In this week’s Tuesday Tip video, learn how a “retirement paycheck” ensures steady income in retirement with strategies like guardrails, empowering you to enjoy life without financial stress. Please watch the video below to learn more. If you would like a free review of your current financial situation, please use this link to schedule a free call. You can find an edited transcript below the video.
Hi, everyone. Today, I want to discuss an important concept I call the “retirement paycheck.” This idea focuses on creating a steady income stream in retirement by paying yourself regularly using the savings you built up during your working years. During your career, you put money aside, deferring your income to ensure a stable future. And now, in retirement, it’s time to use those savings to support your life.
But making the shift from saving to spending can feel challenging. Clients and prospects are often concerned about running out of money in retirement. They also wonder where their income will come from once they retire. That’s where the concept of a retirement paycheck comes into play. By setting up regular withdrawals, you can establish predictable “paychecks” that bring consistency and stability, much like the income you received during your career.
To create this retirement paycheck, we begin by assessing your needs. We look at daily expenses, healthcare, travel, and any other retirement goals you might have. With that understanding, we then set a sustainable withdrawal rate. But this equation includes another important factor as well: flexibility.
Markets fluctuate, and our needs may change over time. One example of this would be the retirement smile. The retirement smile describes the typical pattern of retirement spending. You tend to spend more when you first retire as you knock items off your bucket list. Spending then slows down a bit as you become less active. It increases later in life as your healthcare expenses rise. You can read more about it in the blog linked in the transcript for this video.
Guardrails
Because our needs may change, we can use a guardrails strategy. Guardrails are upper and lower limits set on your withdrawal rate, helping you adjust your spending during both strong and weak markets. Think of it this way: if the market is doing well, we might allow a bit more flexibility to increase your withdrawals. But if the market takes a downturn, we can reduce withdrawals to protect your overall portfolio.
These guardrails act as safety buffers, helping us make small adjustments as necessary to keep your retirement paycheck sustainable for the long haul. They allow you to be adaptable without putting your long-term security at risk. This approach provides a “margin of safety,” so you don’t have to worry about checking the market daily or making drastic changes during economic shifts.
By setting up a retirement paycheck and using guardrails, we’re aiming for stability, freedom, and peace of mind. After all, you spent years working and saving—now it’s time to enjoy the fruits of that hard work and enjoy the next phase of your life without unnecessary stress. It’s about replacing your old paycheck with a steady, reliable income source designed to last as long as you need it.
So, remember: When you retire and start using your hard-earned savings to live on, you’re paying yourself back. You’ve earned it. Setting up a retirement paycheck allows you to create the structure you’re used to, so you can focus on what truly matters in this next chapter of life.
For more information about the retirement paycheck, you can also check out our prior blog.
Thanks for tuning in. Please schedule a complimentary call if you have questions about setting up your retirement paycheck with guardrails. Let’s work together to create a personalized financial plan, including a retirement paycheck when you’re ready, that aligns with your values and empowers you every step of the way.
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For firm disclosures, see here: https://apprisewealth.com/disclosures/
Phil Weiss founded Apprise Wealth Management. He started his financial services career in 1987 working as a tax professional for Deloitte & Touche. For the past 25+ years, he has worked extensively in the areas of financial planning and investment management. Phil is both a CFA charterholder and a CPA.
Located just north of Baltimore, Apprise works with clients face-to-face locally and can also work virtually regardless of location.
