01
Define the spending target
Separate essential expenses from flexible goals. Add irregular costs such as travel, home repairs, gifts, and vehicle replacements.
Retirement guide
Turn retirement savings into a monthly plan.
Retirement income is not one withdrawal rate or one account. It is a coordinated system for spending, taxes, healthcare, and the surprises that come with a long retirement.
Updated September 26, 2026 · 7 minute read
The retirement paycheck
1Social Security + pension
2Portfolio withdrawals
3Cash reserve
4Flexible spending rules
Quick answer
How do you build a retirement income plan?
List your essential and flexible spending, then map reliable income such as Social Security and any pension. The difference is the gap your savings need to cover.
From there, decide which accounts to draw from and in what order, budget for healthcare and possible long-term care, keep a cash reserve, and set rules for adjusting after a difficult market. Review the plan at least once a year.
Sources: SSA: plan for retirement · Medicare.gov: costs
Written and reviewed by Sarah Elizabeth DePover, MBA, Financial Advisor with Northwestern Mutual in Waukesha, WI · Updated . Educational only — not individualized, tax, legal, or medical advice.
The six-part checklist
Build the income plan in the right order.
Start with the life the plan needs to fund. Then match each income source to its job.
02
Map reliable income
List Social Security, pensions, annuity income, and part-time work. Note when each source starts and whether it adjusts with inflation.
03
Measure the income gap
Subtract reliable after-tax income from expected spending. The remaining amount is what savings and investments need to support.
04
Choose where withdrawals come from
Coordinate taxable, tax-deferred, and Roth accounts instead of drawing from whichever account is easiest to reach.
05
Budget for healthcare
Account for Medicare premiums, out-of-pocket costs, and a plan for possible long-term care needs.
06
Set guardrails and review
Decide what will change after a difficult market, a large expense, or a shift in health—and review the plan at least annually.
Put the pieces together
Give every dollar source a role.
Core expenses
Social Security, pension, and other reliable income where possible
Housing, food, utilities, insurance
Flexible lifestyle
Portfolio withdrawals with room to adjust
Travel, hobbies, gifts, dining
Near-term surprises
Cash and short-term reserves
Repairs, deductibles, major purchases
Long-horizon needs
Growth-oriented investments aligned with risk capacity
Later-life spending and inflation
Three decisions that interact
Avoid making these choices one at a time.
Social Security timing
Delaying may increase lifetime monthly income, but requires a plan to fund the years before benefits begin.
Withdrawal order
The account used today can change taxes, Medicare premiums, and the flexibility available later.
Market risk
A downturn early in retirement can be especially damaging when withdrawals continue. Reserves and flexible spending rules can help.
Go one level deeper
Find your full retirement age and compare claiming milestones.
Your one-page retirement income brief
Bring these six numbers to a planning conversation.
1Monthly essential spending
2Monthly flexible spending
3Social Security estimates by age
4Pension or annuity income
5Account balances by tax type
6Cash reserve and major planned expenses
This guide is educational and does not provide individualized investment, tax, or legal advice. Withdrawal strategies and tax rules should be evaluated for your circumstances.
Ready to look at your own numbers? Request a retirement income review.
Build the retirement paycheck