How to Create a Retirement Income Plan that Works

John Stanton |

How to Create a Retirement Income Strategy That Works                                       

John Stanton | April 14, 2022

You’ve worked hard your whole life, and suddenly, you can see the light at the end of the tunnel.   You and your spouse have successful careers, the kids are grown, college is paid for, and you may even be close to paying off the mortgage. You find yourself in a place where you can reap the fruits of your years of labor and enjoy life to the fullest. But this scenario won’t happen on its own. How can you develop a sound plan that will generate the income you need to make these dreams a reality?

Plan First

Modern retirement income planning has evolved over the past seven decades. During the 1950s and 60s, about half of the private sector workforce had access to traditional pensions. (1) Now, only 7% of employers offer a traditional pension and about 14% offer a hybrid plan. (2) Additionally, the current traditional investment environment does not offer much in return with conservative options.  

Our practice at The Stanton Group is to design every retirement portfolio based on your retirement plan. With this “Plan First” philosophy, we develop a plan that can withstand unforeseen circumstances and is adaptable to market and life changes before we even look at different investment options for retirement. Here’s what this process looks like.

Lifestyle-Driven Planning- Define How You Want to Live

The planning process focuses on your lifestyle goals - how and where you want to live and how much it will cost to fund your ideal lifestyle. We divide the predicted expenses into three categories: lifestyle needs, wants, and would-like-to-haves.

Lifestyle Needs  These expenses are not discretionary and include shelter, food, and insurance, medical expenses, to name a few.

Lifestyle Wants and Like to Haves   These are negotiable and involve dining out, travel, hobbies, or club memberships. In the Like to Have category, this could include major family vacations, a boat, or a second home.

The items that fall into lifestyle needs versus wants and would-like-to-haves will vary based on what is important to maintain each person’s desired lifestyle.

Once you have the expense planning taken care of, it’s time to analyze how to pay for your lifestyle in retirement.


Setting Up Income Streams

Each category discussed above will have different income streams to fund the expenses generated.


Your next step is to set up your monthly income streams to fund your lifestyle needs. While potential total return on investments is important to the plan, I find it beneficial to think in terms of monthly income or regular cash flow. Your income source for your needs is non-negotiable and must come in on a monthly basis.

There are two strict criteria for this part of your retirement income portfolio:

  1. The investment option must generate an income stream, either now or in the future.
  2. The income must be predictable or guaranteed.  

Some examples of sources that fit these criteria are Social Security, pensions, CDs, treasury or municipal bond income, and annuity income. Depending where we are in with market interest rates determines the optimal mix of these alternatives.


To fund the wants part of your lifestyle, examples of possible investments include hybrid, non-guaranteed investments. These could potentially generate your anticipated return fairly reliably, but they would not be guaranteed and would be less safe than the sources of income that will be funding your lifestyle needs.


To fund your would-like-to-haves, you might consider investments that offer growth and capital appreciation so you could use the potential gains to pay for the big-ticket items you would like to have. Non-need investments could include individual stocks, stock  mutual funds, exchange-traded funds, and, for those who qualify, private alternative investments. All of these investments have different types of risk.  Understanding the risks and not depending on these returns to fund your retirement, is the key.  


Minimize Taxes

Many people have come to us for retirement planning, with the bulk of their retirement savings in tax-deferred retirement accounts, like 401ks, 403bs, and IRAs.  At retirement, all the money withdrawn, will be considered taxable income, and you will pay taxes at your current tax rate.  

By developing a plan that incorporates ideas for accumulating retirement savings that result in tax reduced, and tax free income at retirement, you will maximize the amount of monthly income you can expect during that retirement.


Can you Grow Your Assets,  While Relying on them for Income Replacement?

The answer is, it depends.  It depends on where your returns are coming from, and the risks to those returns. 

For example, relying on interest and dividends used to be a time tested strategy for replacing employment income.  Risks include the possibility of dividend cuts, low interest rates, and the possibility of companies restructuring, and/or going out of business.

One of the biggest risks to manage for many is not running out of money.

Developing a solid, conservative, base level of income, that funds non negotiable monthly expenses, is the first step to giving yourself the best chance of growing your overall assets over your lifespan. 


Test Your Plan Under Different Economic and Market Scenarios

Stress testing, going through what ifs, is critical, to see if the plan holds up.  We will run these tests based on unforeseen negative events that could, and have occurred throughout history.

Don’t Make This Common Retirement Mistake

Relying on cookie cutter rules for determining what type of income you can expect in retirement can result in living a life you did not expect.  

We have found that most people approaching retirement look at a retirement calculator number first, which usually takes into account a “safe” withdrawal rate. Many people make the mistake of depending on unreliable streams of income investments to fund their needs and wants.

Reverse Compounding

But if those investments decline 40%, as they did during the 2008 recession, how will you cover your non-negotiable expenses while you wait for the market to recover? What if those investments never fully recover their losses?

Currently, about one-third of our clients are retired, and several retired right before 2008. Since we can’t predict the markets, there’s only one thing you can control, and that’s setting up a plan that takes into account all the unforeseen events.

If you are ready to create a retirement income plan that will give you control of your life and is adaptable to market conditions and life circumstances, schedule your complimentary "Get Acquainted" call with John Stanton. 

About John

John Stanton is the founder of the Stanton Group WP, and serves as the primary advisor for clients.  With more than three decades of experience in the financial industry, his focus is on financial planning and the investment strategies to support the plan for his clients. Based in Naperville, Illinois, John serves clients in Naperville, Aurora, Geneva, Winfield, Plainfield, Darien, and throughout the state. Learn more about John’s services by visiting or connecting with him on LinkedIn.   Schedule your 'Get Acquainted" call with John Stanton 

The Stanton Group WP provides investment advisory services through SeaCrest Wealth Management LLC, ( “SWM”) a registered investment advisor. SWM is a registered investment advisor (“RIA”), with the U.S. Securities and Exchange Commission located in the State of New York. SeaCrest Wealth Management, LLC can be reached at (914) 502-1900.  Investing involves risk, including the potential loss of principal.  Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.  Past performance does not guarantee future results. Consult your financial professional before making any investment decision. The information is designed to provide general information on the subjects covered, it is not, however, intended to provide specific legal or tax advice and cannot be used to avoid tax penalties or to promote, market, or recommend any tax plan or arrangement. Please note that The Stanton Group WP do not give legal or tax advice. You are encouraged to consult your tax advisor or attorney.