The 1715 Podcast · Retirement Education Series

Retirement Income Planning: A Complete Guide for Treasure Coast Retirees

Whether you’re five years from retirement or already living it, understanding how to convert a lifetime of savings into a reliable income stream is one of the most important financial challenges you’ll ever face. This guide walks you through the core concepts — clearly, completely, and without the sales pitch.

What You’ll Learn in This Guide

1. What retirement income planning actually means
2. The major sources of retirement income
3. Understanding the “income gap” — and how to close it
4. Withdrawal strategies: making your money last
5. Taxes in retirement — often the overlooked variable
6. Healthcare costs and their impact on your income plan
7. Inflation: the quiet risk every Florida retiree faces
8. Frequently asked questions

1. What Retirement Income Planning Actually Means

During your working years, financial planning is largely about accumulation — saving money, growing investments, and building a nest egg. Retirement income planning is a fundamentally different discipline. It’s about distribution — turning what you’ve accumulated into a steady, dependable flow of money that covers your expenses for the rest of your life.

That shift sounds simple, but it introduces a set of challenges that don’t exist during your working years. When you were employed, a paycheck arrived on a predictable schedule regardless of whether the stock market was up or down. In retirement, your income often depends on decisions you make — when to claim Social Security, how much to withdraw from your IRA, whether to purchase annuity income — and those decisions interact with one another in complex ways.

A retirement income plan is, at its core, a written strategy that answers three questions:

• Where will my money come from? Identifying every income source you’ll have in retirement.
• How much will I need? Estimating your actual spending requirements, not just a guess.
• How long do I need it to last? Accounting realistically for your life expectancy and your spouse’s.

For Treasure Coast residents — many of whom retire to Port St. Lucie, Stuart, Vero Beach, or the surrounding communities — the planning context includes Florida’s lack of a state income tax (a real advantage), the cost of living in a coastal area, and the reality that warm-weather retirees often stay active and live longer than average. That makes getting this right especially important.

2. The Major Sources of Retirement Income

Most retirees draw from several income sources simultaneously. Understanding each one — and its rules, limits, and trade-offs — is the foundation of a sound plan.

3. Understanding the Income Gap — and How to Close It

A simple but powerful concept in retirement income planning is the “income gap” — the difference between your guaranteed income (Social Security, pensions) and your actual monthly spending needs.

For example: suppose your estimated monthly expenses in retirement are $5,500. Your Social Security benefit is $2,200 per month, and your spouse’s is $1,400. Your guaranteed income totals $3,600 — leaving an income gap of $1,900 per month, or $22,800 per year, that must come from your savings and investments.

This framework is useful because it clarifies exactly how much “work” your portfolio needs to do. The larger the gap, the more your savings must generate — and the more important it becomes to think carefully about how those savings are invested, how they’re withdrawn, and how long they need to last.

Some retirees can reduce the gap by delaying Social Security, working part-time in early retirement, downsizing their home, or making modest adjustments to their spending. Others may choose to convert a portion of savings into guaranteed income through an annuity. There is no universally “right” answer — the best approach depends on your personal balance sheet, health, risk tolerance, and goals.

4. Withdrawal Strategies: Making Your Money Last

Once you know how much your portfolio needs to generate, the next question is: how do you withdraw it in a way that doesn’t run out — especially if you live into your 80s or 90s?

The “4% Rule” (and its limitations): A widely cited research finding, the 4% rule suggests that a retiree could withdraw 4% of their portfolio in the first year of retirement, then adjust that amount for inflation each subsequent year, with a high historical probability of the portfolio lasting 30 years. It’s a useful starting point for estimating how much a portfolio can sustainably support, but it was derived from specific historical market conditions and should not be treated as a guarantee.

Bucket strategies: Some retirees find it helpful to mentally (or literally) separate their savings into “buckets” — one for near-term spending (cash and short-term bonds), one for medium-term needs (more conservative investments), and one for long-term growth (stocks). This approach can reduce anxiety about market volatility because near-term spending money is insulated from short-term market swings.

Sequence-of-returns risk: One of the most important and least understood retirement risks is the danger of large portfolio losses early in retirement. A significant market decline in your first few years of withdrawals — when your portfolio is at its largest — can permanently impair your long-term income, even if markets recover later. This is why the investment strategy you use during retirement often needs to look different from the strategy you used before retirement.

Account withdrawal order: The sequence in which you draw down different accounts — taxable first, then tax-deferred, then Roth — can meaningfully affect your lifetime tax bill. This is an area where thoughtful planning and coordination with a tax professional can pay off significantly over time.

5. Taxes in Retirement — The Often-Overlooked Variable

Many people are surprised to discover that retirement doesn’t mean the end of a meaningful tax obligation. Several factors can create significant tax exposure:

• Social Security taxation: Up to 85% of your Social Security benefit may be subject to federal income tax, depending on your combined income. (Florida does not tax Social Security at the state level.)
• RMDs from traditional IRAs and 401(k)s: These mandatory withdrawals are taxed as ordinary income and can push you into higher brackets, increase Medicare premiums, and affect Social Security taxation all at once.
• IRMAA surcharges: Higher-income Medicare beneficiaries pay Income-Related Monthly Adjustment Amounts (IRMAA) on top of standard Medicare Part B and Part D premiums. A large one-time income event — like a Roth conversion or a home sale — can trigger these surcharges the following year.

Florida’s lack of a state income tax is a genuine financial advantage for retirees here on the Treasure Coast — but federal taxes still apply fully. Strategic Roth conversions (paying tax now at a known rate to avoid potentially higher taxes later), tax-loss harvesting, and careful management of income timing can all help reduce your lifetime tax burden. This is a nuanced area that benefits from coordination between your financial planner and a qualified tax professional.

6. Healthcare Costs and Their Impact on Your Income Plan

Healthcare is consistently one of the largest and most unpredictable expenses in retirement. Fidelity’s annual research estimates that a 65-year-old couple retiring today may need approximately $315,000 or more (in today’s dollars) to cover healthcare costs throughout retirement — and that figure excludes long-term care.

Medicare basics: Medicare becomes available at age 65. Part A (hospital insurance) is generally premium-free for those who have worked 40 quarters. Part B (outpatient/doctor coverage) carries a monthly premium (currently $174.70/month in 2024 for most beneficiaries, subject to IRMAA). Part D covers prescription drugs. Most retirees supplement Medicare with either a Medigap (Medicare Supplement) policy or a Medicare Advantage plan — each with different trade-offs in cost, flexibility, and coverage.

The bridge period: If you retire before age 65, you’ll need to bridge the gap with private insurance — either through a former employer’s COBRA coverage, a spouse’s plan, or a Marketplace plan under the ACA. This can be a substantial cost. Some pre-retirees on the Treasure Coast choose to work part-time specifically to maintain employer-sponsored health coverage until Medicare eligibility.

Long-term care: Medicare provides very limited long-term care coverage. Nursing home care in Florida can run $8,000–$12,000 per month or more; assisted living communities vary widely. Options for managing this risk include long-term care insurance, hybrid life/LTC products, or self-insuring through dedicated portfolio assets. There is no one-size-fits-all answer, but ignoring this risk is rarely the wisest choice.

7. Inflation: The Quiet Risk Every Florida Retiree Faces

Inflation doesn’t announce itself dramatically. It works gradually — but over a 25- or 30-year retirement, even modest inflation meaningfully erodes purchasing power. At a 3% average annual inflation rate, $5,000 per month in spending today would require roughly $10,400 per month to buy the same goods and services 25 years from now.

Florida retirees face some inflation pressures that are particularly pronounced: homeowners’ insurance premiums have risen sharply in recent years, property taxes in growing communities can increase as values rise, and the cost of healthcare — which tends to inflate faster than the general economy — weighs more heavily on retirees than on younger households.

Social Security includes a Cost-of-Living Adjustment (COLA) that provides partial protection against inflation. But most other income sources — fixed pensions, fixed annuity payments, CD interest — do not automatically increase with inflation. This is one reason why maintaining some meaningful allocation to growth-oriented investments (such as equities) in retirement remains important for many people, even though it introduces short-term market volatility.

Building an inflation-resilient income plan means balancing the need for near-term stability with the need for long-term purchasing power. That balance looks different for everyone — it depends on your health, your spending flexibility, your other assets, and your personal comfort with uncertainty.

The 1715 Podcast

Many of the topics covered in this guide — Social Security timing, tax-efficient withdrawals, Medicare planning, and building income that lasts — are explored in depth on The 1715 Podcast. Hosted by advisors who live and work on the Treasure Coast, each episode is designed to give Florida retirees and pre-retirees practical, unbiased financial education they can actually use.

▶ New episodes available at 1715tcf.com and wherever you listen to podcasts.

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