Retirement is not a static chapter in life—it evolves. As your expenses, health, and financial priorities shift, your income plan may need to evolve with it. Adjusting your retirement income plan is an important step in staying aligned with your long-term goals, especially in response to inflation, market volatility, and personal life changes.
Whether you’ve just retired or are years into retirement, a flexible approach to income can support informed decision-making through each stage.
Why Income Planning Should Be Revisited Regularly
When retirement begins, many individuals rely on a combination of income sources: Social Security, retirement account withdrawals, pensions, and possibly rental income or part-time work. While that foundation may be strong, life rarely unfolds exactly as planned.
Changes in expenses—such as increased healthcare costs or lifestyle upgrades—can shift your budget. Similarly, market performance and inflation may impact how long your resources last. Periodic reviews of your retirement income strategy can help you make timely adjustments that reflect your current circumstances rather than outdated assumptions.
Assessing Current Spending Needs
The first step in adjusting your retirement income plan is understanding how much you’re spending and where that money goes. Retirement budgets often change over time:
- Early retirement years may include more travel, hobbies, or home projects
- Middle years might involve caregiving or health-related costs
- Later years may bring a shift toward long-term care or simplified living
Reviewing your monthly and annual expenses against available income helps identify any gaps, surplus funds, or areas where withdrawals may need to increase or decrease.
Rebalancing Withdrawals from Different Accounts
Your retirement income may come from several types of accounts, each with its own tax treatment and withdrawal considerations. These include:
- Tax-deferred accounts like traditional IRAs and 401(k)s
- Tax-free accounts such as Roth IRAs
- Taxable brokerage or investment accounts
Adjusting your withdrawal strategy may involve shifting which accounts you draw from based on market performance, tax brackets, or cash flow needs. For example, during years with lower income, it may make sense to convert some tax-deferred funds to Roth accounts. During high-expense years, tapping into a Roth account could help manage your taxable income.
A coordinated plan that balances withdrawals across account types may help provide flexibility and consistency.
Considering the Impact of Inflation
Inflation gradually reduces the purchasing power of your income. While you may start retirement comfortably, inflation can erode that cushion over time—especially during prolonged periods of rising costs.
When adjusting your retirement income plan, consider strategies that account for inflation’s impact, such as:
- Incorporating cost-of-living increases into your withdrawal strategy
- Evaluating investments that have the potential to grow over time
- Reviewing expenses for opportunities to reduce or defer spending
Social Security benefits include cost-of-living adjustments (COLAs), but other sources of income may not. Planning for inflation helps you maintain a lifestyle that aligns with your priorities as costs change.
Accounting for Healthcare and Long-Term Care Costs
Healthcare is often one of the most unpredictable—and largest—expenses in retirement. While Medicare covers many services, it does not cover everything. Out-of-pocket costs, prescription medications, and supplemental insurance can strain a fixed income plan.
Additionally, the possibility of needing long-term care should factor into income planning. Assisted living, home health care, or skilled nursing services can carry significant costs over time. Including contingency funds or long-term care insurance in your broader plan may help address these possibilities without disrupting your other income goals.
Monitoring Required Minimum Distributions (RMDs)
Once you reach age 73 (as of 2025), the IRS requires minimum distributions from tax-deferred accounts like traditional IRAs and 401(k)s. These RMDs are considered taxable income and can impact your overall withdrawal strategy.
If you don’t need the RMD for spending, you may consider ways to reduce its impact—such as qualified charitable distributions (QCDs) or shifting more assets into Roth accounts before RMD age. Being proactive in managing distributions can help maintain more control over your taxable income and investment strategy.
Working with a Financial Team to Adjust Your Retirement Income Plan
Making adjustments to your income strategy doesn’t have to mean a complete overhaul. Often, small, thoughtful changes can help bring your plan back into alignment with current needs. This might include:
- Updating your withdrawal amounts
- Revisiting your investment allocation
- Adjusting how different accounts are used for income
- Reviewing cash reserves for emergency needs
Working with a financial advisory team can provide support in evaluating these changes within the broader context of your goals, taxes, and portfolio management.
Adjusting Your Retirement Income Plan Over Time
Your retirement income strategy shouldn’t be fixed in place. Life changes, and your plan should change with it. From evolving expenses and inflation to healthcare needs and market performance, regularly adjusting your retirement income plan can help you stay responsive and prepared as new situations arise.
Talk with SageGuard Financial Group About Your Income Strategy
At SageGuard Financial Group, we help clients evaluate their income sources and make thoughtful adjustments that reflect where they are now—and where they’re heading. If you’re reviewing your retirement income or navigating unexpected changes, we’re here to guide the conversation and support your next steps. Reach out to us today to learn more. We look forward to speaking with you!
