It’s Outcome, Not Income, That Should Be Stressed In Retirement Planning

The following is a guest post from Dan Carter, an Investment Advisor Representative for Safeguard Investment Advisory Group. Dan has 18 years experience in the insurance and estate planning industry. Dan also is the radio host for a financial radio program, ‘The Big Picture Radio Show,’ on KVTA 1590, Ventura County’s Gold Coast ‘News Talk’ station.

Most Americans are pessimistic about how well off they’ll be financially when they reach retirement.

Disappearing Pensions

“People have a lot of worries and that’s understandable,” says Dan. “Their savings may not be what they hoped for. Pensions for most people are a thing of the past and many are uneasy about the future of Social Security.”

A Gallup poll this year showed that just 48 percent of Americans expect they will have enough money in retirement. Those in their 50s were the least optimistic, with 42 percent in that age group saying they expect to live comfortably in retirement.

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Financial advisors might be able to get those Gallup numbers moving in a more optimistic direction if they didn’t focus so much on “income,” and paid more attention to “outcome,” Carter says.

“Certainly, income is a top concern for retirees,” Carter says. “But not all income is equal. For example, how much of your retirement income is taxable? Does the total look great at first, but look a little less great once Uncle Sam’s share is subtracted?”

Improve the Retirement Odds

To improve the odds of a better outcome, Carter says some issues people planning for retirement should focus on include:

  • Longevity. People are living longer, but many advisors don’t recognize longevity as a risk, he says. “Most plans that I see out there will run out when people are in their early 80s,” Carter says. “And most people will say that’s no big deal because they don’t believe they’ll live longer than that. But they could be in for a surprise.” As an example, take a married couple who are both 65. There’s a 63 percent chance at least one of them will live into their 90s. Retirees who want to eliminate longevity risk should consider implementing a hybrid technique which will create lifetime income that will never run out.
  • Taxes on Social Security. Many people planning for retirement may not realize that Social Security counts toward their taxable income. If their income exceeds a certain level, they will be taxed. Staying below those income levels could be one option, but most people might not be able to live on such limited income. When planning retirement expenses, be sure to take taxes into account, and discuss with a financial advisor what your options might be for avoiding or at least limiting those taxes, Carter says.
  • Consider Working Longer. One way to improve your income situation in retirement is to continue working, either full or part-time. That’s not possible for everyone because of health or other concerns. But for some people this can be a solution that allows you to both save more and postpone spending your savings.

Final Thoughts

“It’s important that people sit down with a financial advisor who can take all these issues into consideration,” Carter says. “You want to make sure that your ‘income’ results in a positive ‘outcome.’ ”

Blogger-in-Chief here at RetirementSavvy and author of Sin City Greed, Cream City Hustle and RENDEZVOUS WITH RETIREMENT: A Guide to Getting Fiscally Fit.


  1. Being 21, retirement is still far far away for me. However, sometimes the question crosses my mind how it’s gonna end up for me. I don’t have the intention to be dependable on a pension. Being military, it won’t be bad, but still I don’t trust the government & finances. Providing for yourself and family is a task you shouldn’t rely on other people.

    • Indeed. While there are some knowns, there are just as many unknowns and the best course of action is to build a solid financial foundation and prepare for the worst.

  2. That’s why I started investing I saw that then I could control my futures decisions. Most of my stocks are in dividend paying stocks which hopefully will always pay. I’m retired military and got no pay raise this year so the goal is if they still let us keep it I hope to have just as much dividend income as retirement.

    Good article

    • First, thanks for your service, my friend. You make a great point by noting that ultimately if you want to control your own destiny, if you want to have choices, you have to put your income to work in such a way that you can develop sustainable income.

      Thanks for stopping by and sharing your thoughts.

  3. I agree with you on the LTC insurance. Premiums can go up by any percentage and companies can go out of business.

    I think self-employment and entrepreneurship are going to be key for those who are decades younger and facing a long life. One needs to have control over how much cash flow he can generate.

    • “One needs to have control over how much cash flow he can generate.” Absolutely agree. As I’ve noted, particularly in the Multiply Your Streams of Income post, developing as much control as possible over your streams of income is a key to financial freedom.

      Thanks for stopping by and sharing your thoughts.

  4. The longevity piece is something that I am thinking about more and more. My father is 86 and my mom is 77. I like the idea of a hybrid plan and I think if our pensions are there (in some form) and Social Security too (again, in some form) in addition to our rental properties, we are likely to be OK. Long-term care is incredibly expensive though and that is on my mind too.

    • I gave a lot of thought to long-term care insurance and ultimately decided against it; too expensive and an ever shrinking provider pool makes it a questionable investment in my opinion. For me, a better approach is to invest in other vehicles and personally finance any care that might be required for me and/or the wife.

      Thanks for stopping by and sharing your thoughts, my friend.

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