RETIREMENT DECISIONS THAT ARE HARDER THAN THEY LOOK
WHAT IS THE SMARTEST WAY TO
CREATE RETIREMENT INCOME?

WATCH ON YOUTUBE

Sandy Hornor | CEPS
Managing Director, Wealth Management & Executive Manager

Tessa Hall
Media and Communications
Specialist

About This Episode

What is the smartest way to create retirement income? After decades of saving, retirement requires a major shift from accumulating money to using those savings to create a reliable income stream.

In Episode 3 of Retirement Decisions That Are Harder Than They Look, Tessa Hall speaks with Sandy Hornor, Managing Director, Wealth Management & Executive Manager at BWFA, about turning retirement savings into income. They discuss how Social Security, pensions, and investment accounts may work together to fund retirement spending. Sandy also explains why the order of withdrawals can matter and how having different types of accounts may provide greater flexibility when managing taxes throughout retirement.

Discover how BWFA can help you plan for your financial future by visiting our Financial Planning page.

Where does retirement income come from?

Retirement income may come from several sources, including Social Security, pensions, IRAs, 401(k)s, 403(b)s, and other investment accounts. The mix will depend on how you prepared for retirement and when each income source becomes available. The goal is to coordinate those resources so that your accumulated savings can begin to support your ongoing spending needs.

Why can creating retirement income feel difficult?

For decades, most people have been conditioned to save and grow their retirement accounts. Retirement reverses that process. Instead of continuing to accumulate money, retirees must begin converting their savings into an income stream. Sandy explains that this mental shift can be difficult even for people who have accumulated substantial retirement assets.

How do you determine how much you can spend in retirement?

A retirement financial plan can help establish a sustainable annual spending target based on your assets, income sources, goals, and expected expenses. That amount may also need to be adjusted over time for inflation and changes in your circumstances. Rather than treating retirement spending as an arbitrary number, the goal is to connect withdrawals to the broader financial plan.

Why does the order of retirement withdrawals matter?

Different accounts can have different tax consequences. Traditional retirement accounts generally hold tax-deferred balances, while qualified Roth withdrawals may be tax-free, and taxable brokerage accounts may generate capital gains. Choosing which account to draw from can therefore affect the taxes associated with generating retirement income.

Why can having different types of accounts help in retirement?

Holding assets across traditional retirement accounts, Roth accounts, and taxable investment accounts may provide greater flexibility when generating retirement income. Instead of relying entirely on withdrawals that receive the same tax treatment, retirees may have options for choosing where their spending money comes from. That flexibility can become part of managing taxes alongside retirement income needs.

More from the Retirement Decisions That Are Harder Than They Look Series

Episode 1:
How Do You Know When You Have Enough to Retire?

Episode 2:
How Much Should You Plan to Spend in Retirement?

Episode 3:
How Should You Withdraw Money in Retirement?

Episode 4:
Should You Pay Off Your Mortgage Before Retirement?

Episode 5:
Can You Afford to Give Money to Your Kids in Retirement?