Building a Balanced Retirement Income Plan
June 5, 2025
Most people have a retirement date in mind.
You’ve had a long career filled with challenges and rewards. And now, the dream of having more time to do whatever is about to come true. Before you send your last email or attend that last meeting, it’s wise to have a solid plan in place to pay the bills when your paycheck stops. What you want to build is a complete retirement income plan. This plan will show you where you’ll be spending your money in retirement. You’ll also learn about available financial resources to help build your new retirement paycheck.Most people have a retirement date in mind.
The 4 Parts of a Retirement Income Plan
Crafting a tailored retirement income plan is key to a successful retirement journey. Taking the time to consider expenses, savings and income before stepping into retirement will help ensure there's an ample balance for a comfortable life.
- PERSONAL ACCOUNTS
- RELIABLE INCOME
- FLEXIBLE EXPENSES
- ESSENTIAL EXPENSES
Identify all your non-negotiable, essential expenses
These are the bills and expenses you must continue to pay long after you’ve stopped working. These expenses can’t be deferred or delayed regardless of the ups and downs of the market. You know the obvious must-have expenses such as food, shelter, health care, utilities and income taxes. But many essential expenses are missed: technology, property taxes, and homeowners or renter’s insurance. In addition, some expenses for enjoying retirement living will be essential expenses.
— For some, it will be a club membership.
— Others consider travel to see the grandchildren essential.
— For those who are retiring to pursue hobbies, start-up costs may be a factor to consider.
It’s up to you to define your essential expenses. The closer you are to retiring, the more accurate your list and estimated costs should be.
Make a wish list of your discretionary expenses
Not every expense will be a must-have in retirement. You’ll also need to build in a fair amount of flexibility. For example, you may need a new car or two over a 30-year retirement period, but when and what you buy are flexible. Or, if travel is going to be a big part of retirement, great! You may spread out the trips a bit further or make them a bit shorter to stay within your budget.
It’s fun to think about all the things you might do in retirement, but you may have to make some adjustments or compromises about when and what you can comfortably afford.
Determine your sustainable or guaranteed sources of income
Putting together a retirement income plan can help you get a good handle on the amount of reliable income you are on track to receive in retirement. These sources are ones you can count on every month for the rest of your life. Typically, there are three possibilities:
SOCIAL SECURITY
Most workers qualify for Social Security. Look at the current estimates on your statement (available on SSA. gov/myaccount). You’ll want to know how much less you’ll get each month if you claim too early and how much more by waiting up to age 70. If you’re married, it’s also important to consider what will happen if you die first. How will your surviving spouse’s income be changed by your claiming decision?
PENSIONS
A defined benefit pension plan may be part of your retirement income. These payments are designed to provide monthly income for as long as you live. Take great care in deciding how to take the payments if you are married or have a dependent who will count on this income if you die first.
INCOME ANNUITIES
Insurance companies offer a variety of guaranteed income products. You might already have savings in an annuity product that you’ll turn into a guaranteed income stream, or you might consider buying one. While annuities can be complex, they are the only financial product backed by an insurance company.*
Take a full inventory of all your personal accounts and how they can deliver cash
After a lifetime of work and saving, you may find you have more accounts than you realize. Each account helped you save and will now become part of your retirement paycheck. And each type of account has unique options, distribution rules and tax obligations. Here are some of the more common accounts you may have in your inventory:
401(k)s, 403(b)s and 457(b)s
Tax-deferred when saving, but distributions are taxable. Required Minimum Distributions (RMDs) are required once you reach a certain age. You may be able to delay RMDs from your current employer if still working there.
Traditional IRAs, SEPIRAs and SIMPLE-IRAs
Usually tax-deductible when you made the contributions, but withdrawals are taxable in retirement.
Inherited IRAs
If you were named as a beneficiary on someone else’s IRA (not your spouse), you likely must fully liquidate the account in 10 years and may owe income tax.
Roth accounts
If the holding period and other rules are met, you can generally take money out income tax-free. Hooray!
Health Savings Accounts
These triple-tax advantaged accounts can be used in retirement to pay for qualified health expenses, including Medicare Part B and Part D premiums. When used for qualified expenses, withdrawals are income-tax-free.
Savings accounts and Certificates of Deposit (CDs)
Money socked away in these types of accounts are typically for emergencies. Interest earned is taxable each year
Brokerage and investment accounts
Any interest or capital gains earned from brokerage and/or investment accounts are taxable in the year of the transaction
Nonqualified deferred compensation
Distributions from various NQDC accounts are taxable. As the amounts may be substantial, estimated taxes are often owed as well.
There are many other types of accounts depending upon the complexity of your financial household. And if you have a spouse, they may also have a suite of their own similar accounts.
You can see how important it is to get all your accounts well-organized before retiring. Ensuring you are handling all accounts in the most tax-effective way will help you enjoy sufficient retirement income and achieve your legacy goals.
When planning for your retirement income, creating a simple visual helps you see your financial future.
You’ll want to know what you’ll have as income sources and how you’ll pay for your expenses for 30 years, more or less.
Making a visual 4 part retirement income plan
1. PERSONAL ACCOUNTS
- Tax-deferred accounts
- Taxable accounts
- Roth accounts
- HSAs1. PERSONAL ACCOUNTS
2. RELIABLE INCOME
- Social Security
- Pension payouts
- Income annuities
3. FLEXIBLE EXPENSES
- Travel
- Golf, fishing, sports
- Parties and dining out
- House renovations
4. ESSENTIAL EXPENSES
- Food, shelter, health care
- Taxes
- Utilities and tech
- Retirement goals
Know if you have a gap
After pulling together your four financial parts for retirement, do some simple math to answer these five key questions:
- How much of my essential expenses will be paid for by my guaranteed sources of income?
- If my essential expenses are higher than my guaranteed sources of income, how much will I need to pull from my personal savings accounts?
- What will change, if anything, once I reach the RMD age and must begin taking them?
- Do I understand how much I will pay for Medicare and other health care needs and where my HSA can help?
- If I have a spouse or partner, have we considered how retirement income will change for the surviving person?
Simplify and organize
Once you have an inventory of your personal accounts, organize them.
Whether that means at one financial institution, one financial advisor or in one integrated money management platform. If you have several same types of accounts (a rollover IRA, SEP IRA, and traditional IRA, for example), simplify by combining them.
Lastly, create a binder or online file of all the latest statements from all your future income sources. Review it at least once a year to keep track of changes.
The Gasaway Team
Gasaway Investment Advisors
7110 Stadium Dr
Kalamazoo, MI, 49009
(269) 324-0080
info@gasawayinvestments.com
www.gasawayinvestments.com
The Gasaway Team
Gasaway Investment Advisors
7110 Stadium Dr
Kalamazoo, MI, 49009
(269) 324-0080
info@gasawayinvestments.com
www.gasawayinvestments.com
This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal, or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material. ©401(k) Marketing, LLC. All rights reserved. Proprietary and confidential. Do not copy or distribute outside original intent
This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal, or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material. ©401(k) Marketing, LLC. All rights reserved. Proprietary and confidential. Do not copy or distribute outside original intent.
As you likely know, tariffs have been a major theme of the Trump administration in 2025. These tariffs are being implemented for a few reasons: negotiation/bargaining, punishment/sanction, and improving the U.S.’s economic situation. As a reminder, a tariff is a tax on imported goods. For example, raising the tariff rate on Japan to 25% means that all goods that U.S. companies import from Japan will be subject to a 25% tax at the port of entry. Punitive and Reciprocal Tariffs The tariff announcements began in February, with President Trump threatening 25% punitive tariffs on Canada and Mexico if they didn’t stop the flow of fentanyl across their borders. In April, Trump and the Secretary of Commerce Howard Lutnick announced “reciprocal tariffs”, aimed at lowering the trade deficits between the U.S. and foreign countries. These included a base 10% duty on all countries that have tariffs on U.S. goods, as well as significantly higher rates on countries with high tariff rates on U.S goods (like 46% on Vietnam). This announcement sent stocks reeling as the rates were much higher than expected. Stocks fell 14% in the next 4 days. Then, Trump put a 90-day pause on these reciprocal tariff and stocks rose almost 10% that day. As of August, these tariffs have gone into effect for all countries who haven’t made deals with the U.S. (Japan, Vietnam, and the EU have notably made deals). Targeted 50% Tariffs: India & Brazil India and Brazil have emerged as focal points of the new tariff strategy. India initially faced a 25% reciprocal tariff, but that was doubled to 50% since they are continuing to import Russian oil. Brazil’s tariff rate was raised from 10% to 50%, mostly for political reasons.
Market Indices Performance
Interest rates may seem like a topic best left to economists and bankers, but they play a critical role in your everyday financial life. Whether you're borrowing money, saving for the future, or investing, understanding how interest rates work can help you make smarter financial decisions. What Are Interest Rates? An interest rate is the cost of borrowing money, expressed as a percentage1. When you take out a loan, you pay interest to the lender. When you deposit money in a savings account, the bank may pay you interest in return. It’s the price of using someone else's money or the reward for letting someone else use yours. Who Sets Interest Rates? In the U.S., the Federal Reserve (or “the Fed”) influences short-term interest rates through the federal funds rate. This rate affects everything from mortgage loans to credit card APRs. When the Fed raises rates, borrowing becomes more expensive. When it lowers rates, loans become more affordable, often to stimulate economic growth. Why Interest Rates Change Interest rates are adjusted to manage inflation, support employment, and stabilize the economy. For example: Rising rates can help cool inflation but also make borrowing more costly. We have seen this over the last couple of years. Falling rates can encourage borrowing and spending but may reduce returns on savings. This narrative has become more vocal in 2025 with our president begging for rates to fall. These shifts can impact both your short-term budget and long-term financial plans. How Interest Rates Affect You Loans & Mortgages: A small change in rates can significantly affect your monthly payments and total loan costs. Credit Cards: Most credit cards have variable rates, meaning your debt becomes more expensive when rates rise. Savings & Investments: Higher interest rates can increase your savings returns and influence investment strategies. Consumer Behavior: Rate changes often affect when and how people borrow, spend, and save. How a Financial Advisor Can Help Navigating interest rate environments can be complex, especially when you're balancing multiple financial goals. A financial advisor can: Help you time major financial decisions, such as refinancing a mortgage or locking in a fixed-rate loan Adjust your investment strategy to account for rate-sensitive assets like bonds or real estate Guide your savings plan to take advantage of higher-yield opportunities Offer personalized advice on managing debt in rising-rate environments With expert insight, an advisor can help you avoid common pitfalls and align your financial strategy with current economic conditions. Final Thoughts Interest rates may not seem like a personal concern, but they directly affect your finances: from your debt to your savings to your investment portfolio. Understanding how they work and working with a financial advisor can help you make confident, well-timed financial choices in any rate environment. Sources: https://www.investopedia.com/terms/i/interestrate.asp
Retirement represents a pivotal phase in an individual’s life, marked by the transition from employment to a lifestyle supported by accumulated financial resources and personal planning. While often approached primarily through a financial lens, effective retirement planning must also incorporate qualitative factors that influence well-being, identity, and life satisfaction. This article outlines both the quantitative and qualitative dimensions of retirement, emphasizing the importance of a balanced and holistic perspective. Qualitative Aspects Beyond the numbers, retirement is a profound personal and emotional transition that affects daily life, self-perception, and interpersonal relationships. Here are a few aspects that influence a successful retirement transition: 1. Sense of Purpose Many retirees experience a loss of identity upon leaving the workforce. A successful retirement often involves finding new purpose through activities such as volunteering, mentoring, or creative pursuits. 2. Social Engagement Social isolation is a common challenge, particularly for those who derived much of their interaction from the workplace. Maintaining strong social networks contributes significantly to mental health and emotional resilience. 3. Health and Lifestyle Retirement presents an opportunity to focus on physical and mental well-being. Establishing healthy routines, engaging in regular exercise, and pursuing intellectual interests are vital for a high quality of life. 4. Psychological Adjustment The emotional shift into retirement can be complex, requiring time to adjust to a new identity and lifestyle. Gradual retirement or pre-retirement counseling may ease this transition. Quantitative Aspects The quantitative side of retirement focuses on measurable financial and logistical elements essential to sustaining one’s standard of living. 1. Financial Preparedness This includes the evaluation of retirement savings, income streams such as pensions and Social Security, and investment portfolios. 2. Life Expectancy and Longevity Risk With increasing life expectancy, retirees must plan for potentially 25–30 years of post-employment life.1 Longevity risk is the risk of outliving one’s assets and necessitates careful financial forecasting and often calls for conservative investment and withdrawal strategies. 3. Healthcare Costs Healthcare remains one of the most significant expenses in retirement. Retirees must anticipate out-of-pocket costs for insurance premiums, medical procedures, medications, and potential long-term care. Planning for these costs is critical to avoid financial strain later in life. 4. Investment Strategy and Risk Management Retirement typically involves a shift from growth-focused investing to capital preservation. Retirees must balance the need for income generation with the desire to protect against market volatility and inflation. Conclusion A meaningful and secure retirement depends on both quantitative preparation and qualitative enrichment. Financial planning lays the foundation, but personal fulfillment, health, and social engagement define the experience. A truly successful retirement is one that aligns financial stability with purposeful and satisfying living. Source: https://www.dunham.com/FA/Blog/Posts/financial-planning-in-an-era-of-longer-lifespans?ref=dunham.ghost.io
The financial advisory industry is undergoing a significant transformation, driven by rapid advances in technology. Once reliant solely on face-to-face meetings and manual portfolio management, today’s financial advisors are leveraging digital tools to offer smarter, faster, and more personalized financial guidance. Far from replacing financial advisors, technology enhances their capabilities, allowing them to deliver more value to clients, stay compliant, and compete in a fast-changing market. 1. The Digital Shift in Financial Advising The traditional model of financial advising that involves paper documents, in-person meetings, and delayed communications, is becoming obsolete. Clients now expect real-time updates, mobile access, and digitally driven experiences. Advisors who embrace technology are not just meeting these expectations; they’re creating new value. Cloud-based platforms, CRM tools, and secure client portals are streamlining workflows, freeing up more time for relationship-building and strategic planning. 2. Robo-Advisors: Competitor or Complement? Robo-advisors are automated, algorithm-driven investment platforms that were initially seen as a threat to traditional advisors. But the story has changed. Instead of replacing human advisors, robo-advisors are now often integrated into hybrid advisory models, combining the efficiency of automation with the insight of human expertise. For example, financial advisors can use robo platforms to handle routine tasks like portfolio rebalancing or tax-loss harvesting, while focusing their time on complex planning, retirement strategies, and holistic financial coaching. 3. Artificial Intelligence and Data Analytics AI is becoming a trusted partner for financial advisors. By analyzing massive amounts of client data, AI tools can uncover patterns, identify risks, and generate tailored recommendations that help advisors offer more proactive and customized advice. With predictive analytics, advisors can forecast life events and suggest actions long before clients even ask. This makes the advisor not just a service provider, but a true financial partner. 4. Client Experience: Personalized, Digital, and On-Demand Modern clients, especially Millennials and Gen Z, expect a digital-first approach to money management. Advisors are meeting this need with client dashboards, mobile apps, and video conferencing tools that make communication fast and convenient. Technologies like e-signatures, digital onboarding, and interactive financial planning software improve transparency and foster engagement. Some advisors even use gamification or AI-powered chatbots to make financial literacy more accessible. 5. Compliance and Cybersecurity in a Digital World As advisors handle more client data online, cybersecurity and regulatory compliance are top priorities. Fortunately, technology also provides solutions here. Compliance tools can monitor communication, generate audit trails, and ensure KYC/AML standards are met with minimal manual input. Secure document storage, multi-factor authentication, and encrypted messaging platforms help advisors build trust and maintain client confidentiality. 6. Open Banking and Financial Integration Tools Thanks to Open Banking and API-driven platforms, advisors can now access clients’ complete financial picture. From banking and loans to retirement accounts and insurance, advisors can get up to date data all in one place without having to ask for updated paper statements. This integrated view allows for holistic planning and better decision-making. Tech-forward advisors are leveraging aggregation tools like eMoney, MoneyGuidePro, or RightCapital to deliver dynamic plans that evolve with clients' goals and can track real time habits of their clients. 7. Fiduciaries vs. Technology? As technology becomes central to financial services and governance, fiduciaries must evolve to meet new standards of care, loyalty, and prudence. Today’s fiduciary responsibilities extend beyond traditional decision-making to include oversight of AI tools, digital platforms, data privacy, and cybersecurity. Whether it’s relying on algorithm-driven investment strategies or evaluating third-party tech vendors, fiduciaries are now expected to exercise digital literacy and ethical judgment in tandem with legal obligations. The rise of opaque algorithms, ESG scoring tools, and automated systems requires not only informed adoption but transparent governance. Technology is no longer a support function it’s becoming a core fiduciary consideration within decision making and putting client’s best interests forward. In conclusion, while some may fear that the integration of technology into the financial sector could diminish control, the reality is quite the opposite. By leveraging advanced tools, advisors are empowered to deliver enhanced, personalized service, allowing them to focus more effectively on their clients and streamline the overall experience. Sources: Nitrogen Launches Its Own AI Notetaker (And More Of The Latest In Financial) Bot Versus Human: For Financial Planning, It’s No Contest Meet the AI agents defining the new customer experience
Managing personal finances does not need to be overwhelming. Achieving long-term financial goals often begins with simple steps, such as creating a budget and implementing effective debt management strategies. By adopting a few disciplined habits, you can establish a strong financial foundation, reduce stress, and move closer to financial independence. Whether you're just getting started or seeking to refine your approach, consider these five key steps to strengthen your financial well-being: 1. Set Clear Financial Goals Before creating a budget or starting to save, take time to clearly define your financial goals. It's difficult to make meaningful progress without a clear direction. Identify what you want to achieve. Whether it’s paying off debt, purchasing a home, or building an emergency fund, categorizing your goals by timeframe: short-term (1–2 years), medium-term (3–5 years), and long-term (10+ years) can help give direction to which order your goals should fall. Well-defined, measurable goals provide clarity, purpose, and motivation to stay on track. 2. Track Your Spending You can’t fix what you can’t see. Begin by tracking all your income and expenses for a month to gain a clear picture of your financial habits. Whether you use budgeting apps, spreadsheets, or simply pen and paper, the goal is to identify spending patterns, highlight areas for improvement, and uncover potential savings opportunities. 3. Create a Simple Budget A budget is a strategic plan for managing your finances. To create one, begin with your total income, deduct your fixed expenses, such as rent, utilities, and other essential bills, then allocate the remaining funds toward financial goals, savings, and discretionary spending. The 50/30/20 rule is a great place to start: 50% needs 30% wants 20% savings/debt repayment Remember, this is a general structure to help give an idea. Adjust as needed to fit your life. 4. Build an Emergency Fund An emergency fund is your financial safety net. Aim to save at least a measurable, fixed dollar amount to start, then work up to 3–6 months of living expenses. Keep it in a high-yield savings or checking account so it is accessible, but out of everyday reach. This fund keeps unexpected expenses from turning into debt or even more stress. 5. Pay Off Debt and Start Investing Focus on high-interest debt first, like credit cards. Then, compare which debt is ok with sticking around by seeing if it is Good Debt or Bad Debt. A good way to do this is by measuring the life of the item that has the debt associated with it and how long you plan to use said item. For example, a mortgage on a home is Good Debt. A home is an appreciating asset that most people will use for many years. A high-interest personal loan is an example of Bad Debt. Credit cards are the perfect example of this. A common tactic used to get Bad Debts under control is the debt snowball. This approach involves focusing on paying off the smallest balances first while maintaining minimum payments on larger debts. As each balance is eliminated, the freed-up funds are rolled into the next smallest debt, creating a compounding effect. This method builds momentum and motivation, helping you stay engaged as payments grow and debts are steadily eliminated. Once debt is under control, investing in the future is the next step. Use retirement accounts like 401(k)s or IRAs for long-term, tax beneficial growth. Time and consistency are your best friends when planning.
Risk management in financial planning is the process of understanding potential financial threats, evaluating their significance, and taking proactive steps to reduce their impact. These risks may arise from changes in the market, unexpected personal challenges, rising costs, tax implications, or broader economic changes. While it’s not possible to eliminate risk completely, effective financial planning helps you anticipate challenges, reduce their severity, manage their effects, and recover more effectively when setbacks occur. Why Risk Management Is Crucial 1. Preserves Your Capital The first rule of investing is often, “Don’t take losses.” Risk management helps protect your principal, so you're not forced to sell after a major loss. 2. Keeps Emotions in Check Fear and greed drive many poor financial decisions. With a risk management strategy in place, you’re less likely to panic during market volatility or chase unrealistic gains. 3. Improves Financial Resilience Life is unpredictable, and events like job loss, health emergencies, or market downturns can quickly disrupt your plans if you're not prepared. Risk management helps create a financial cushion, giving you the stability to navigate these challenges more confidently. 4. Ensures Long-Term Growth A well-balanced approach to risk helps you stay invested for the long term, which is where real wealth accumulation happens. It prevents overexposure to risk while still allowing growth. 5. Aligns Your Portfolio with Your Life Goals Not every investor is trying to beat the market. Some just want a comfortable retirement or a college fund for their kids. Managing risk aligns your financial plan with your goals and time horizons. Core Risk Management Strategies 1. Asset Allocation Asset allocation refers to how you distribute your investments across different asset classes such as stocks, bonds, and real estate. A younger investor may choose a higher proportion of stocks to pursue growth over a longer time horizon. In contrast, someone approaching retirement is more likely to prioritize stability and capital preservation by allocating more to bonds or dividend-paying stocks. 2. Diversification Even within an asset class, spreading your investments across industries, geographies, and types of securities can reduce the risk of any one failure hurting your portfolio. Don’t put all your eggs in one basket. 3. Insurance Planning Life, health, disability, and property insurance all protect against unexpected events that can have a major financial impact. 4. Emergency Fund This is your first line of defense against sudden expenses or income loss. A fully funded emergency reserve helps you avoid tapping into your investments during downturns. 5. Contingency Planning A good financial plan includes backup strategies for major life events, such as losing a job, dealing with illness, or supporting a family member. Having backup plans in place can help you stay focused and make clear decisions, even when emotions are running high. 6. Regular Monitoring and Rebalancing Market changes may shift your portfolio away from your desired risk level. Rebalancing brings it back in line and helps manage risk over time. Risk Management at Different Life Stages Risk tolerance and financial priorities often evolve with age, but everyone is different. The following examples offer a general framework to help assess an appropriate level of risk based on your stage in life: In your 20s–30s: You can typically afford to take more investment risk (long time horizon). In your 40s–50s: Risk should be more balanced. Growth is still important, but so is preservation and protection of principal. In your 60s and beyond: Capital protection and income become more critical than aggressive growth. Preservation of funds is of utmost importance. A financial plan that adapts to each stage of life while maintaining a focus on risk management is both effective and prudent. Make Risk Work For You, Not Against You Risk in financial planning is not inherently negative; in fact, it is often a key driver of wealth creation and a necessary element in achieving long-term goals. When managed effectively, risk can present valuable opportunities. However, unmanaged risk can lead to significant setbacks. Through thoughtful planning and the use of appropriate risk management strategies, you can navigate uncertainty with greater confidence and make informed decisions that align with your objectives. Ultimately, risk management is not just about minimizing losses, but about building a resilient and adaptable financial plan capable of withstanding challenges and continuing to grow over time.
When it comes to preparing for retirement, Social Security often serves as the foundation of most Americans' retirement income. While it was never intended to be the sole source of income in retirement, Social Security remains a vital component in any comprehensive financial plan. Understanding how it fits into your retirement strategy and how to maximize its benefits can make a significant difference in your long-term financial security. The Role of Social Security in Retirement Planning Social Security is a government-administered insurance program that provides guaranteed monthly income based on your lifetime earnings and contributions through payroll taxes. For many retirees, it accounts for a significant portion of their income. According to the Social Security Administration, the program replaces about 40% of the average worker’s pre-retirement income. For lower-income earners, that percentage may be even higher(1). However, to build a stable and sufficient retirement income, Social Security should be considered one part of a three-legged stool, along with personal savings (such as IRAs or 401(k)s) and employer-sponsored pensions or retirement plans. As pensions are starting to phase out, items like an emergency fund or money market funds are becoming more and more important to help with budgeting and immediate expenses. Key Planning Considerations 1. Timing Your Claim Strategically One of the most important decisions in retirement planning is when to begin collecting Social Security benefits. You can start receiving benefits as early as age 62, but doing so will reduce your monthly benefit by ~30% permanently. Conversely, delaying benefits beyond your full retirement age can increase your benefit by up to 8% per year until age 70 (2). Factors to consider: Life expectancy and health status Employment plans after age 62 Need for immediate income vs. long-term income security Spousal or survivor benefits 2. Understanding Spousal and Survivor Benefits Social Security also offers benefits for spouses, ex-spouses, and survivors. If you are married, you may be entitled to receive up to 50% of your spouse's benefit, and surviving spouses may receive their deceased spouse’s full benefit if it is higher than their own. In retirement planning, it’s important to coordinate benefits between spouses to optimize household income, especially when one partner has significantly higher lifetime earnings. 3. Tax Implications Social Security benefits may be taxable depending on your total income. If your combined income (adjusted gross income + nontaxable interest + 50% of your Social Security benefits) exceeds certain thresholds, you could pay tax on up to 85% of your benefits. A tax-aware retirement income plan can help minimize taxes and stretch your retirement dollars further. With the ‘One Big Beautiful Bill Act’ now becoming law, from 2025-2028 seniors age 65 and older will get an additional $6,000 deduction to use on their taxes if their adjusted gross income is below $75,000 ($150,000 for married) (3). This new law will have an impact on whose Social Security will be exposed to being taxable and whose will not. 4. Inflation Protection One of the advantages of Social Security is that it is adjusted annually for inflation through cost-of-living adjustments. This built-in inflation protection makes it a reliable income stream in retirement and helps preserve purchasing power over time, something few private annuities or pension plans offer. Integrating Social Security into Your Financial Plan Incorporating Social Security into your broader financial plan requires careful analysis of your income needs, expected expenses, other retirement assets, and goals. A few best practices include: Estimating future benefits using tools like the SSA’s online calculator or statements from your "my Social Security" account. Running scenarios to test different claiming ages and how they impact long-term financial outcomes. Coordinating with other income sources to create a tax-efficient withdrawal strategy. Consulting a financial planner to tailor your strategy based on your personal needs. The Bottom Line Social Security is more than just a monthly check; it’s a critical asset in your retirement portfolio. Making informed decisions about when and how to claim your benefits can significantly impact your financial well-being over the course of your retirement. While you can't control market returns or interest rates, you can control your Social Security strategy. Used wisely, it can enhance your income security and provide peace of mind as you transition into retirement. Sources: 1: https://www.ssa.gov/policy/docs/ssb/v72n3/v72n3p37.html 2: https://www.ssa.gov/benefits/retirement/planner/agereduction.html 3: http://irs.gov/newsroom/one-big-beautiful-bill-act-tax-deductions-for-working-americans-and-seniors This is not an offer or a solicitation to buy or sell securities. Material is meant to provide general information and it is not to be construed as specific investment, tax or legal advice. The information has been compiled from third party sources. Keep in mind that current and historical facts may not be indicative of future results. Additional information, including management fees and expenses, is provided on our Form ADV Part 2, available upon request or at the SEC’s Investment Advisor Public Disclosure website, https://adviserinfo.sec.gov/firm/summary/123807 .
On July 4, 2025, President Donald J. Trump signed into law the One Big Beautiful Bill Act (OBBBA), a far-reaching tax and spending package that reshapes key components of the U.S. fiscal landscape. The legislation, extending more than 900 pages, builds upon the 2017 Tax Cuts and Jobs Act and introduces substantial changes across individual taxation, corporate incentives, federal entitlement programs, and national spending priorities. Key Provisions of the Legislation 1. Extension of Individual Tax Provisions The OBBBA makes permanent the reduced personal income tax rates initially established under the 2017 Tax Cuts and Jobs Act. The individual rate brackets (10% to 37%) and expanded standard deduction are maintained indefinitely, offering tax continuity for most income earners.² 2. Modification of the State and Local Tax (SALT) Deduction The legislation increases the SALT deduction cap from $10,000 to $40,000 for taxpayers earning less than $500,000 annually. This expanded deduction gradually phases out for higher earners and is scheduled to revert to its original cap in 2030.¹ 3. Introduction of New Deductions and Tax Benefits Several temporary deductions, effective through 2028, have been introduced. These include: • Tax exemption for tips and overtime wages² • Deductibility of auto loan interest² • An additional $6,000 deduction for senior citizens over age 65²,³ • Expanded child tax credits and tax-deferred child benefit accounts² 4. Estate and Charitable Giving Revisions The estate tax exemption is increased to $15 million beginning in 2026. Furthermore, the bill allows non-itemizers to deduct qualified charitable contributions, thus incentivizing broader philanthropic participation.⁴ 5. Corporate and Energy-Related Measures Corporate tax relief is expanded through the reintroduction of 100% bonus depreciation and targeted tax incentives for semiconductor manufacturing. Simultaneously, the legislation phases out key clean energy subsidies enacted under the Inflation Reduction Act, prioritizing fossil fuel investments and infrastructure.⁵ 6. National Security and Trade Adjustments The OBBBA includes provisions for increased defense spending and border enforcement, allocating $150 billion to each. Additionally, the bill introduces new tariffs and a 1% tax on international remittances.⁶ Distributional Effects: Beneficiaries and Those Adversely Affected Primary Beneficiaries: • High-income taxpayers, particularly in high-tax states, benefit from the SALT cap increase and the preservation of reduced tax rates. • Senior citizens, who gain from enhanced deductions and tax-free treatment of Social Security benefits. • Corporations and large businesses, which enjoy renewed tax incentives and regulatory relief. Groups Potentially Adversely Affected: • Low-income individuals, due to reductions in Medicaid funding (12–18%) and the imposition of work requirements for Supplemental Nutrition Assistance Program (SNAP) recipients, potentially disqualifying 10–17 million individuals. • Clean energy developers, as tax credits for renewable energy are curtailed. • Higher education institutions with large endowments, which face new taxation measures. Fiscal Outlook and Policy Implications According to the Congressional Budget Office, the OBBBA is projected to increase the national debt by approximately $3.5 trillion over the next decade. Federal revenue losses are estimated between $3 and $4.5 trillion, while the number of uninsured Americans is expected to rise by roughly 11.8 million.⁷ Conclusion The One Big Beautiful Bill Act is emblematic of the Trump administration’s policy priorities: tax relief for individuals and corporations, reduced federal social spending, and enhanced investment in defense and fossil fuel industries. While proponents highlight economic stimulation and tax certainty, critics raise concerns over regressive impacts, environmental setbacks, and long-term fiscal sustainability. As implementation unfolds, policymakers and taxpayers alike will closely monitor its economic and social consequences. Sources 1: https://www.mayerbrown.com/en/insights/publications/2025/07/one-big-beautiful-billact-introduces-significant-domestic-and-international-tax-changes 2: https://bipartisanpolicy.org/explainer/the-2025-tax-bill-additional-6000-deduction-forseniors-simplified/ 3: https://www.kiplinger.com/taxes/extra-standard-deduction-age-65-and-older 4: https://www.fidelitycharitable.org/articles/obbb-tax-reform.html 5: https://frostbrowntodd.com/one-big-beautiful-bill-act-cuts-the-powerphase%E2%80%91outs-foreign%E2%80%91entity-restrictions-and-domestic-content-inclean%E2%80%91energycredits/#:~:text=Introduction,orders%20as%20they%20are%20published. 6: https://armedservices.house.gov/legislation/one-big-beautiful-bill.htm 7: https://am.jpmorgan.com/wr/en/asset-management/liq/insights/marketinsights/market-updates/on-the-minds-of-investors/unpacking-the-obbbas-impact-onthe-us-economy-fiscal-health-and-more/
Our brief June monthly update on the markets and the economy.