Approaching Retirement?

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Our responses to the top 3 questions our clients ask as they prepare for retirement

As our clients begin approaching retirement, they begin to have new questions for us and it’s our job to help them understand how to prepare financially for a comfortable, worry-free retirement. The notion of retirement is relatively simple, but the details can be quite complicated and preparation can be daunting.  Following are the three most-asked questions we receive from prospective retirees as they prepare to receive final paychecks. 

approaching retirement
Where will the money come from when I’m no longer earning a paycheck? 

We suggest that our clients set up a regularly scheduled withdrawal from their financial accounts, so that a  fixed amount can then be transferred to their checking account each month.  This allows them to continue business as usual, from a cash flow standpoint, and has the advantage of maintaining a sustainable lifestyle during retirement.  Hopefully, additional funds will be available as needed, and funds that are not needed on a regular basis can remain invested for the future.  Our clients typically prefer this approach. 

How much income do I need each month in retirement? 

In our experience, most folks have only a vague idea about how much they spend each month.  They regularly set aside money for saving but tend to be relatively unconstrained about how much they spend.  When the paychecks end and they have to rely on their accumulated savings, this becomes a more important consideration.  We recommend that our clients gain a good understanding of their total cost of living by taking a comprehensive look at all spending over the past 6 months to a year.  This will provide a general idea of what they’ll need moving forward. 

I understand how much monthly income I need, but how do I determine from which accounts these routine living expenses should be withdrawn? 

Many retirees expect to receive income from social security, pensions or annuities, but the amount of funds from these sources may not be sufficient to fully provide for their lifestyle needs, therefore supplemental withdrawals from their accumulated savings may be required.  Making this determination is anything but simple and requires a solid understanding of each person’s unique tax situation and financial goals, as well as of how their financial accounts are structured. 

People tend to have savings in many different forms, including after-tax, tax-deferred, and/or tax-free accounts.  It is important to note that tax liabilities will be affected by where the withdrawals comes from and taxable income can also have an impact on Medicare premiums, which could rise dramatically if taxable income increases.

In summary, it is very important to take the time necessary to closely review each person’s specific tax situation and make a tailored plan to manage savings withdrawals in a way that will minimize current and longer-term income taxes.  Consulting with a tax or financial advisor to determine the best course of action is recommended. 

WE CAN HELP.

Understanding and taking advantage of these tax law benefits is no easy task.  We, at Horizon Wealth Advisors, and our associated CPA firm at Maddox, Thomson & Associates, stand ready to help.  Please call us or email us to set up a complimentary consultation.


Horizon Wealth Advisors is a Houston based fee-only wealth management firm. Horizon is a fiduciary advisor. We specialize in helping successful individuals and families understand, organize, and manage their often complex financial situations. Horizon offers integrated financial planning and investment management services.

Larry Maddox, CFP®, CPA
Larry founded Horizon Advisors, LLC in Houston, Texas in 1999 with fellow business partner Joe Thomson. He collaborates with our wealth management team and other external advisors to provide comprehensive wealth management services.

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