Two Very Different Jobs
Building your retirement savings and spending it down are not the same skill. For 25 or 30 years the job was simple: contribute, invest, and try not to touch it. The job that starts the day you retire is completely different. Now every account, your pension, Social Security, your 403(b), your 457(b), has to work together to produce a paycheck that lasts as long as you do.
That distribution phase can easily run 25 to 30 years. A retirement income plan is what tells you, in actual dollars, whether the paycheck you are about to create holds up that long.
The Order You Draw From Accounts Matters
Your pension and Social Security, if you have it, show up automatically. The rest, your 403(b), 457(b), and any other savings, requires a decision every year about where the next dollar comes from.
Pull too much from tax-deferred accounts early and you can push yourself into a higher bracket, make more of your Social Security taxable, or trigger higher Medicare premiums down the road. Draw the wrong account down first and you can run short of flexibility later, right when you need it most. We build a withdrawal sequence around your specific mix of accounts so each year's decision supports the plan instead of working against it.
This is exactly where the bucket strategy comes in. Safety money covers near-term needs, income-producing assets fund the middle years, and growth money is left alone long enough to keep working for you.
Planning for a 25 to 30 Year Retirement
Your CalSTRS or CalPERS pension includes a cost-of-living adjustment, but it is generally capped well below actual inflation in a high-inflation environment, and it applies to your pension only, not to Social Security or your other income sources on the same terms. Over a multi-decade retirement, that gap compounds.
A retirement income plan accounts for that gap directly. We build in an assumption for rising costs, particularly healthcare, and structure part of your portfolio for growth specifically so your income has a chance to keep pace over 20 or 30 years, not just the first five.
Protecting Your Spouse
Your pension election is a decision you make once, and it directly affects what your spouse receives if you pass away first. A retirement income plan has to be built around both of you, not just around your own numbers.
We walk through your pension election options side by side with your other income sources, so you can see exactly what changes for your spouse under each scenario before you make an irreversible choice.
Coordinating Pension and Social Security Timing
If you are a classified employee or otherwise paid into Social Security during your career, when you claim it is one of the more consequential decisions in your entire retirement plan. Claim early and the reduction is permanent. Wait, and each year of delay past your full retirement age adds a guaranteed increase up to age 70.
For CalSTRS members, most teaching service does not pay into Social Security, so your pension carries more of the load. If you also have Social Security from other work, a spouse's benefit, or a second career, the timing of your pension election and your Social Security claim need to be looked at together, not decided separately.