How to Replace Your Paycheck in Retirement
A 6-Step Planning Guide for Women
Retirement represents one of the largest financial transitions most people will ever experience. For decades, your paycheck (or the paycheck of your spouse) arrives on a predictable schedule. Then, almost overnight, you become responsible for re-creating that paycheck from what you've saved and earned in retirement income benefits.
For women, this shift can carry a unique weight. We tend to outlive our male counterparts, making longevity and long-term care planning especially critical. We're also more likely to have experienced workforce interruptions as caregivers, which can reduce both Social Security benefits and overall retirement savings.
When you first start thinking about retirement, a few questions might naturally arise:
How do I start using what I’ve saved?
How do I avoid paying more in taxes than necessary?
How do I coordinate Social Security and other retirement income sources?
How do I prepare for future healthcare costs?
How do I make sure my money lasts as long as I do?
Whether retirement is ten years away or ten months away, there are a handful of foundational planning steps that can help you tackle these questions with greater confidence.
So, where do we begin?
1. Build a Clear Picture of Your Net Worth
Before you can create a retirement income strategy, you need a complete picture of what you own and what you owe, because your net worth is the foundation upon which every retirement planning decision will be built.
This means taking inventory of:
Non-retirement investment accounts (brokerage accounts)
Retirement accounts (Traditional IRA, Roth IRA, 401(k), etc.)
Checking and savings accounts (including CDs)
Real estate assets
Business interests
Debts and liabilities
Once you have current values of your assets and current balances on your liabilities, subtract total liabilities from total assets to arrive at your net worth.
If you aren't sure where to start in preparing a net worth statement, download our free net worth template to edit and make your own.
2. Understand How Your Accounts Are Taxed
Now that you know your net worth, it's time to understand how these assets are taxed. A taxable brokerage account, Traditional IRA, and Roth IRA are all taxed differently. Real estate and business interests also follow entirely different rules. Understanding these distinctions isn't just smart, it's essential to keeping more of what you've built.
Knowing the tax characteristics of your assets can help you better plan around things like:
Withdrawal strategies
Required Minimum Distributions (RMDs)
The interplay of Modified Adjusted Gross Income (MAGI) and Medicare premiums
Charitable, estate, and legacy planning
The more diversity you have across account types, the more flexibility you'll have to manage taxes in retirement and beyond. If, for example, the bulk of your savings sits in a tax-deferred 401(k), it is worth exploring whether funding a Roth and/or brokerage account before you retire could give you greater control over your tax picture down the road.
3. Get Details on Your Sources of Retirement Income
One of the most common questions I hear from those approaching retirement is: "How do I actually replace my paycheck?"
The first step is knowing every income source that will be available to you at retirement. This may include:
Social Security
Pension(s)
Annuities
Investment and dividend income from brokerage account(s)
Rental income
Part-time or consulting work
General portfolio distributions
A note on Social Security benefits: It's worth understanding not just your own benefit estimate, but also whether you may be entitled to spousal or survivor benefits, which can be significantly higher and are often overlooked when elections are made. You can review your Social Security benefit estimate anytime by creating an account at ssa.gov/myaccount. If you have questions on spousal or survivor benefits, calling SSA at (800) 772-1213 is a good place to start.
A note on Pension benefits: If you are entitled to a pension, make sure you understand not only your projected benefit amount, but also when your benefits begin, whether you are entitled to annual cost of living adjustments, and the impact of survivor benefit elections.
The more clearly you understand all income sources available to you, and the rules that govern each, the better positioned you'll be to make intentional decisions about when and how to start using each one to maximize your retirement income stream.
4. Know What You Spend
Many people know what they earn, and some may know what their retirement income will be, but far fewer know what they actually spend.
Retirement income planning becomes significantly easier when you have a clear understanding of:
Current monthly spending
Whether (and in what categories) spending will change in retirement
Essential versus discretionary expenses
One-time goals and major purchases
How spending is likely to shift over time
Spending in retirement rarely stays flat. Travel and experiences often peak in the early years. Healthcare costs tend to rise later. Mortgage payments may disappear. New interests and hobbies often emerge. For women, planning for a retirement that spans 25, 30, or even 40 years means accounting for multiple phases of spending, not just one. The goal isn't knowing today to the dollar what you will need through these different chapters, but it is to raise awareness of the different costs you are likely to incur in different chapters.
A note on healthcare costs: For most people, healthcare represents one of the fastest-growing expense categories in retirement. Before Medicare eligibility at age 65, coverage can be surprisingly costly. After 65, premiums, out-of-pocket expenses, and potential long-term care costs deserve their own line in your retirement budget. Planning for extended care needs is not a pessimistic exercise. It is a practical one.
5. Stress-Test Your Retirement Income Plan
Once you've identified your assets, income sources, and spending needs, it's time to connect the dots.
Key questions to pressure-test your plan:
How does inflation affect future spending over a 30+ year retirement?
How much can safely be withdrawn from investments each year?
What level of investment risk is appropriate given your income needs and time horizon?
What happens to your portfolio longevity if markets decline in the early years of retirement?
That last question points to one of the most important and least discussed risks in retirement income planning: sequence of returns risk. This is the danger that a market downturn in the early years of retirement can have an outsized impact on your portfolio's longevity. For this reason, finding the right balance between growth and stability is one of the most consequential conversations in the planning process. It is one worth revisiting regularly as your retirement date approaches, as well as throughout different phases in retirement.
6. Visualize What Retirement Looks and Feels Like
This may be the most overlooked step in all of retirement planning, and the one I find most meaningful to explore with clients.
Many people spend decades planning financially for retirement without ever asking what retirement itself will actually look like.
Consider:
What will your daily rhythm be?
What inspires purpose when work no longer dominates your schedule?
What relationships do you want to deepen?
What experiences have you been deferring?
Where do you want to live, and does your financial plan support that?
For women navigating retirement after a divorce, the loss of a spouse, or a major life transition, this conversation takes on added dimension. Retirement is not simply an end to working. It is an invitation to design what comes next, and that vision exercise deserves as much intention as the financial analysis supporting it.
The Bottom Line
Retirement planning done well is proactive, not reactive. And there is no shortage of opportunities available to those approaching or in retirement: Roth conversions, RMD management, Social Security timing, charitable giving strategies, plus legacy and estate planning, to name a few. And these decisions are most powerful when they work together as part of a cohesive plan.
If you're ready to build yours, but aren’t sure where to start, we're here to help.
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This material is intended for educational purposes only. You should always consult a financial, tax, or legal professional familiar with your unique circumstances before making any financial decisions. Nothing in this material constitutes a solicitation for the sale or purchase of any securities. Any mentioned rates of return are historical or hypothetical in nature and are not a guarantee of future returns. Past performance does not guarantee future performance. Future returns may be lower or higher. Investments involve risk. Investment values will fluctuate with market conditions, and security positions, when sold, may be worth less or more than their original cost. Advisory Services offered through Avise Financial Cooperative Inc, a Registered Investment Adviser with the SEC. Registration of an investment adviser does not imply a certain level of skill or training.
