Climbing Your Retirement Income Mountain: Where Will Your Income Come From?

Retirement can feel like scaling a mountain—the journey is long and filled with twists and turns, but with the right tools, you can confidently reach the summit. But successful retirement planning isn’t just about reaching the top; it’s about creating a well-structured, tax-efficient income strategy. That’s what we refer to as the Retirement Income Mountain.

You’ve worked hard to build your wealth, and now it’s time to enjoy it without the fear of running out. Let’s review the ins and outs of retirement income so you can climb your own retirement income mountain with unwavering confidence.

The Base Camp: Social Security

Every climber starts with a solid base camp, and in retirement, that foundation is Social Security. While it provides a steady stream of income, it may not be enough to cover all your expenses. 

The key is to maximize your benefits. Here are a few strategies to increase your Social Security payments:

• Remain in the workforce for at least 35 years
• Delay benefits until at least full retirement age
• Take advantage of delayed retirement credits by claiming after age 70
• Claim spousal or survivor benefits (if applicable)

At Michael Brady & Co., we help you determine the best claiming strategy for your financial situation so that you can make the most of this essential income source.

The Climbing Gear: Employer-Sponsored Retirement Plans

Your employer-sponsored retirement plan is like the gear that supports your climb. Would you be able to make the hike without a harness? We think not!

Contributing to a 401(k) or 403(b) while working ensures you have enough resources for the journey ahead. Once you retire, rolling over these funds into an IRA can offer more flexibility and investment options. Roth conversions can also be smart, allowing you to pay taxes upfront and enjoy tax-free withdrawals later. You can create a more efficient and flexible income stream by proactively managing these accounts.

The Summit Supplies: Personal Savings and Investments

Personal savings and investments are your supplies for the summit. Like water is essential for your adventure, your savings and investment portfolio are critical to reaching your retirement goal.

Whether through IRAs, brokerage accounts, or other investments, these funds provide the additional income you need to maintain your lifestyle in retirement. Strategic asset allocation and withdrawal planning can help stretch your resources while minimizing taxes and capital gains. At Michael Brady & Co., our team guides you in structuring a diversified portfolio that aligns with your retirement goals and risk tolerance.

The Emergency Rations: Emergency Cash Reserve

Every climber needs emergency rations just in case, and in retirement, that’s your cash reserve. 

Having an emergency fund—typically three to six months’ worth of expenses—ensures that unexpected costs won’t force you to tap into investments at the wrong time. Medical emergencies or unexpected home repairs can be stressful and costly, but a well-planned cash reserve can protect you from whatever life throws at you.

The Rope: Part-Time Work or Consulting

Some climbers use a rope for extra support; in retirement, that support can come in the form of part-time work or consulting. This not only provides additional income but also keeps you engaged and active. 

There are several part-time jobs that can be a great fit for retirees, including:

• Teaching or tutoring
• Consulting
• Freelancing
• Working part-time at your current job
• Pet-sitting, babysitting, or house-sitting

The extra income from part-time work is an obvious bonus, but consulting in retirement can also increase energy levels, improve mental health, and instill a greater sense of purpose. The trick is to find a balance between staying busy and remaining stress-free—what’s the point of being retired and remaining overwhelmed with the stresses of the workforce? Our team can help guide you in the right direction and create a plan that aligns with your goals and values.

The Final Stretch: Tax Strategies for Retirement Income

As you near the summit, understanding tax-efficient withdrawal strategies is crucial. 

Different income sources—Social Security, retirement accounts, and investments—vary in how they are taxed. So, strategically drawing from tax-deferred, tax-free, and taxable accounts can help minimize your tax burden and extend your wealth. 

For example, withdrawals from traditional IRAs and 401(k) accounts are taxable and can increase your taxable income. Moving into a high tax bracket could significantly impact your Social Security benefits and Medicare premiums, so it’s important to withdraw from your investments strategically.

Our team specializes in designing tax-efficient withdrawal plans, allowing you to maximize your income and keep more of what you’ve worked so hard to earn.

The Retirement Income Mountain Top Is Within Reach

Reaching retirement is a huge accomplishment, but you can’t get there without careful and intentional planning. A well-structured retirement plan ensures that you not only reach the summit but also navigate the journey with confidence. At Michael Brady & Co., we help you map out your Retirement Income Mountain, ensuring financial security and peace of mind.

Are you ready to start mapping your Retirement Income Mountain? Schedule a complimentary consultation today and take the next step toward a secure financial future.