Turning Your Savings into a Sustainable Retirement Paycheck

Presented by Retirement GPS – Navigated by Zynergy

Retirement Isn’t Just Math — It’s Meaning

Our goal is to give you the clarity and confidence to make informed decisions. Yes, the numbers matter. But retirement is also about lifestyle, purpose, and peace of mind. This guide walks you through both the financial mechanics of creating income and the personal choices that keep your plan aligned with what you value.

The Three Buckets You’ll Spend From

Most retirees draw from a mix of accounts. Think of them as buckets:

• Taxable (checking, savings, brokerage)
  • Interest/dividends are taxed along the way.
• Pre-Tax (Traditional IRA/401(k))
  • Untaxed so far; withdrawals are ordinary income.
  • Subject to Required Minimum Distributions (RMDs) beginning in your 70s.
• Roth (Roth IRA/401(k))
  • Taxes were paid up front; qualified withdrawals are tax-free and no RMDs for the original owner.

A healthy plan uses all three—intentionally.

A Cautionary Tale (and Fix)

“Sam & Lila” retired and, to keep taxes near zero, spent mostly from their Roth. It felt great—until their Traditional IRA kept compounding, RMDs kicked in, and they were forced to withdraw more than they needed. That pushed taxes higher, triggered premium surcharges on Medicare (IRMAA), and complicated capital gains.

What worked: We rebuilt their plan to blend withdrawals and executed right-sized Roth conversions for a few years. Yes, that meant higher taxes and Medicare premiums short-term, but it created tax diversification and control long-term. Their ongoing withdrawals now fit neatly within target tax brackets, with far fewer surprises.

The Living-Off-Investments Framework

1) Map Your Guaranteed Income

List monthly sources that show up whether markets are up or down:

• Social Security (note if it’s inflation-adjusted)
• Pension/annuity income (does it have a COLA / Cost of Living Adjustment?)

This is your base paycheck.

2) Annualize Your Spending (Not Monthly)

Monthly bills are only half the picture. Build an annual view that includes:

• Travel and holidays
• Gifts and celebrations
• Home/auto maintenance (tires, brakes, roof, HVAC)
• Insurance premiums and deductibles
• One-off projects and upgrades

Perfect isn’t the goal; realistic is. Use the last 12–24 months as a guide.

3) Calculate “The Gap”

Annual Spending – Guaranteed Income = Gap

That gap is what your portfolio must cover after taxes. From there, pressure-test:

• Can you trim fixed costs (e.g., refinance or retire a small remaining mortgage to improve cash flow)?
• Are big one-time expenses better funded from taxable or Roth to avoid bracket creep?

4) Set a Sustainable Withdrawal Rate

As a rule of thumb, plan to draw roughly 4%–5% of invested assets per year across market cycles. Above ~5% long-term, your risk of depleting principal rises; below ~4%, you may be under-enjoying your retirement. We’ll tailor this to your portfolio mix, timeline, and risk tolerance.

5) Build Your Withdrawal “Blend”

Think of an orchestra, not a solo. A typical order of operations:

• First, capture what’s already taxable:
  Take interest and dividends from your taxable account instead of reinvesting them. That’s income you were going to report anyway.
• Next, “fill your bracket” with pre-tax dollars:
  Withdraw just enough from IRAs/401(k)s to use available room in your current tax bracket—without spilling into the next one or tripping unwanted thresholds.
• Then, use Roth for flexibility and spikes:
  Tap Roth for large, irregular needs or in years when other income runs high, to avoid pushing yourself up the ladder.
• All along, watch the tripwires:
  • Medicare IRMAA (premium surcharges that follow higher income with a 2-year lookback)
  • Social Security taxation (how much of your benefit becomes taxable)
  • Capital gains stacking (where realized gains land on your return)

The goal is not “lowest tax this year,” it’s lowest lifetime tax with steadier premiums and fewer surprises.

Smart Enhancements

Right-Sized Roth Conversions

Early retirement years (before Social Security and full RMDs) can be ideal for moving dollars from pre-tax to Roth on your terms. Converting up to a bracket limit can:

• Shrink future RMDs
• Create a tax-free pool for big purchases later
• Improve legacy outcomes (heirs have 10 years to withdraw; Roth dollars avoid income tax)

Yes, conversions increase today’s income—and can nudge IRMAA—so we size them deliberately, one year at a time.

Estate Alignment While You Withdraw

• Keep beneficiary designations current—these override your will for retirement accounts and life insurance.
• Coordinate titles and Transfer-on-Death (TOD/POD) where appropriate.
• Review wills, powers of attorney, and healthcare directives regularly. Your withdrawal plan and your estate plan should sing from the same sheet.

Putting It All Together (A Simple Playbook)

1. List guaranteed income and note which pieces adjust for inflation.
2. Build an annual spending number (include travel, gifts, maintenance).
3. Compute your after-tax gap and target a 4%–5% portfolio draw.
4. Design your blend: dividends/interest → pre-tax to bracket limit → Roth for precision.
5. Model thresholds (IRMAA, Social Security taxation, capital gains).
6. Consider annual Roth conversions if they improve lifetime taxes and flexibility.
7. Review yearly and adjust as life, markets, and laws evolve.

Ready To Chart Your Course?

Bring your annual spending estimate and last year’s tax return to your next meeting. We’ll translate those into a clear income plan—mapping the gap, crafting a right-sized withdrawal mix, and stress-testing it against taxes and healthcare—so you can spend confidently and live with purpose.