A Guide for South Jersey Retirees
Retirement Income Planning: How to Turn Savings into Sustainable Income
Retirement income planning is the process of converting your accumulated savings, Social Security, and other assets into a reliable, tax-efficient stream of income that lasts throughout retirement. For pre-retirees and current retirees in South Jersey, coordinating these income sources can make the difference between a retirement that endures and one that falls short.
The Fundamentals
What Is Retirement Income Planning?
Retirement income planning is the strategy of determining how much you can spend each year, which accounts to draw from, and in what order, so that your savings last as long as you do while minimizing taxes along the way. Unlike accumulation, where the goal is growing wealth, retirement income planning shifts the focus to distribution: generating dependable cash flow from multiple sources in a coordinated, tax-aware manner.
The decisions you make in the years surrounding retirement, particularly around Social Security timing, Roth conversions, and withdrawal sequencing, have an outsized impact on your financial security. A well-constructed income plan addresses not just how much income you need but also how to generate it efficiently, how to manage taxes across decades, and how to adapt when markets or life circumstances change.
At Independence Wealth in Voorhees, NJ, retirement income planning is a core service. Eric Nelson, CFP® and CEPA®, works with pre-retirees and current retirees throughout South Jersey to build personalized income plans that coordinate every piece of their financial picture into a single, cohesive strategy.
The Building Blocks
The Income Sources Your Plan Must Coordinate
Most retirees draw income from several sources. The challenge is not simply having enough income but sequencing and coordinating these sources to minimize taxes, avoid unnecessary portfolio withdrawals, and preserve assets for later in retirement.
Social Security
Social Security provides guaranteed, inflation-adjusted income for life. As of 2026, the full retirement age is 67 for those born in 1960 or later. You can claim as early as 62 (with a permanent reduction) or delay until 70 (with delayed retirement credits of roughly 8% per year). The claiming decision affects your lifetime benefit by tens of thousands of dollars. Learn about our Social Security planning services.
Pension Income
If you have a pension, you may face a one-time irrevocable decision about how to receive it: single life, joint and survivor, or lump sum. This decision affects your surviving spouse's financial security and your overall income plan. We help you evaluate pension options in the context of your total financial picture.
Portfolio Withdrawals
Your investment accounts are the most flexible income source but also the most vulnerable to market downturns, taxes, and longevity risk. How much you withdraw, from which accounts, and in what order determines how long your portfolio lasts and how much you owe in taxes each year.
Other Income Sources
Part-time work, rental income, royalties, or annuity payments may also factor into your plan. Every income source has tax implications, timing considerations, and coordination requirements that a comprehensive plan should address.
Withdrawal Strategy
Withdrawal Sequencing: Which Accounts to Tap First
Most retirees have savings spread across three types of accounts, and the order in which you withdraw from them has a direct impact on your tax bill and how long your money lasts.
A common approach is to draw from taxable accounts first, tax-deferred accounts (like traditional IRAs and 401(k)s) next, and tax-free accounts (Roth IRAs) last. This sequencing allows tax-deferred assets to continue growing and preserves Roth assets for later in retirement when they can provide tax-free income without required minimum distributions.
However, the optimal sequence depends on your individual tax situation, your account balances, your age, and your goals. In some cases, it makes sense to withdraw from tax-deferred accounts earlier to fill lower tax brackets or to create room for Roth conversions. There is no universally correct answer, which is why a personalized analysis matters.
The Three Account Types
Taxable Accounts
Brokerage accounts, bank accounts. Taxed on dividends and capital gains each year. Flexible to access without penalty.
Tax-Deferred Accounts
Traditional IRAs, 401(k)s, 403(b)s. Taxes owed on withdrawal. RMDs begin at age 73 (or 75 if born in 1960 or later).
Tax-Free Accounts
Roth IRAs, Roth 401(k)s. Qualified withdrawals are tax-free. No RMDs during your lifetime for Roth IRAs.
The Roth Conversion Window
The years between retirement and the start of RMDs are often the most valuable time for tax planning. With careful planning, you can convert traditional IRA funds to Roth IRAs at lower tax rates, reducing future RMDs and creating a pool of tax-free income for later in retirement.
Factors to consider include your current tax bracket, expected future tax rates, the size of your tax-deferred accounts, Medicare IRMAA thresholds, and your estate planning goals. Converting too much can push you into a higher bracket or trigger Medicare premium surcharges, so careful calibration is essential each year.
Tax Planning
Roth Conversions: Your Gap-Year Opportunity
Many retirees experience a "gap" of several years between when they stop working and when required minimum distributions (RMDs) begin. During this window, your taxable income may be lower than it has been in decades. This creates a valuable opportunity to convert funds from traditional IRAs to Roth IRAs at potentially lower tax rates.
Roth conversions move money from a tax-deferred account to a tax-free account. You pay taxes on the converted amount in the year of conversion, but future growth and qualified withdrawals from the Roth IRA are tax-free. Done strategically over several years, conversions can reduce the size of your tax-deferred accounts, which means smaller RMDs and lower tax bills later in retirement.
Roth conversions are not appropriate for every retiree and involve trade-offs, including immediate tax costs and potential impacts on Medicare premiums. Results vary by individual tax situation, and the strategy should be revisited annually as part of your ongoing tax planning.
Required Minimum Distributions
Managing RMDs Starting at Age 73
Required minimum distributions from traditional IRAs, 401(k)s, and other tax-deferred retirement accounts are mandatory withdrawals that begin at age 73 for individuals born between 1951 and 1959, and at age 75 for those born in 1960 or later. These withdrawals are taxable as ordinary income, and failing to take them can result in significant IRS penalties.
RMDs can push retirees into higher tax brackets, increase the taxation of Social Security benefits, and trigger Medicare premium surcharges known as IRMAA (Income-Related Monthly Adjustment Amount). A proactive income plan accounts for RMDs years before they begin, using strategies like Roth conversions, qualified charitable distributions, and timed withdrawals to reduce their impact.
For married couples, RMD planning should also consider the surviving spouse, who will eventually inherit the accounts and face their own distribution requirements. Coordinating RMD strategy with your overall retirement plan can reduce the tax burden for both you and your heirs.
Tax Coordination
How Taxes Shape Your Retirement Income
In retirement, you have more control over your taxable income than at almost any other point in your life. You decide how much to withdraw, from which accounts, and when. Those decisions determine what you owe the IRS each year, how much of your Social Security is taxed, and whether you face Medicare premium surcharges.
Social Security Taxation
Up to 85% of your Social Security benefits may be subject to federal income tax if your combined income exceeds IRS thresholds. Coordinating your withdrawals and Social Security claiming can reduce how much of your benefit gets taxed.
Medicare IRMAA
Higher income in retirement can trigger Medicare premium surcharges that cost hundreds of dollars per month. Managing your modified adjusted gross income through careful withdrawal planning may help you avoid or reduce these surcharges.
Capital Gains Management
In taxable investment accounts, timing the sale of appreciated assets can help you stay within the 0% long-term capital gains bracket, potentially allowing you to realize gains with little or no federal tax owed.
Tax planning strategies involve trade-offs and depend on your individual circumstances. Results vary, and strategies should be reviewed annually with a qualified advisor. See our comprehensive tax planning services for retirees.
Portfolio Strategy
How Investment Management Changes in Retirement
During your working years, the primary goal of your investment portfolio is growth. In retirement, that shifts. Your portfolio now needs to balance growth, income, and stability in a way that supports your spending needs without exposing you to excessive risk.
A retirement portfolio must address several risks that did not matter as much during accumulation. Sequence-of-returns risk, the danger of experiencing market losses early in retirement when you are withdrawing funds, can have a lasting impact on portfolio longevity. Inflation erodes purchasing power over a retirement that may last 30 years or more. And longevity risk, the possibility of outliving your assets, requires a plan that accounts for living longer than expected.
We manage investments with these risks in mind. Client assets are held at Fidelity Investments, a well-known and trusted custodian, providing independent custody and reporting. Our approach is designed to balance the need for growth with the need for stability, aligned with your actual retirement timeline rather than a generic risk questionnaire. Learn how to weather bear markets and protect your retirement income.
Key Retirement Portfolio Risks
- ! Sequence of returns: Withdrawals during an early-retirement market downturn can permanently reduce portfolio longevity.
- ! Inflation: Even modest inflation compounds over a 30-year retirement, eroding the purchasing power of fixed income.
- ! Longevity: Planning to age 95 or 100 rather than average life expectancy provides a margin of safety against outliving your assets.
- ! Tax drag: Inefficient withdrawals can cost thousands per year in unnecessary taxes, reducing the income available for your lifestyle.
Why Personalization Matters
Why a Personalized Plan Beats the 4% Rule
The 4% rule, which suggests withdrawing 4% of your portfolio in the first year of retirement and adjusting for inflation thereafter, originated from a 1994 study by financial planner William Bengen. It remains a useful starting point for understanding how much you might safely withdraw from a portfolio over a 30-year retirement. Read our detailed analysis of the 4% rule for New Jersey retirees.
However, the 4% rule is a general guideline, not a plan. It does not account for your specific tax situation, your actual spending needs (which vary year by year), your Social Security claiming strategy, your pension options, your Roth conversion opportunities, or how market conditions in the first few years of retirement affect your portfolio. It also assumes a constant spending level, which does not reflect how most retirees actually spend: more in early retirement, less in middle retirement, and potentially more in late retirement due to healthcare costs.
A personalized retirement income plan replaces generic rules with a strategy built around your actual goals, accounts, tax situation, and timeline. It adapts as markets, tax laws, and your circumstances change. This is the approach we take at Independence Wealth: building plans that are educational, strategic, and flexible enough to evolve with you.
Working With Us
Retirement Income Planning With an Independent, Local Advisor
The firms that dominate the search results for retirement income planning are large institutions. They offer useful educational content, but they do not know your situation, your tax picture, or your goals. Working with a local, independent fiduciary advisor means your income plan is built around your life, not a template.
Independent and Fiduciary
As an independent registered investment advisor, Independence Wealth operates free from the pressures of a large broker-dealer. Eric Nelson is a CFP® professional who is legally obligated to place your interests first. Being independent allows us to tailor solutions to your specific needs without the constraints of a one-size-fits-all approach, though compensation-related conflicts may still exist.
Credentials That Matter
Eric Nelson holds the CERTIFIED FINANCIAL PLANNER® (CFP®) designation and the Certified Exit Planning Advisor® (CEPA®) designation. The CFP® marks require rigorous education, examination, experience, and ethical standards. This means Eric can address the full range of retirement planning needs without sending you elsewhere for every question.
South Jersey Based
Our office is located at 221 Laurel Road, Suite 180, in Voorhees, NJ. We serve clients throughout South Jersey, including Cherry Hill, Haddonfield, Marlton, Mount Laurel, Medford, and surrounding communities. We meet in person or virtually, whichever is most convenient for you.
Frequently Asked Questions
Retirement Income Planning FAQs
What is the best retirement income strategy?
There is no single best retirement income strategy for everyone. The most effective approach depends on your account balances, tax situation, Social Security options, health, and goals. A well-designed strategy typically coordinates Social Security timing, tax-aware withdrawal sequencing, Roth conversion planning during gap years, and RMD management. The strategy that works for your neighbor may not work for you, which is why personalized planning matters more than any rule of thumb.
How much do I need in retirement to make $100,000 a year?
The answer depends on how much of your $100,000 need is covered by guaranteed income sources like Social Security and pensions. If you receive $40,000 from Social Security and have no pension, your portfolio needs to cover $60,000. Using the 4% rule as a rough starting point, that would require a portfolio of approximately $1.5 million. However, your actual target may be higher or lower depending on your tax situation, desired retirement age, expected longevity, and other factors. Read our detailed guide on how much you need to retire in New Jersey.
What is the $1,000 a month rule for retirees?
The $1,000 a month rule is a simplified guideline suggesting that for every $1,000 of monthly income you need from your portfolio in retirement, you should aim to have approximately $300,000 saved. This is another way of expressing the 4% rule: $1,000 per month equals $12,000 per year, and $12,000 divided by 0.04 equals $300,000. Like the 4% rule, this is a rough starting point, not a personalized plan. Your actual savings need may differ based on taxes, guaranteed income sources, and your specific circumstances.
When should I start retirement income planning?
Ideally, retirement income planning begins 5 to 10 years before your target retirement date. This window provides time to position your accounts, evaluate Roth conversion opportunities, coordinate Social Security timing, and adjust your investment strategy. However, even if you are already retired, it is not too late. Many retirees benefit from revisiting their withdrawal strategy, tax coordination, and investment allocation to improve outcomes for the remainder of their retirement.
How does Social Security affect my retirement income plan?
Social Security is a cornerstone of most retirement income plans. As of 2026, your full retirement age is 67 if you were born in 1960 or later. Claiming at 62 permanently reduces your monthly benefit, while delaying until 70 increases it by roughly 8% per year. The claiming decision also affects how much of your benefit is taxed, how much you need to withdraw from your portfolio, and your surviving spouse's financial security. Learn more about Social Security planning with Independence Wealth.
What happens if I do not plan for retirement income?
Without a deliberate income plan, retirees risk overpaying in taxes by withdrawing from accounts in the wrong order, missing windows for Roth conversions that could reduce future tax burdens, claiming Social Security at a suboptimal time, and taking excessive portfolio withdrawals that jeopardize long-term sustainability. An income plan is designed to address these risks proactively rather than reacting to them after the fact.
Ready to Build Your Income Plan?
Turn Your Savings Into Income That Lasts
If you are approaching retirement or already retired, a personalized income plan can help you make informed decisions about when to claim Social Security, how to structure your withdrawals, and how to manage taxes across your retirement years. Schedule a consultation with Independence Wealth to see if we are a good fit for your needs.
Independence Wealth | 221 Laurel Road, Suite 180, Voorhees, NJ | info@independence-wealth.com