read commentary →Week 25 Day 6: Building a Retirement Paycheck
Combine Social Security, portfolio withdrawals, and any pension or rental income to create a stable monthly 'paycheck' in retirement. The goal: replace your working income with passive income.
Read commentary →Week 25 Day 7: Your Retirement Number: How Much Is Enough?
Multiply your annual expenses by 25. That is your retirement number. $50,000 in expenses means you need $1,250,000. $80,000 means you need $2,000,000. The 4% rule makes the math simple.
Read commentary →Week 48 Day 1: Social Security Basics: How the System Works
Social Security is the largest retirement asset most Americans own, yet few understand how it works. You earn credits by paying FICA taxes during your working years. After 40 credits (about 10 years of work), you qualify for benefits. The amount you receive depends on your 35 highest-earning years and the age you claim.
Read commentary →Week 48 Day 2: When to Claim: 62 vs. 67 vs. 70
You can claim Social Security as early as 62 or as late as 70. Claiming at 62 permanently reduces your benefit by about 30%. Waiting until 70 increases it by about 24% over your full retirement age amount. Every year you delay past full retirement age, your benefit grows by 8% -- guaranteed, inflation-adjusted. No investment matches that.
Read commentary →Week 48 Day 3: The Bridge Strategy: Using Savings to Delay Claiming
If you retire before 70, you face a gap between your last paycheck and your optimal Social Security claiming age. The bridge strategy fills this gap by withdrawing from your portfolio (or using a pension, part-time work, or Roth conversions) during the bridge years, allowing Social Security to grow 8% per year until you claim at 70.
Read commentary →Week 48 Day 4: Spousal and Survivor Benefits: Protecting Your Partner
Marriage unlocks two critical Social Security features. Spousal benefits allow a lower-earning spouse to receive up to 50% of the higher earner's benefit at full retirement age, even if their own work record would pay less. Survivor benefits allow the surviving spouse to receive 100% of the deceased spouse's benefit. These provisions make delayed claiming even more valuable for married couples.
Read commentary →Week 48 Day 5: Social Security and Taxes: The Stealth Tax Bracket
Up to 85% of your Social Security benefits may be taxable, depending on your total income. This creates a hidden 'tax torpedo' where each additional dollar of income from pensions, withdrawals, or investments can cause more of your Social Security to become taxable, effectively doubling your marginal tax rate in certain income ranges.
Read commentary →Week 48 Day 6: Social Security and Early Retirement: The FIRE Angle
If you pursue early retirement or financial independence, Social Security still plays a role in your plan -- just a different one. Working fewer than 35 years means zeros in your benefit calculation, reducing your monthly check. But even a reduced benefit provides a valuable inflation-indexed income floor starting at 62 or later, reducing how much your portfolio must support.
Read commentary →Week 48 Day 7: Your Social Security Strategy: Making the Claiming Decision
Social Security is not an all-or-nothing decision. It is a claiming-age decision that depends on your health, your finances, your marital status, and your other income sources. For most healthy people, especially the higher earner in a married couple, delaying to 70 is the single best financial move available. It is a guaranteed 8% annual raise that no stock, bond, or annuity can match.
Read commentary →Get Income Planning Daily
Receive one 52-week financial guide entry each morning with commentary. Free, no spam, unsubscribe anytime.
Start Free Daily Email