Will your money last as long as you do? Most retirees cannot answer that question with confidence. Not because they lack assets, but because they lack a written plan. In our experience working with families preparing for or living in retirement, the vast majority do not have a written income plan in place.[1] That is the real risk. Retirement is not about how much you have. It is about how your assets produce income in a structured, repeatable way. Without that structure, even well-built portfolios can face challenges under adverse conditions.

During your working years, your focus is growth. You contribute consistently and have time to recover from market declines. Retirement changes the rules. You now depend on your portfolio to generate income. Every withdrawal matters. Timing matters. Mistakes can compound faster. You are no longer building wealth. You are converting it into a paycheck, and that requires a shift in strategy. A portfolio built for accumulation is not automatically built for distribution.

Many investors believe market volatility is the primary threat in retirement. In our experience, the greater risk is often how withdrawals interact with market performance over time. This is commonly referred to as a sequence of returns at risk. If markets decline early in retirement and withdrawals continue, this can reduce the base your portfolio needs to recover. Over time, this may increase the risk of depleting assets sooner than expected.[2]

Consider a simple example. A couple retires at age 65 with $1.5 million and begins taking withdrawals. If the market declines by 15% in the first year, those withdrawals come from a reduced balance. Even if markets recover later, the early withdrawals may have a lasting impact on the portfolio’s ability to sustain income.[3] Average returns may appear sufficient over time, but outcomes can differ significantly depending on when those returns occur.

A Retirement Income Stress Test is a structured planning process designed to evaluate three key areas. How much income a portfolio may reasonably support, how long that income may last under different assumptions, and how the plan performs across a range of market and economic scenarios. This is not about predicting markets. It is about preparing for uncertainty. A well-designed stress test evaluates factors such as market variability, inflation, and longevity, while coordinating investment, tax, and income decisions.

One approach many investors use to structure retirement income is to assign purposes to different segments of their portfolio. This is often described as a three-bucket framework. The first bucket focuses on near term income needs and is generally allocated to more stable assets. The second bucket is designed for intermediate needs and balances growth and stability. The third bucket is focused on long term growth to help support future income and offset inflation. This type of structure can help reduce reactive decision-making during periods of market volatility and provide greater clarity around income sources over time.

A well-designed income plan begins with income mapping. You should be able to identify where each dollar of income is expected to come from. This may include Social Security, pensions, dividends, interest, and portfolio withdrawals. The objective is to align reliable income sources with essential expenses, while using more flexible sources for discretionary spending.

Withdrawal strategy is another critical component. The order and timing of withdrawals across taxable, tax deferred, and tax-free accounts can influence both tax outcomes and portfolio sustainability. Factors such as Required Minimum Distributions, capital gains, and Social Security timing should be considered as part of a coordinated approach. Thoughtful planning in this area may help improve overall efficiency.

Portfolio alignment is equally important. Your investment strategy should reflect your income needs, time horizons, and tolerance for risk. Growth remains important, but stability and income generation also play a role. Each allocation should serve a defined purpose within the broader plan.

Inflation must also be addressed. Over time, rising costs can erode purchasing power. Even moderate inflation can have a meaningful impact over a long retirement. Including growth-oriented assets and reviewing the plan periodically may help address this risk.

Longevity is another key factor. Many retirees underestimate how long they may live. A healthy couple at age 65 has a meaningful probability that one spouse will live in their 90s. [4] Planning for longer time horizons can help reduce the risk of outliving assets.

Healthcare and unexpected expenses should also be considered. Costs related to Medicare, potential income-related premium adjustments, and out-of-pocket healthcare expenses can affect a retirement plan. Planning these variables in advance may help reduce uncertainty.

Without a written income plan, many retirees tend to follow one of three patterns. They may withdraw more than is sustainable, withdraw less than they could and unnecessarily limit their lifestyle, or make reactive decisions during periods of market volatility. A structured plan can help provide a more consistent framework for decision making.

This matters in today’s environment. Interest rates, inflation, and market conditions continue to evolve. This creates both opportunity and complexity. Coordinating investment, tax, and income decisions has become increasingly important for high-net-worth families seeking to maintain long-term financial stability.

At PFS Wealth Management Group, we guide clients through a structured planning process designed to align these elements. The Retirement Income Stress Test is a key component of that process. It focuses on coordination, clarity, and disciplined decision making across all areas of a client’s financial life.

If you are within 10 years of retirement or already retired, there is one simple question worth answering. Do you have a written income plan that clearly outlines how your assets are intended to support your lifestyle over time? If not, you may benefit from a more structured approach.

We offer a Retirement Income Stress Test for individuals and families seeking greater clarity around their retirement strategy. In one meeting, you will gain a clearer understanding of your current income approach, identify potential risks and inefficiencies, evaluate how your plan may perform under different conditions, and outline potential next steps based on your goals.

To learn more, visit www.pfswealthgroup.com or email info@pfswealthgroup.com to request your Retirement Income Stress Test. Bringing extraordinary value to extraordinary families each and every day starts with a plan designed with purpose.

Required Disclosure:

Insurance products are offered through the insurance business PFS Wealth Management Group. PFS Wealth Management Group is also an

Investment Advisory practice that offers products and services through AE Wealth Management, LLC (AEWM), a Registered Investment Advisor. AEWM does not offer insurance products. The insurance products offered by PFS Wealth Management Group are not subject to Investment Advisor requirements.

Investing involves risk, including the potential loss of principal. Any references to protection, safety or lifetime income, generally refer to fixed insurance products, never securities or investments. Insurance guarantees are backed by the financial strength and claims paying abilities of the issuing carrier. This radio show is intended for informational purposes only. It is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual’s situation. Please remember that converting an employer plan account to a Roth IRA is a taxable event. Increased taxable income from the Roth IRA conversion may have several consequences. Be sure to consult with a qualified tax advisor before making any decisions regarding your IRA

PFS Wealth Management Group is not permitted to offer, and no statement made during this show shall constitute tax or legal advice. Our firm is not affiliated with or endorsed by the U.S. Government or any governmental agency. The information and opinions contained herein provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by PFS Wealth Management Group.

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Footnotes:

[1] Based on internal observations from client and prospective client meetings conducted by PFS Wealth Management Group. This is not a scientific study and may not be representative of all investors.

[2] Source: https://www.morningstar.com/retirement/how-sequence-returns-risk-affects-your-retirement.

[3] Hypothetical example for illustrative purposes only. Results will vary based on market conditions, withdrawal rates, and individual circumstances.

[4] Source: https://www.ssa.gov/oact/STATS/table4c6.html.