Introduction:
Retirement used to mean a steady pension check and Social Security. Today, most of us have to piece together different income streams to make sure money lasts as long as we do. That’s why creating a retirement paycheck plan is so important — it turns your savings into reliable monthly income.
This post builds on our earlier discussions:
- Why Annuities Are the New Retirement Anchor in 2025 (July)
- Annuities for Beginners: 5-Step Starter Guide (July)
- Annuity Laddering Strategies: How to Maximize Income & Flexibility (July)
- Retire Smarter: How Target-Date Funds With Private Markets Are Reshaping Retirement Portfolios (August)
- 🌱 Target-Date Funds 2.0: How Private Markets Could Grow Your Retirement Savings (August)
Together, these posts showed how annuities and modern target-date funds can support your retirement. Now, let’s bring it all together into one paycheck plan.
Why Do You Need a Retirement Paycheck Plan?
Q: Isn’t Social Security enough?
- In most cases, no. Social Security covers only a portion of living expenses.
- Rising costs, inflation, and the declining value of fiat money mean your dollars lose buying power each year.
In simple terms: A paycheck plan fills the gap between your guaranteed income and your real-life expenses.
Step 1: Add Up Your Essential Expenses
Think about the basics you must pay for every month:
- Housing (rent, mortgage, utilities)
- Food and groceries
- Healthcare and insurance
- Transportation
- Other essentials (like phone, internet, clothing)
This is your “must-have” budget.
Step 2: Count Your Guaranteed Income
Guaranteed income is money you can depend on every month, no matter what happens:
- Social Security
- Pension(s)
- Annuities (see Why Annuities Are the New Retirement Anchor in 2025)
Add these together and see how much of your essential expenses they cover.
Step 3: Plan Your Flexible Income
Flexible income comes from accounts and investments that can rise and fall with the market:
- Retirement accounts like 401(k)s or IRAs
- Target-date funds (see Target-Date Funds 2.0)
- Brokerage accounts or investments
These help cover the shortfall after guaranteed income, but withdrawals must be managed carefully.
Step 4: Fill in the Gap
If your expenses are higher than your guaranteed + flexible income, you have options:
- Annuity laddering strategies (see Annuity Laddering Strategies: How to Maximize Income & Flexibility)
- Cutting back on lifestyle expenses (travel, hobbies, extras).
- Part-time or consulting work to boost income (preview for October’s topic: Semi-Retiree Lifestyles: Work on Your Terms).
Step 5: Protect Against Inflation
Remember, costs rise over time. A dollar today won’t buy the same tomorrow. Consider:
- Choosing annuities with inflation protection.
- Keeping part of your portfolio invested for growth.
- Reviewing and adjusting your plan every year.
Step 6: Add Lifestyle & Fun Funds
Retirement isn’t just about paying bills. A good paycheck plan also budgets for:
- Travel
- Hobbies or classes
- Family gifts or support
These are your “joy” expenses, but they still need a place in your plan.
Quick Takeaway
- Add up your essential costs.
- Subtract your guaranteed income.
- Use flexible income and, if needed, optional part-time work to cover the rest.
- Review yearly to stay ahead of inflation.
In simple terms: A retirement paycheck plan turns your savings into a steady monthly flow, so you can live with confidence instead of worry.
Free Tool: Retirement Paycheck Worksheet
Ready to put this into practice? Download the worksheet we’ve created to map out your own retirement paycheck plan:
👉 Download the Retirement Paycheck Worksheet (Free PDF)
Next Month’s Topic Preview: Many retirees discover that part-time work or passion projects not only fill the income gap but also keep life meaningful. In October, we’ll explore “Semi-Retiree Lifestyles: Work on Your Terms.”