Retirement Planning: One Size Doesn’t Fit All

For the most important financial decision of your life, you need a plan that’s tailored especially for you.

Smiling older couple looks at retirement planning documents.
(Image credit: Getty Images)

Planning for retirement is not easy. The key to planning is to reduce the probabilistic aspects of your retirement and to effectively manage the other risks. Importantly, that process is very personal.

For my next four articles, I’m going to give you the following retirement planning lessons based on what we at Go2Income have learned these past five years:

  1. One Size Doesn’t Fit All — Especially in Planning Your Retirement
  2. Understand the Numbers — And What Contributes to Success
  3. Plan Should Last a Lifetime — But Should Adjust to Your Life Events
  4. Get Your Order Right — So Do Your Planning in the Right Order

Real-Life Example of Picking the Right Size

I enjoyed a happy day of preschool shopping with my grandkids in late August. While helping them find a few items, I spotted a T-shirt style I admired in various shades of my favorite color (green) and wandered over to that rack. I considered size, the many hues of green, pondered pre-fit vs. relaxed and, of course, price.

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Before the kids got too antsy, I chose the one that suited me best and bought it. I assume you don’t care much about how I dress, but I mention this scenario to show how important it is to dismiss the concept of “one size fits all.”

Virtually everything can be customized to fit us individually. And that includes a retirement income plan.

New Retirement Rules of Thumb Still Have Issues

I’m not the only one who is advocating a new way of looking at planning for retirement. The New York Times wrote much the same thing.

In the article, finance reporter Tara Siegel Bernard quoted experts who basically said the 4% rule of thumb (a “one-size-fits-all” rule) is dead. The experts, however, proposed new rules of thumb that aren’t much better. Their ideas were at least somewhat customizable to specific circumstances, but they followed the same narrow path: Pick an income goal and test it to see if it fails. If it fails, cut back on your spending.

Message to the experts: Your test results could fail at any time without warning, leaving retirees with no choice but to downsize.

A rule of thumb isn’t the best way to determine what is probably the most important financial decision in your life.

Consider Your Major Sources Of Income

To achieve your best plan for retirement income, look at all of the major sources of income that are logical for your situation and create a plan where the lion’s share is in the form of safe income.

That means:

  • Understand and correctly use the different sources of income — dividends, interest, annuity payments and withdrawals (involving sales of securities) — from your savings.
  • Select long-term planning assumptions for the markets and inflation with the understanding that you likely won’t achieve them in the short term.
  • Monitor your plan, re-project the planning results in real time and update your plan if necessary. Note: The more safe income you have, the less volatility you will contend with.

Expect Variability in Results When Planning

Let’s look at how the above approach might work for a consumer who develops a plan with Go2Income guidance. We looked at the results for Go2Income plans ordered over the week ending Sept. 16. The average visitor to Go2Income had retirement savings of $1.6 million (about half was in a rollover IRA), and half of these retirees wanted to leave a legacy of their current savings. Sixty-three percent were married with an average age of 66.

Based on all these stats, the average Starting Income Percentage (SIP) was 5.01%. So, did we declare victory with our new 5% rule of thumb? Nope. It’s not about being the highest, it’s about being the right fit. Also, the SIP is only the start (no pun intended) of a Go2Income plan. It is important because it tells you the contribution of income from your savings to meet your income goal. But a plan also needs to address inflation, lifetime income, legacy and liquidity.

Even so, since it’s the first thing a visitor sees, you ought to know it needs to be personalized. The SIP for these visitors ranged from 3.98% to 7.36%. There are lots of factors impacting that result, but age, gender and marital status are keys, with a male only, female only and couple averaging 5.54%, 4.87% and 4.97%, respectively.  

Using SIP to Personalize Your Plan

I apologize for all the numbers, but a plan for retirement income is defined by the kind of retirement you want and deserve. One thing that shows up immediately is how the pricing of annuity payments affects your plan. With the increase in interest rates and improvement in annuity payout rates, all SIPs are higher than they were at the beginning of the year — from 4.55% to 5.01%.

And, of course, there are additional plan options you can adjust to meet other SIP or retirement objectives. For example, if you want to rely on the inflation protection of Social Security benefits or income-producing real estate, you might build in a lower inflation rate. A reduction from 2% to 1% in the assumed annual inflation would increase the average SIP from 5.01% to 5.54%.

Even more than a T-shirt, the plan must be tailored just for you — and your SIP is an efficient way to set started.

Are you shopping for more retirement income? The experts at Go2Income can help. Start by answering a few simple questions and receive a complimentary personalized plan.


This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Jerry Golden, Investment Adviser Representative
President, Golden Retirement Advisors Inc.

Jerry Golden is the founder and CEO of Golden Retirement Advisors Inc. He specializes in helping consumers create retirement plans that provide income that cannot be outlived. Find out more at, where consumers can explore all types of income annuity options, anonymously and at no cost.