The Common Sense Retirement Roadmap: A Different Approach to Retirement Planning in Greenville

A Common Sense Approach to Retirement Planning

Every year, thousands of people retire in the Upstate. Some slide into retirement smoothly, confident and prepared. Others struggle, stressed about whether their money will last, confused by Medicare, worried about taxes, and uncertain about their investment strategy.

What separates these two groups?

It’s not how much money they have. I’ve seen people with $300,000 retire more comfortably than others with $1.5 million. The difference is the approach—whether they have a comprehensive roadmap or just a collection of financial products.

Today, I want to walk you through what we call the Common Sense Retirement Roadmap and explain why it’s different from what most advisors offer.

Why Most Retirement Plans Fail

Let me start with a story. Last month, a gentleman I’ll call Robert came into our Anderson office. He’d recently retired from Michelin after 32 years on the manufacturing floor. He had about $680,000 saved—a great accomplishment he had worked hard for.

But Robert was stressed. Really stressed.

He’d been working with a financial advisor from one of the big firms, and when I asked him what his retirement plan was, he pulled out a single page showing his portfolio allocation: 55% stocks, 35% bonds, 10% cash.

“That’s your investment allocation,” I said. “But what’s your plan?”

He looked confused. “Isn’t that my plan?”

This is the problem. Most advisors create an investment portfolio and call it a retirement plan. But an investment allocation isn’t a plan any more than owning a car is a travel itinerary.

A real retirement plan answers five critical questions:

1. Income: Where will my paycheck come from when I stop working?
2. Investments: How should my assets be positioned for both safety and growth?
3. Taxes: How can I minimize the tax bite on my retirement income?
4. Healthcare: How will I handle medical expenses and long-term care costs?
5. Legacy: How do I ensure my wealth transfers efficiently to my loved ones?

That’s the Common Sense Retirement Roadmap—five integrated pillars that work together to create a comprehensive strategy for your retirement years.

Let me walk you through each pillar and explain how comprehensive planning addresses situations like Robert’s.

Pillar 1: Income Plan – a Key Part of Your Financial Plan

Here’s the fundamental shift that happens at retirement: your paycheck stops. For four decades, money flowed in predictably every two weeks. Now, you need to recreate that paycheck using your savings, Social Security, maybe a pension, and other income sources.

This is where most people make their first critical mistake: they assume they’ll just withdraw 4% from their portfolio each year and hope it lasts.

The 4% rule is broken, folks. It was created in 1994 based on historical market data and assumed a 30-year retirement with a specific portfolio allocation¹. But today’s retirees face:

• Longer lifespans (many of you will live into your 90s)
• Lower bond yields than historical averages
• Higher healthcare costs
• Increased market volatility
• Different tax environments

For someone in Robert’s situation—recently retired with about $680,000 saved—a comprehensive income plan would typically start by creating two budgets: essentials and lifestyle.

Essential expenses might include:

• Housing costs (even with a paid-off home, there are taxes and insurance)
• Food and utilities
• Healthcare premiums
• Transportation
• Other necessities

The lifestyle bucket would cover discretionary spending:

• Travel
• Hobbies and entertainment
• Helping family members
• Buffer for unexpected wants

Let’s say essentials total around $48,000/year and lifestyle goals add another $20,000, creating a total need of $68,000 annually.

Next, we’d examine guaranteed income sources. For a Michelin retiree, this might include:

• Social Security (timing the claim strategically)
• A small company pension

If these sources provide, say, $40,400 per year, that leaves an income gap of $27,600 that needs to come from savings.

Here’s where strategic income planning becomes critical. Rather than simply withdrawing from a portfolio and hoping it lasts, a comprehensive approach might include building what we call a Retirement Income Generator (RIG) using multiple strategies:

Strategy Option 1: Multi-Year Income Bucket A retiree might consider positioning a portion of savings (perhaps $150,000) into a combination of short-term bonds, structured notes, and high-quality bond funds. This creates a stable bucket that can provide income for several years while serving as an emergency fund. Critically, this money isn’t subject to stock market volatility.

Strategy Option 2: Income-Focused Annuity Some retirees allocate a portion of their savings (maybe $200,000-$250,000) to a fixed index annuity with income features. These products can provide contractual income with principal protection, often allowing free withdrawals of 10% annually. The income continues regardless of market performance.

Strategy Option 3: Dividend and Interest Income The remaining portfolio might be positioned to generate dividend and interest income from quality investments, providing supplemental cash flow while maintaining growth potential for inflation protection.

The goal is to create layered income sources that work together—ideally exceeding the basic need to provide a comfortable cushion and flexibility for increased spending when desired.

More importantly, with this type of structure, essential expenses can be covered by guaranteed or highly stable income. If the market drops 30%, lifestyle doesn’t have to change dramatically.

Pillar 2: Investment Strategy – the Growth Portion of Your Financial Plan

Once income needs are addressed, investment positioning becomes much clearer and less stressful. This is the opposite of how most people approach retirement—they start with investments and hope the income works out.

A comprehensive investment strategy for someone like Robert might use what’s called a bucket approach:

Bucket 1 (Years 1-5): Safety and Stability This bucket holds the income reserves mentioned above—low volatility, high safety. The goal is to ensure short-term income needs are met regardless of market conditions.

Bucket 2 (Years 6-10): Moderate Growth A moderate allocation (perhaps $100,000-$120,000) might go into a mix of bonds, dividend stocks, and balanced funds. This bucket needs to grow enough to eventually refill Bucket 1 but doesn’t need to take aggressive risk.

Bucket 3 (Years 11+): Long-Term Growth The remaining assets (maybe $150,000-$180,000) can be positioned in growth-oriented investments—primarily stocks. This money has at least a decade to ride out market volatility and focuses on long-term growth, inflation protection, and legacy building.

This bucketing strategy is powerful because it removes stress from short-term market movements. When stocks dropped in 2022, retirees using this approach likely didn’t panic because their income for the next five years was secure. They could let growth investments recover without being forced to sell at a loss.

Compare this to having everything in a moderate allocation. If the market drops significantly early in retirement, a retiree might be forced to sell investments at depressed prices just to generate income—a phenomenon called sequence of returns risk that can devastate a retirement².

Pillar 3: Tax Planning – Pay What You Owe But Don’t Leave a Tip

This is where we typically find the biggest opportunities—and where most advisors drop the ball completely.

For someone like Robert with substantial IRA and 401(k) savings, tax planning is critical but often overlooked. When everything is in traditional retirement accounts, every dollar withdrawn is fully taxable.

Here’s the problem many retirees don’t see coming: starting at age 73 or 75, required minimum distributions (RMDs) force withdrawals from IRAs whether the money is needed or not. For someone with $600,000-$700,000 in traditional accounts, RMDs by age 80 could easily exceed $40,000-$45,000 annually, potentially pushing them into higher tax brackets.

Without planning, a retiree might pay $150,000-$200,000 or more in unnecessary taxes over their lifetime.

Strategic tax planning for this situation might include several approaches:

Strategy Option 1: Roth Conversions During early retirement years (ages 62-70, before RMDs begin), converting portions of traditional IRAs to Roth IRAs while staying within lower tax brackets can be powerful. By paying some tax now at known, relatively low rates, future RMDs can be dramatically reduced.

For example, converting $30,000-$40,000 annually for 8-10 years while staying in the 12% or 22% bracket might cost $36,000-$48,000 in taxes. But it could save $120,000-$180,000 over a lifetime—a 3-to-4 times return on the tax paid.

Strategy Option 2: Qualified Charitable Distributions (QCDs) For charitably-minded retirees who donate to churches or nonprofits, QCDs allow donations directly from IRAs starting at age 70½. This satisfies RMD requirements without increasing taxable income—potentially saving $500-$1,000+ annually in taxes³.

Strategy Option 3: Tax-Efficient Withdrawal Sequencing The order withdrawals are taken matters significantly:

1. Taxable accounts first (taking advantage of lower capital gains rates)
2. Tax-deferred accounts strategically (managing bracket creep)
3. Roth accounts last (letting tax-free money grow as long as possible)

This sequencing alone can save thousands annually compared to the common approach of simply taking everything from IRAs.

Pillar 4: Healthcare & Asset Protection

Healthcare planning is often the most overlooked aspect of retirement preparation, yet it can have enormous financial impact.

For someone retiring before 65, there’s a critical gap period before Medicare begins. Private health insurance through the Affordable Care Act marketplace here in South Carolina can easily cost $1,500-$2,000+ per month. Over three years, that’s $54,000-$72,000 that needs to be budgeted.

Many retirees don’t factor this into their planning and get blindsided by the expense. A comprehensive roadmap includes:

Medicare Planning Strategies:

• Understanding Original Medicare Parts A & B
• Evaluating Medicare Supplement (Medigap) plans versus Medicare Advantage
• Selecting appropriate Part D prescription drug coverage
• Managing income to avoid IRMAA surcharges that can add $1,000-$6,000+ annually to Medicare premiums⁴

Long-Term Care Considerations:

This is the elephant in the room that nobody wants to discuss. But the statistics are sobering:

• 67% of people turning 65 will need some form of long-term care
• Nursing home costs in Upstate South Carolina average $7,000-$9,000 per month
• A typical 2-3 year stay costs $170,000-$270,000

For someone whose father spent time in a nursing home—as was the case with Robert—this isn’t theoretical. It’s a real concern that needs addressing.

Traditional long-term care insurance has challenges: it’s expensive, has “use it or lose it” features, and premiums can increase. Many people explore alternatives such as:

Hybrid Life Insurance with LTC Riders: These products allow a lump sum allocation (perhaps $75,000-$100,000) that provides leveraged long-term care benefits (often 2-3x the premium) if needed, but pays out as life insurance if care is never required. This eliminates the “use it or lose it” concern.

Asset-Based Long-Term Care: Similar concept—money positioned to provide protection without the risk of losing premiums if care isn’t needed.

Strategic Asset Positioning: Some retirees with larger estates specifically earmark assets as a “long-term care bucket”—money set aside that wouldn’t devastate the surviving spouse’s lifestyle if needed for care.

The key is addressing this before health issues arise, ideally in your 50s or early 60s when options are most available and affordable.

Pillar 5: Legacy Planning

Many retirees have spent decades building wealth but never formalized how it should transfer to the next generation. Basic beneficiary designations on accounts aren’t enough for most situations.

For someone like Robert with children and grandchildren, comprehensive legacy planning might include working with an estate planning attorney to create:

Revocable Living Trust: This powerful tool allows assets to pass to heirs without going through probate court. In South Carolina, probate can take 12-18 months and becomes public record. A trust provides:

• Faster distribution of assets
• Privacy (not public record)
• Control over how and when beneficiaries receive funds
• Potential creditor protection

Powers of Attorney:

• Healthcare POA designating who makes medical decisions if incapacitated
• Financial POA allowing someone to manage finances if needed

Living Will: Documenting wishes about end-of-life care to avoid burdening family with difficult decisions.

Tax-Efficient Beneficiary Planning: Strategic designation of beneficiaries can save tens of thousands in taxes. For example:

• Roth IRAs might go to younger beneficiaries (grandchildren) who have decades for tax-free growth
• Traditional IRAs might go to beneficiaries in lower tax brackets
• Life insurance (which is generally tax-free) might go to beneficiaries who would benefit most from tax-free income

Estate planning costs are typically modest ($2,000-$3,500 for comprehensive documents) but the value is enormous: avoiding probate, reducing family conflict, and potentially saving tens of thousands in taxes and legal fees.

Why This Approach Works

This comprehensive roadmap approach differs fundamentally from what most advisors provide. Here’s why:

Most advisors are trained in investments, not retirement distribution. They learned how to build portfolios, not how to create retirement paychecks and navigate the complexities of taxes, healthcare, and legacy planning.

They don’t specialize. Retirement planning is what we do exclusively—not a side service alongside helping young families save or managing corporate 401(k) plans.

It takes time and expertise. Building a comprehensive roadmap requires multiple meetings, detailed analysis, coordination with estate planning attorneys and tax professionals, and ongoing monitoring. Many advisors would rather manage more clients with less depth.

They’re often product-focused. Many advisors are incentivized to sell specific products rather than create truly customized solutions.

At Common Sense Retirement Planning, we built our entire firm around this roadmap process. When you visit us at our offices in Greenville, Spartanburg, or Anderson, you won’t get a one-hour meeting with a portfolio pitch.

You’ll get a comprehensive analysis of all five pillars of retirement, customized to your specific situation, goals, and concerns.

Is This Retirement Planning Approach Right for You?

This level of comprehensive planning makes the most sense if you:

• Have at least $250,000 saved for retirement
• Are within 5-10 years of retirement or recently retired
• Want to understand exactly where your retirement income will come from
• Are concerned about taxes eating into your retirement savings
• Need help navigating the Medicare maze
• Want to leave a legacy to your family or charity
• Value working with specialists who focus exclusively on retirees
• Work or worked at major Upstate employers like BMW, Michelin, Fluor, or similar companies

If that describes you, I’d encourage you to experience the roadmap process for yourself.

You’ve worked hard for decades to build your nest egg. Make sure you have a real plan—not just a portfolio—to guide you through your retirement years.

References

1. Bengen, W. P. (1994). “Determining Withdrawal Rates Using Historical Data.” Journal of Financial Planning.
2. Pfau, W. D. (2021). “Safety-First Retirement Planning.” Retirement Researcher Media.
3. Internal Revenue Service. (2024). “Qualified Charitable Distributions.”
4. Medicare.gov. (2024). “Medicare Costs.”
5. Kitces, M. (2023). “Understanding Sequence of Returns Risk.” Nerd’s Eye View.

Securities and advisory services offered only by duly registered individuals through Madison Avenue Securities LLC, member FINRA/SIPC and a Registered Investment Advisor. MAS and Phillip Allen Inc. or Common Sense Retirement Planning are not affiliated entities. 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 Common Sense Retirement Planning.

A Roth IRA conversion is a taxable event. Our Firm does not offer legal or tax advice. Consult with your legal or tax advisor regarding your situation.

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.

The examples above are hypothetical in nature and intended for illustrative purposes only. Your results will vary. Past performance does not ensure future performance or results.