How to Create a Retirement Income Strategy that Works

John Stanton | Feb 25, 2026

You've worked hard your entire career, and now retirement is on the horizon. The kids have recently chosen initial careers, the mortgage is nearly paid off (or already is), and you're envisioning a fulfilling chapter filled with travel, hobbies, family time, and relaxation.

But turning those dreams into reality requires more than hope—it demands a deliberate, adaptable retirement income strategy that generates reliable cash flow while protecting against market volatility, inflation, longevity, and unexpected events.

Retirement planning has shifted dramatically. In the mid-20th century, many enjoyed traditional pensions for steady income. Today, defined benefit pensions are rare—only about 14% of private-sector workers have access to them, while 70% have access to defined contribution plans like 401(k)s (Bureau of Labor Statistics, March 2025 data).

With volatile yields on conservative investments in recent years and longer lifespans, the burden falls on personal savings, Social Security, and smart planning.

At The Stanton Group, we follow a "Plan First" approach: We build your customized retirement plan around your desired lifestyle before selecting investments. This creates a resilient framework that can adjust to life's changes and market shifts.

Step 1: Lifestyle-Driven Planning—Start with How You Want to Live

Begin by envisioning, and experiencing, your ideal retirement. Where will you live? How will you spend your days?

Estimate costs realistically, dividing expenses into three buckets:

Needs — Essential, non-negotiable items like housing, utilities, food, healthcare, insurance, and basic transportation. These must be covered reliably every month.
Wants — Enjoyable but flexible expenses such as dining out, hobbies, memberships, and moderate travel.
Would-Like-to-Haves — Aspirational big-ticket items like luxury vacations, a second home, a boat, or significant family gifts.

Costs vary by individual priorities—what's a "need" for one person might be a "want" for another. Factor in inflation (historically ~3% annually) and healthcare, which can rise faster. Many retirees underestimate longevity; plan for 30+ years.

Step 2: Build Reliable Income Streams Matched to Your Buckets

Match income sources to expense categories for stability. For Needs (Guaranteed or Highly Predictable Monthly Income)

Prioritize sources that deliver consistent cash flow, ideally guaranteed or low-risk:

Social Security (average retired worker benefit ~$2,071/month in 2026, after the 2.8% COLA).
Any remaining pensions.
Annuities (for guaranteed lifetime income).
CDs, Treasury bonds, or municipal bonds (especially attractive in higher-rate environments).
Multi Year Guaranteed Annuities Fixed Interest Rate, and Maturity, Backed by Issuing Insurance Company
Dividend-paying assets with stable histories (though not fully guaranteed).
Rental Income and Royalties Potential for steady, increasing income, not guaranteed.

The goal: Cover 100% of essentials with predictable inflows, reducing sequence-of-returns risk (poor market timing early in retirement).

For Wants (Moderate Risk, Reliable but Not Guaranteed)
Use a balanced mix for potentially steady returns:

Diversified bond ladders.
Dividend-focused funds or ETFs, not guaranteed.
Dividend-paying assets with stable histories , not guaranteed.
Rental Income and Royalties Potential for steady, increasing income, not guaranteed.

These aim for reliable income but accept some variability.

For Would-Like-to-Haves (Growth-Oriented, Higher Risk)
Target Capital Appreciation:

Growth mutual funds, ETFs.
Individual Growth Stocks
Qualified alternative investments (e.g., real estate or private equity, where eligible).

Treat these as bonuses—don't rely on them for basics. Reinvest gains or harvest them opportunistically.

Step 3: Minimize Taxes to Maximize Spendable Income

Many savers hold most assets in tax-deferred accounts (401(k)s, IRAs), where withdrawals are taxed as ordinary income. A smart strategy incorporates:

Tax-free sources like Roth IRAs (via conversions or contributions).
Tax-efficient investments (e.g., municipal bonds).
Strategic withdrawals (e.g., blending taxable, tax-deferred, and tax-free buckets).

Roth conversions in lower-tax years can create tax-free income later, especially valuable with potential future tax increases.

Step 4: Balance Income and Growth—Yes, You Can Have Both

Can your portfolio grow while providing income? It depends on sources and risk management. Traditional dividend/interest strategies worked historically but face risks: dividend cuts, low rates, or corporate issues. A strong base of guaranteed income for needs allows the rest to pursue growth (e.g., equities for inflation protection and legacy building).

Many retirees preserve or grow assets over time by avoiding over-withdrawal during downturns.

Recent research (Morningstar 2025) suggests a base safe withdrawal rate of ~3.9% for a 30-year retirement (90% success probability, balanced portfolio). Flexible strategies (e.g., guardrails adjusting spending with markets) can push this higher—up to ~5-6%—but require discipline.

These first 4 steps to take, and put in place, are critical to get through a "Lost Decade" of no returns for stocks, and low interest rates on fixed income, like we saw from 2000=2010, when near, or in retirement.

Step 5: Stress-Test and Avoid Common Pitfalls

Run scenarios: What if markets drop 30-40% (like 2008)? How about a lost decade of no returns for stocks, and low interest rates? Inflation spikes? Healthcare costs soar? Longevity extends?

Avoid cookie-cutter approaches like blindly applying a 4% rule without personalization—many over-rely on volatile assets for essentials, risking drawing down your portfolio.

Don't ignore sequence risk: Early losses force selling low, amplifying damage.

Final Thoughts: Take Control Today

A well-crafted retirement income strategy isn't about chasing high returns—it's about security, flexibility, and peace of mind. By planning lifestyle-first, layering income streams, optimizing taxes, and testing resilience, you position yourself to enjoy retirement without constant worry. If you're ready for a personalized plan that adapts to changing markets and life events, schedule a complimentary "Get Acquainted" call with John Stanton at The Stanton Group. Let's build the retirement you've earned!

Let's Start a Conversation

Have questions? Ready to take the next step? We are here to help! Whether you have specific questions, or are just looking for more information on the above, schedule a call with us today.

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John Stanton

For over 20 years, John and his team have been helping successful individuals and their families, plan, preserve, protect, and pass on their hard earned wealth.

Based in Naperville, Illinois, John serves clients in Naperville, Plainfield, Darien, Aurora, Geneva, St Charles, and throughout the United States.

Learn more about John's services by visiting https://www.stantongwp.com/team-member-01 or connecting with him on LinkedIn https://www.linkedin.com/in/john-stanton/ .

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