The Income Runway

For most of your working life, retirement planning revolves around one question:

How much are you saving?

You contribute to your 401(k), build investment accounts, pay into Social Security, and maybe earn a pension. For 30 or 40 years, the focus is accumulation.

Then retirement gets closer, and the question changes.

It’s no longer just about how much you’ve accumulated.

It’s about how you’re going to turn those assets into income.

That’s where the Income Runway begins.

 

Your Income Doesn’t Start All at Once

Retirement income rarely comes from one place—or begin at the same time.

You may retire at 60 but delay Social Security until 67 or 70. A pension may begin immediately. Taxable investments may be available from day one. Your 401(k) and IRA provide another source of income, and eventually Required Minimum Distributions begin.

Paycheck → Portfolio → Pension → Social Security → RMDs

The order will look different for every family.

The important part is understanding when each source becomes available and how they work together.

 

Find the Gaps

Suppose you retire at 60, receive a pension, and plan to delay Social Security until 70.

Your pension covers part of your lifestyle, but not all of it.

What funds the difference for those ten years?

That’s the gap your portfolio needs to bridge.

Now we can start asking more meaningful questions.

How much do you actually need from the portfolio each year?

Which accounts should that income come from?

Could the years before Social Security and RMDs create tax-planning opportunities?

And how much investment risk does the portfolio actually need to take?

Instead of looking at every account independently, the Income Runway shows us how the pieces connect.

 

Give Your Portfolio a Job

Once we understand when you’ll need the money, we can give different parts of the portfolio different jobs.

Money needed over the next few years may need to provide stability and liquidity.

Money you won’t need for 10 or 15 years may have more time to grow.

That’s a very different way of thinking about retirement investing.

Instead of simply asking: “How should my portfolio be invested?”

We can ask: “When will I actually need this money?”

Your retirement date is only one point on the runway.

Your pension, Social Security, portfolio withdrawals, and eventually RMDs are all other points along the way.

Having $2 million, $3 million, or $5 million saved tells us what you’ve accumulated.

It doesn’t necessarily tell us how those assets will support your life.

 

Your account balance tells you what you have.

Your Income Runway tells you how you’re going to use it.