Retirement Income Planning
Retirement Income Strategies in Denver: How to Build a Sustainable Withdrawal Plan
Transitioning from saving for retirement to spending from it requires a different set of decisions. Our Denver-based CFP® and CFA credentialed advisors help pre-retirees and retirees design withdrawal plans that coordinate Social Security, tax-efficient sequencing, and portfolio sustainability for a retirement that could span decades.
Schedule a ConsultationWhat Are Retirement Income Strategies?
A Coordinated Approach to Spending What You've Saved
Retirement income strategies are the methods and frameworks used to convert accumulated savings, investments, and stable income sources into ongoing cash flow throughout retirement. A sustainable withdrawal plan coordinates when to claim Social Security, which accounts to draw from first, how to manage taxes on distributions, and how to adjust spending as circumstances change. For Denver and Colorado retirees, state-specific tax rules add another layer to consider. Our retirement planning services provide the hub for this more focused look at income strategy.
Seven strategies commonly discussed in retirement income planning include:
Social Security Optimization
Timing when to claim benefits to support lifetime income.
Systematic Withdrawals
Drawing a set percentage or dollar amount from investments each year.
Bucket Strategy
Dividing assets into short-term, mid-term, and long-term pools.
Tax-Efficient Sequencing
Choosing which accounts to tap first to manage tax liability.
Roth Conversions
Converting traditional assets to Roth in lower-income years.
Annuity-Based Income
Using insurance products to create a stream of contractual payments.
Dynamic Spending Adjustments
Modifying withdrawals based on market performance and needs.
Social Security Optimization
Timing Your Claim to Support Lifetime Income
Social Security is one of the few sources of income that continues for life and adjusts with inflation. Deciding when to claim can significantly affect total benefits received. Ryan Griffin, CFP®, Financial Planning Manager at The Stellarix Group, helps clients evaluate claiming strategies in the context of their broader retirement income picture.
For workers born in 1960 or later, full retirement age (FRA) is 67. Claiming as early as age 62 reduces monthly benefits by approximately 30%, while delaying past FRA increases benefits by 8% per year up to age 70 (SSA). For 2026, the maximum monthly benefit at FRA is $4,152, and the average retired-worker benefit after the 2.8% cost-of-living adjustment is approximately $2,071 (SSA 2026 COLA Fact Sheet).
Individual benefits depend on your earnings history, years worked, and claiming age. The decision to delay or claim early also involves trade-offs: delaying means fewer years of payments but larger monthly amounts, while claiming early provides income sooner at a permanently reduced rate. Coordinating spousal and survivor benefits adds further complexity.
2.8%
2026 COLA Increase
$4,152
Max Monthly Benefit at FRA
8%
Annual Delayed Retirement Credit
Age 70
Latest Year to Earn Credits
Source: Social Security Administration, 2026 COLA Fact Sheet. Figures as of January 2026. Individual benefits vary based on earnings history and claiming age.
Comparing Withdrawal Strategies
Four Frameworks for Structuring Retirement Income
No single withdrawal method is right for every household. Each framework has structural advantages and limitations, and many retirees use a combination. The table below compares four commonly discussed approaches.
| Strategy | How It Works | Potential Advantages | Key Considerations |
|---|---|---|---|
| Systematic Withdrawals | Withdraw a fixed dollar amount or percentage (often discussed as a guideline around 4%) from the portfolio annually, adjusted for inflation. | Simple to implement; provides predictable income; easy to monitor. | May deplete assets during extended market downturns; the 4% guideline is a starting point, not a promise; actual sustainability depends on market returns, inflation, and time horizon. |
| Bucket Strategy | Divide assets into time-segmented pools: near-term cash, intermediate-term bonds, and long-term growth investments. | May reduce the emotional impact of market volatility; provides a structured spending roadmap. | Requires rebalancing and maintenance; cash allocations may reduce long-term growth; does not eliminate sequence-of-returns risk. |
| Dynamic Withdrawals | Adjust withdrawal amounts annually based on portfolio performance, spending needs, and market conditions. | May extend portfolio longevity by reducing withdrawals during downturns; responds to real-world conditions. | Income fluctuates year to year, which may complicate budgeting; requires ongoing monitoring and discipline. |
| Income Flooring | Match essential expenses to stable income sources (Social Security, pensions, annuities) and fund discretionary spending from investments. | May help cover essential needs during periods of market volatility; provides psychological comfort. | May require allocating a significant portion of assets to contractual income sources; income insurance products may have fees and limited liquidity; inflation protection varies by product. |
These strategies are educational comparisons, not recommendations. Each approach involves trade-offs, and suitability depends on individual circumstances. Our advisors can help evaluate which framework, or combination, may align with your goals.
Required Minimum Distributions
2026 RMD Rules: What to Plan For
Required Minimum Distributions are mandatory withdrawals from certain tax-deferred retirement accounts. Failing to take them can trigger significant penalties. Understanding the current rules helps you plan withdrawals proactively rather than reactively.
RMD Starting Age
Under SECURE 2.0, the RMD starting age is generally 73 for traditional IRAs, SEP IRAs, SIMPLE IRAs, and most defined-contribution plans. The age rises to 75 for individuals who turn 73 after December 31, 2032 (generally those born in 1960 or later) (IRS; CRS).
Roth Accounts
Original owners of Roth IRAs generally have no lifetime RMD requirement. SECURE 2.0 also eliminated lifetime RMDs for designated Roth accounts in 401(k) and 403(b) plans beginning in 2024. Beneficiaries of inherited Roth accounts may still be subject to distribution rules (IRS).
Deadline and Calculation
The first RMD is generally due by April 1 of the year after you reach the applicable age; subsequent RMDs are due by December 31 each year. The 2026 RMD is calculated using the account balance as of December 31, 2025, divided by the applicable IRS life-expectancy factor (IRS Publication 590-B).
Penalty for Missed RMDs
SECURE 2.0 reduced the excise tax for missed RMDs from 50% to 25% of the undistributed amount. If corrected within the applicable correction period, the penalty may be further reduced to 10% (IRS).
Sources: IRS Retirement Topics, RMDs; Congressional Research Service. Information as of September 2026. Rules for inherited accounts and employer plans may differ. Our tax planning services can help coordinate RMD strategy with your overall plan.
Colorado Tax Considerations
State-Specific Benefits for Colorado Retirees
Colorado offers tax subtractions that may reduce the taxable portion of retirement income for eligible residents. Understanding these provisions can influence which accounts you draw from and when.
Taxpayers age 65 or older may subtract up to $24,000 of qualifying pension and annuity income. Those ages 55 to 64 may subtract up to $20,000. Taxpayers 65 and older may also subtract the full federally taxable portion of Social Security benefits. For ages 55 to 64, the full Social Security subtraction is available if federal AGI does not exceed $75,000 (single) or $95,000 (joint); above those thresholds, the subtraction is generally capped at $20,000 (Colorado DOR; Colorado DOR, SS and Pensions).
These subtractions interact: a Social Security subtraction reduces the available limit for other qualifying pension and annuity income. The same income cannot be claimed under multiple subtractions. Individual tax situations vary, and we coordinate with your CPA or tax professional to align withdrawal sequencing with Colorado tax rules.
$24,000
Max Pension Subtraction (Age 65+)
$20,000
Max Pension Subtraction (Ages 55 to 64)
$75,000
SS Subtraction AGI Limit (Single, Under 65)
$95,000
SS Subtraction AGI Limit (Joint, Under 65)
Source: Colorado Department of Revenue, updated March 2026. Eligibility requirements and income limits apply. Consult your tax professional for individual guidance.
Annuity Considerations and Portfolio Sustainability
Balancing Contractual Income With Long-Term Growth
Annuity Considerations
Annuities are insurance contracts that can provide a stream of payments for life or a set period. They may serve as a tool for income flooring, helping cover essential expenses with predictable payments. Bryan Andersen, CFA, Financial Advisor at The Stellarix Group, evaluates annuity considerations alongside investment portfolio analysis to help clients understand how different income tools may fit together.
Annuities also involve trade-offs. Depending on the contract type, they may carry fees, surrender charges, and limited liquidity. Some products adjust for inflation; others do not. The financial strength of the issuing insurer matters, as payments depend on the insurer's ability to meet obligations. Annuities are one category of income tool, not a universal solution, and suitability depends on individual circumstances.
Portfolio Sustainability
A sustainable withdrawal plan seeks to balance current income needs with the risk of depleting assets too early. Two factors are particularly important: sequence of returns risk (the impact of market downturns early in retirement) and longevity risk (the possibility of outliving assets). Diversification across account types, asset classes, and income sources may help manage these risks, though no strategy can eliminate them entirely.
Our risk management and insurance planning services complement investment strategy by addressing life, disability, and long-term care risks that could affect retirement sustainability. For a broader look at retirement planning, visit our financial advisor for retirees page.
Avoid These Pitfalls
Common Mistakes in Retirement Income Planning
Even well-funded retirees can encounter difficulties when income strategy is overlooked. Here are common missteps and how coordinated planning may help address them.
Coordinated planning may also involve long-term care planning, estate planning strategies, and charitable giving strategies that align with your income goals.
Frequently Asked Questions
Retirement Income Questions, Answered
What Are Effective Retirement Income Strategies?
Commonly discussed strategies include Social Security optimization, systematic withdrawals, the bucket strategy, tax-efficient withdrawal sequencing, Roth conversions, annuity-based income, and dynamic spending adjustments. Most retirees benefit from combining several approaches rather than relying on a single method. The right mix depends on your savings, expenses, tax situation, and goals.
Is $3,000 a Month a Good Retirement Income?
Whether $3,000 per month represents adequate retirement income depends entirely on your expenses, location, debt, healthcare needs, and lifestyle goals. In Colorado, housing and healthcare costs vary significantly between Denver and other regions. A financial advisor can help you project your required income and evaluate whether your savings and income sources may support it.
How Much Social Security Will I Get if I Make $120,000 a Year?
Social Security benefits depend on your 35 highest-earning years, not just your current salary, plus your claiming age relative to full retirement age. The SSA provides an online calculator at ssa.gov that estimates benefits based on your actual earnings record. For 2026, the maximum taxable earnings base is $184,500 (SSA). A CFP® professional can help coordinate Social Security timing with your broader retirement plan.
What Is a Good Monthly Income for a Retired Person?
There is no universal benchmark for good retirement income. What matters is whether your income sources can cover your essential expenses, fund your discretionary spending, and adjust for inflation over a retirement that could last 30 years or more. Many planners suggest replacing a percentage of pre-retirement income, but the right target varies by household. Building a personalized withdrawal plan is more useful than comparing to averages.
Can I Retire at 62 With $400,000 in a 401(k)?
Retiring at 62 with $400,000 depends on many factors: your monthly expenses, other income sources (including Social Security, which is reduced if claimed at 62), healthcare coverage before Medicare eligibility at 65, expected longevity, inflation, and investment strategy. Early retirement extends the time your assets must last and may increase sequence-of-returns risk. A comprehensive financial plan can help you evaluate whether this scenario may be feasible for your situation.
Your Retirement Income Plan
Let One Star Guide Your Way
Building a sustainable retirement withdrawal plan means coordinating Social Security, taxes, investments, and risk management in one integrated strategy. Our CFP® and CFA credentialed advisors in Denver serve clients across Colorado and all 50 states. Connect with our team to explore how a personalized income plan may align with your goals.
Schedule a ConsultationOr call us at (303) 692-8183
2000 S Colorado Blvd, Tower 2, Ste 800, Denver, CO 80222