Will My Retirement Income Be Enough?

biblical retirement income planning
Last Updated On April 5, 2024

The two main fears many people face as they near retirement are not having enough money to meet their ongoing expenses and running out of money during retirement. People quickly realize that what got them to retirement will not successfully get them through retirement. One part of the solution that can help address both these issues is retirement income planning.  

The focus of this post is to look at what retirement income planning is, some of the factors that are important to keep in mind, and how to get started in creating a plan. A true income plan (and analysis) can be more complex than presented here, but hopefully this provides a greater understanding of the issues surrounding retirement income.

What Is Retirement Income Planning?

Retirement income planning helps people ensure they have enough income to pay their expenses, while keeping an eye on their future needs. At face value, retirement income planning sounds like a very easy concept. But when you delve deeper you find it is much more complicated than it first appears. 

Anyone can create income by selling investments, taking distributions from retirement plans etc, but each of these have tax implications. A good retirement income plan will help with the following:

  • How to create the necessary income – without jeopardizing future needs
  • Minimize taxes where possible
  • Maximize eligibility for government benefits
  • Avoid major tax issues during the latter stages of retirement

 Many of the decisions surrounding retirement income impact other decisions as well. It is best to work on them altogether rather than one at a time.

Why Is Retirement Income Planning Important?

When pensions were more common and people lived shorter lives, income from Social Security and pensions met the bulk (if not all) of their expenses. However, with people living longer and the transition towards 401(k)/403(b) plans, the burden of planning has been placed on the individual to determine how to meet their income needs in retirement. 

Most people when they enter retirement, start to regularly take money out of their investments to provide for their needs. Though it is normal (and expected), it is very scary for people. Developing a retirement income plan can provide peace of mind for your retirement.

Why Is It Difficult?

Retirement income planning is challenging. Here are a few reasons why:


When you retire, you transition from a period of life where you were accumulating assets, to a time when you need those assets to provide for your living expenses. During your working years, the market returns mattered as you needed growth to meet future needs. However, when you retire, thought the return of your portfolio still matters, retaining as much of your principal while paying for your expenses becomes the primary goal. 

Psychologically it can be challenging to have less income and more expenses in retirement. This impacts people differently. Some can handle seeing a deficit, while others cannot.


When you are working it can be easy to put your finances on autopilot. Your main goal is to pay your current expenses, pay down debt and save for the future. The main decisions you have are how much to save, spend, give and how much risk to take.  

When retirement arrives, you have many more variables and decisions to contend with that you have never faced before. As you will see, these decisions impact everything from taxation to medical costs. There are no do overs when you reach this stage.



Not only are there more variables to deal with when it comes to retirement planning, but they change periodically. When tax law, Medicare rules and inflation change, it requires at least a review of the plan in place, and possibly wholesale revisions to make it still work amidst those changes. This is not a set it and forget it type of plan, there needs to be periodic monitoring done to ensure everything still works.

Important Retirement Income Planning Factors

Ideally, when you are 5-10 years from retiring, it is helpful to start planning for your retirement income needs. It takes time to get things organized correctly, and you need time to think through things.  

If you are reading this and are closer to or in retirement, all is not lost. You just need to get working on things now. 

Here are a few important areas that require further thought:


The old adage, “it is not what you make that matters, it is what you keep,” applies here. Taxes are inevitable, but can quickly eat away at your income without proper planning. Income is taxed differently, depending on where it comes from. Here are a few to be aware of:

  • Roth IRA distributions are not taxed (if all conditions are met)
  • Traditional IRA distributions are taxed at ordinary income rates
  • Annuities earnings are taxed at ordinary income tax rates, but principal is not taxed
  • Selling taxable investments (if held for more than one year) may be taxed at 0%, 15% or 20%. If held less than a year, you are taxed at your ordinary income tax rates
  • If you are receiving Social Security benefits (or when you start receiving benefits), how much income you earn each year impacts how much of your Social Security benefits are taxable (either 0, 50 or 85% of your benefit is taxable)
  • If you earn above certain amounts, there are additional taxes to contend with 

As you can see, taxation is a complicated issue (and we have only scratched the surface here). Each person’s tax situation is different, and needs to be examined to determine the best path forward. This is where your Financial Advisor and Accountant working together can help minimize the impact of taxes.


Where You Live

Some states, like Pennsylvania, do not tax retirement distributions (IRA/401k etc) while others do. Some states have no income tax, or a lower flat tax, while others have a graduated tax system (the more you make, the higher the tax you will pay). Understanding this before you retire is very important, because state taxes are an added expense that can be avoided.  

Granted, moving to another state for tax purposes may not be ideal, but depending on your situation, it may be worth considering.



Medicare premiums are impacted by how much income you have in retirement. The Income-Related Monthly Adjustment Amount (IRMAA) annually sets income limits for regular Medicare premiums. Once your income exceeds these amounts, your Medicare Part B & D premiums become higher two years later. Depending on your income, the costs could become quite high. Just $1 of extra income can move you into one of the IRMAA brackets, so this is an important area to watch out for.


Required Minimum Distributions (RMD’s)

When you turn age 72, you are required to start taking money out of your Traditional IRA/401(k)/403(b) accounts. Every year the IRS requires a calculation to determine your RMD. As you get older, you will be pulling out more money each year (assuming your account balance stays somewhat the same). As this money was not taxed during your working years, the government wants to receive the tax money owed to them. 

If you don’t pull out the appropriate amount, the IRS will take 50% of the amount as a penalty, and have the other 50% sent to you. If you have large Traditional retirement account balances, this can be more challenging to plan around.

If you are charitably inclined, you can give from your IRA, which can help with your planning.

Creating A Retirement Income Plan

There is no single solution that works for everyone. Below I have outlined a few steps to help you start thinking about how to move forward. However, I would encourage you to seek wise counsel, as your situation may require further assistance.

 1. Establish A Budget

If you have never lived on a budget, in the last few years before you retire, I would strongly suggest you start doing so. Determining your actual expenses is crucial in planning for retirement. If you don’t have good information on this, you can’t plan effectively. Living on a budget is freeing because you know what is available to spend. 

Your expenses will change in retirement, but I would encourage you to use 100% of your current expenses for planning purposes.


2. Giving Plan

When you retire your giving will change. Your income will normally decrease, and it can be tempting to reduce or stop your giving altogether because of fear of running out of money. However, God provided for you during your working years, and He will provide for you during your years of retirement (Matthew 6:25-34). Adjusting your giving to your new reality is important, but continue to be rich towards the Lord.


3. Income

Having an accurate picture of your monthly income (Social Security, pension etc) allows you to determine if and when there is an income need. Mapping this information out over the long-term can help identify areas of need and enable you to work on a solution. If you know that a source of income will end at age 70, you need to start much earlier to find a way to replace that income.


4. Have A Cushion

By the time people retire I find it helpful to have one year of living expenses saved in cash. There are two main reasons for this. First, transitioning from working to retirement has many costs that aren’t anticipated. Having extra funds set aside to help with this is wise planning. 

Second, if the market were to crash early in your retirement, you would need to sell investments in a down market (which has a negative effect on your long-term finances) to provide for your current expenses. You don’t have the luxury of waiting for the market to recover unless you have a financial cushion to ride it out.  

Keeping at least 6 months of living expenses in reserve throughout retirement can help smooth out income needs over time.


5. Adjust Your Investments

During your working years you may have been invested primarily for growth. As you near retirement, you may want to reposition your investments to provide additional income and potentially reduce risk. This requires a balance, that will change over time. If you take too little risk, you may run out of money during retirement. If you take too much risk, your investments may not provide enough income – you may have to sell more of your investments to meet your current needs. Periodically, you will want to review and adjust as needed.


6. Taxes

If you are a DIY type of person, you need to start researching IRMAA, RMD’s, Social Security taxation and how your tax return will change with retirement. Compiling all this information will help you determine the timing of certain income and the impact of taxes on your various sources of retirement income. 

If your eyes just glazed over at the thought of all this, then…


7. Get Help

Find someone you trust to help you navigate this season of life. Here are links to posts I have written on how to find a Financial Advisor and how they are paid so you can be knowledgeable before contacting one. 

Even if you think you can handle all this on your own, I would encourage you to consider meeting with a Financial Advisor to ensure there is nothing you missed.

Final Thought

It is complicated, but manageable. If you don’t feel you can handle it, then I would encourage you to find a trusted advisor to help you. The key is not to procrastinate. Particularly if you retire early, you will have more opportunities to plan proactively, that will aid you in the latter stages of retirement.

Points To Consider

  1. Income planning requires a different set of skills and thought process from your working years
  2. Though it can be scary to see more money go out than comes in, having a plan makes a big difference
  3. You can’t control much. Focus on what you can control
  4. God has provided for you during your working years, and will continue to provide for you, but you need to do your part

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