Preparing Your Retirement Income for the Year Ahead

As a new year approaches, many people focus on resolutions like eating better or exercising more. But one area that often gets overlooked — and arguably matters far more — is retirement income planning.

If you’re retired or within 10 years of retirement, the year ahead can bring meaningful changes to your financial life. Market volatility, rising healthcare costs, inflation, and tax law changes don’t wait until January to take effect. The retirees who feel the most confident aren’t reacting to these changes — they’re preparing for them in advance.

Preparing your retirement income for the year ahead isn’t about chasing higher returns. It’s about clarity, predictability, and protecting the income you rely on to live your life.

Below is a practical, step-by-step guide to help you review and strengthen your retirement income strategy heading into the new year and beyond. 

Step 1: Take Inventory of Your Income Sources

Start by listing every source of income you expect to receive in retirement. This sounds simple, but many people underestimate how fragmented their income really is.

Common retirement income sources include:

• Social Security benefits
• Pensions (if applicable)
• Investment withdrawals
• Required Minimum Distributions (RMDs)
• Rental or business income
• Annuity income
• Interest or dividend income

Once everything is written down, separate income into two categories:

Guaranteed Income vs. Variable Income

Guaranteed income is income you can count on regardless of market conditions.
Examples include Social Security, pensions, and certain annuities.

Variable income depends on market performance or withdrawal timing.
Examples include investment portfolios, mutual funds, and brokerage accounts.

Why this matters:
Your essential expenses — housing, food, utilities, insurance, healthcare — should ideally be covered by guaranteed income. Variable income can then support discretionary spending like travel, hobbies, and gifts.

If most of your income relies on market performance, the year ahead may feel stressful instead of secure.

Step 2: Stress-Test Your Plan Against Inflation

Inflation doesn’t just raise prices — it quietly erodes purchasing power. Even moderate inflation can significantly reduce what your income can buy over time.

Ask yourself:

• How much have my everyday expenses increased over the last few years?
• Does my income grow, or is it fixed?
• How will inflation affect me 5, 10, or 20 years from now?

Healthcare, food, insurance, and property costs tend to rise faster than general inflation. A retirement income plan that looks fine on paper today may feel tight sooner than expected if inflation isn’t addressed.

Preparing for the year ahead means understanding which parts of your income can adjust and which cannot.

Step 3: Review Your Social Security Strategy

Social Security is often the foundation of retirement income, yet it’s commonly misunderstood.

Key questions to revisit each year:

• Did I claim at the right time based on my health, income needs, and longevity?
• Am I coordinating benefits properly with my spouse?
• How much of my Social Security is exposed to taxation?
• Do cost-of-living adjustments keep pace with my actual expenses?

For many retirees, Social Security alone is not enough to cover essential costs — but when combined with other guaranteed income sources, it can create a strong baseline.

The year ahead is a good time to confirm that Social Security fits properly into your overall income plan rather than operating in isolation.

Step 4: Prepare for Healthcare and Medicare Costs

Healthcare is often the largest wildcard expense in retirement. Premiums, deductibles, prescriptions, and out-of-pocket costs can change annually.

As you prepare for the year ahead, review:

• Medicare Part B and Part D premiums
• Prescription drug coverage changes
• Supplemental or Advantage plan adjustments
• Expected out-of-pocket costs

Even small premium increases can add up over a year, especially for couples. If healthcare expenses aren’t clearly accounted for in your income plan, they can disrupt your budget quickly.

Planning ahead allows you to adjust income sources before costs increase — not after.

Step 5: Understand Required Minimum Distributions (RMDs)

Once you reach the applicable age, Required Minimum Distributions become a non-negotiable part of retirement income planning.

RMDs can impact:

• Tax brackets
• Medicare premium surcharges
• Social Security taxation
• Overall cash flow

Preparing for the year ahead means knowing:

• Which accounts are subject to RMDs
• How much you’ll be required to withdraw
• Whether those withdrawals are truly needed for income

If RMDs are creating unnecessary tax pressure, it may be time to evaluate tax-efficient income strategies before distributions increase further.

Step 6: Evaluate Market Risk and Timing Risk

Many retirees are exposed to two risks that don’t get enough attention:

Market Risk

The risk that market downturns reduce portfolio value.

Timing Risk

The risk of withdrawing income during a market downturn, locking in losses.

If the year ahead brings volatility — and history suggests it often does — relying heavily on market-based income can increase stress and uncertainty.

A well-prepared retirement income plan balances growth with protection so you’re not forced to make financial decisions at the worst possible time.

Step 7: Create a Clear, Written Income Plan

One of the biggest differences between confident retirees and anxious ones is clarity.

A strong retirement income plan answers:

• How much income do I receive each month?
• Which income sources are guaranteed?
• How are essential expenses covered?
• Where does discretionary income come from?
• What happens if markets decline?
• How does my plan adjust over time?

If your plan exists only in your head — or scattered across statements — it’s not really a plan.

Preparing for the year ahead means turning assumptions into structure.

Why Preparation Matters More Than Prediction

No one can predict markets, inflation, or policy changes with certainty. But retirees who prepare properly don’t need perfect predictions.

They’ve already:

• Reduced dependence on market timing
• Aligned income with expenses
• Planned for healthcare and taxes
• Built flexibility into their strategy

That preparation creates confidence — regardless of what the year ahead brings.

Tootsie’s Takeaway 🐾

I once buried a bone so well… I couldn’t find it later. Turns out, forgetting where your income comes from isn’t a great retirement strategy either.

Here’s the real lesson: retirement income works best when it’s clear, dependable, and easy to track. If you don’t know which income is guaranteed and which depends on the market, you’re guessing — and guessing doesn’t pay the bills. A solid plan helps you enjoy retirement instead of worrying through it.

Final Thought

Preparing your retirement income for the year ahead isn’t about starting over. It’s about reviewing, adjusting, and strengthening what you already have — before small issues become big problems.

The best time to prepare is before the year begins. The second-best time is now.

Written by Brent Meyer, founder of SafeMoney.com. With more than 20 years of experience helping families navigate retirement and legacy planning, Brent is committed to making financial education simple, clear, and trustworthy.

Disclaimer: This article is for educational purposes only and should not be considered financial, tax, or legal advice. Retirement strategies vary based on individual circumstances. Always consult with a qualified financial professional before making financial decisions.