This article is part of the Biblically-Informed Framework for Retirement Stewardship. It was initially published in April 2017 but was updated in January 2026.
This article is the fourth and final one in a series about the most important thing you can do in different stages of life to be able to “retire with dignity.”
Well, you’re finally there. You’re in your 60s, or perhaps you’ve been there for a while. You’ve been working, saving, and investing for 30 or 40 years, and you’re ready to retire or have recently done so. You’re moving from the “accumulation” stage to the “distribution” stage.
Understanding the three principles framework at retirement
The Biblical Framework for Retirement Stewardship rests on three foundational principles:
Self-Sustaining Principle: Planning wisely so you don’t burden family, church, or society with expenses you could have prepared for.
Caregiving Principle: Preparing to both give care (to aging parents) and eventually receive care yourself.
Ministry Principle: Continuing to bear fruit and serve God’s purposes in every season of life.
This article focuses primarily on the Self-Sustaining Principle—converting your lifetime of savings into sustainable retirement income. However, your 60s are also when the Caregiving Principle becomes concrete: You must finalize estate documents, clearly communicate your care preferences, and, if applicable, execute care plans for aging parents or for yourselves. The Ministry Principle also takes center stage; retirement isn’t the end of purposeful living but the beginning of a new chapter of service. For the complete framework, see Biblical Framework for Retirement Stewardship.
Now let’s focus on the critical task of income planning.
The critical transition
To see a list of things you should do during this time to prepare for retirement, check out this article. It’s a fairly long list, but the most important thing at this juncture is to determine your retirement income needs and how you will meet them. To do that, you will need to identify your various income sources, and if savings are a part of that equation, decide on a strategy for converting your savings to a regular paycheck that you won’t outlive.
According to a survey done by Vanguard and published on Marketwatch, one of the areas where retirees say they need the most help is income planning:
The steps they find most challenging are those related to retirement income planning—how they will draw down their assets from sources like their 401(k), pension plans and personal investments. In other words, people struggle with creating a retirement paycheck.
Your income needs and sources
To start, you have to determine how much income you will need in retirement. One way is to prepare a retirement budget. You can adjust your current budget based on what you expect to change. Some expenses will decrease in retirement, especially those related to your working life. Once you are eligible for Medicare, your health insurance costs may change. But others, especially in discretionary areas and healthcare, will likely increase.
Another way to do this is to use a percentage of your pre-retirement income. Many professionals estimate that you will need 80 percent of your pre-retirement income in retirement. The JPM Retirement Guide I have been referencing suggests you will need at least 70%. Others propose a higher number (even greater than 100 percent), but almost nobody says you can get by on much less than 70 to 80 percent without making drastic changes. That doesn’t mean it’s not possible; it simply means most financial professionals don’t consider it straightforward.
Of course, your actual income needs may vary depending on your lifestyle, debt, medical expenses, and other factors. If you are extremely frugal in retirement, you may get by with less—say, 50 to 60 percent—but it could be challenging.
Next, you need to determine your sources of income in retirement. Most people will receive Social Security benefits, which will provide the bulk of their retirement income when combined with income from their savings. Others may have income from a pension (rarely available), real estate, an annuity, or a small business.
Finally, it is important to identify the portion of your income you need from savings to cover your expenses. A simple way to do that is to add up all your non-savings income sources and subtract that amount from your expenses. For example, if you need $60,000 (70% of $85,000) per year of income and will have a combined Social Security of $32,000 and no other sources of guaranteed income, you will need to generate $28,000 of income per year from personal savings.
Income strategies
Once you determine how much income you need from savings, you will need to decide on a plan for converting your savings into regular income. Income planning is one of the more complex (and highly debated) areas of retirement planning, but I will simplify it as much as possible. It is also one of the bigger challenges, as you want to generate enough income to meet your expenses for life.
Here are a few of the simpler and most common approaches. Some people will use just one, whereas others will create a hybrid approach that combines two or more of them. Each has its advantages and disadvantages, which I will briefly explain.
Option #1 – Annuity payments
With this option, you would purchase an annuity with savings to generate the needed income. A life annuity is not an investment, per se. It is an insurance product typically sold by an insurance company that guarantees you will receive regular payments for as long as you live. Payment amounts vary based on factors such as your age, the amount you contribute, and the type of annuity you purchase.
Because annuities can be structured to provide “guaranteed” lifetime income, they can address a major concern with other strategies: running out of money.
You could use annuities as your primary income distribution strategy IF you’re comfortable giving all of your hard-earned savings to an insurance company. (Most people are not.) However, there may be a better strategy that I discussed at length in the article titled “Annuities and Retirement Stewardship, Part 2.” In that article, I talked about using part of your savings to purchase an annuity to help create an income “floor” in retirement. This is a hybrid approach that combines an annuity with Social Security to provide enough income to cover all your essential living expenses for as long as you live.
I have become increasingly fond of this approach, especially using simple single-payment immediate annuities, and I implemented a version of it myself when I retired.
Option #2 – Fixed withdrawals
There are two types of fixed withdrawals: fixed amount and fixed percentage. With a fixed amount, you decide how much you need to live on and withdraw that amount, perhaps with an increase for inflation, each year, regardless of what the markets do. A benefit of this approach is a predictable income. The negative is significant—you could run out of money much sooner than expected.
You can implement the fixed percentage approach by making regular withdrawals at a fixed annual percentage rate. The fixed percentage is probably the simplest strategy, and the most common fixed-withdrawal strategy is the “4 percent rule.” (It is the approach used in the JPM Retirement Guide.) This rule of thumb suggests you can withdraw up to 4 percent of your savings each year and increase it annually at the rate of inflation, with minimal risk of running out of money during retirement. Withdrawing more than 4% plus inflation will significantly increase that chance. If you withdraw less, say 3 to 3.5 percent, your risk will decrease.
You will withdraw a larger sum with a fixed percentage when the markets (and your investments) are up. When things go down, you will remove a smaller amount. Your odds of running out of money are pretty low, but mathematically, your portfolio could get very small, especially later in life. Finally, your lifestyle could be impacted year over year, perhaps dramatically during prolonged market downturns.
Option #3 – Flexible withdrawals
Flexible withdrawals are based on variable performance data (known as “value-based” or “momentum-based” strategies that account for year-to-year market performance). It is a little more complicated than fixed withdrawals but can also be more effective in the long run (see the right-side note in the JPM chart below).
I like the idea of a variable withdrawal strategy that uses a fixed percentage with boundaries—i.e., stability with flexibility. One approach, provided by author Bob Clyatt, is called the “95 percent rule.” He thinks it a better safe withdrawal method because it adjusts for poor market performance. With this approach, you can withdraw 4 percent, or 95 percent of the amount you withdrew the previous year, whichever is greater. That means you would not reduce your income by more than 5 percent in any given year, even if your assets lose more than that. However, in a prolonged market downturn—say over a five-year period—it would have a large cumulative adverse effect on your income.
I ran a quick simulation of a portfolio that increased in year one and then declined each year thereafter for the next four years. It incurred a 17 percent total loss over that period, resulting in a 9 percent reduction in income from withdrawals in year 5. As you can see, this approach smooths your income year over year with minimal additional risk of running out of money.
There are other flexible withdrawal options that are more complex and adjust your withdrawals based on market performance. I may discuss them in greater detail at another time.
Option #4 – Capital preservation
With this strategy, you live off the interest, dividends, and growth of your investments without significantly decreasing your “net worth” year over year. The value of your assets would not be significantly reduced each year unless the markets have an awful year.
This can be a good approach, especially in the early retirement years, when you don’t want to sell the very assets that could generate future income. Your goal is to preserve your income-generating assets, at least in the early years, though you may need to sell some later. Of course, this assumes that you can generate enough interest and dividend income, along with some growth, to live on—a big assumption!
This strategy is also a good option for people who want to give some of their assets away while they are alive, retain them for a legacy after they are gone, or do both.
For this strategy to work, you will need to use a “total return” approach to managing your retirement portfolio. Such an approach anticipates receiving interest income and stock dividends, as well as some capital growth in your investments. However, conservative-to-moderate-risk portfolios typically don’t generate 4 percent income in the very low-interest-rate environment we’re currently in. So, you may occasionally need to “dip into principal” to meet your target income requirements—you want to do it in a way that preserves principal year over year.
One of the most common ways to do this is to simply sell assets that have performed well. Another way is through “rebalancing,” which uses withdrawals to bring your asset allocation back to your target stock/bond percentage mix (e.g., 50/50, 60/40, 70/30, etc.).
Fixed withdrawal example
As I stated above, a fixed withdrawal strategy is the most common and easiest to implement. That doesn’t mean it’s best for every person in every situation. It has some drawbacks. A fixed amount locks you into a certain spending level and lifestyle. You know exactly how much you’ll have to spend, but you won’t have much flexibility and don’t know how long your funds will last.
That’s a big drawback—the fact that you can’t know for sure how long your money will last. (Only an annuity can give you a high level of confidence in that.) However, we can make some educated projections. As the chart below from the JPM guide shows, a 40 percent stock/60 percent bond portfolio with a 4% withdrawal rate has a reasonable chance of lasting at least 30 years, leaving a significant legacy. The legacy number increases with a 60/40 portfolio at a 4% withdrawal rate, but decreases as the stock allocation declines.
Let’s look at an example. A retiree earning $80,000 per year would need an estimated $56,000 in retirement (70% of $80,000). If they have $600,000 in savings, they could withdraw $24,000 (4 percent of $600,000) in year one and increase it by the rate of inflation each year after that without a significant risk of running out of money. In fact, extrapolating from the chart on the left, they could leave a legacy of approximately $300,000. They would then need an additional $32,000 in income from Social Security and other sources to reach the $56,000 target.
Factoring in Social Security
In the example above, the JPM charts used in this series assume that someone making $80,000 will need to replace at least 35 percent of their income at retirement. That amount, when combined with Social Security, would provide approximately 70 percent of their pre-retirement income. That means Social Security must provide the remaining 35 percent. Generally, the lower your overall income requirement, the greater the percentage covered by Social Security, and vice versa. That makes it all the more critical to maximize your Social Security benefits.
Your Social Security benefits are primarily determined by your earnings while employed and the age at which you claim them. You probably have more control over the latter than you do the former. In fact, deciding when to claim Social Security benefits is one of the most important decisions you will make.
Currently, many retirees take benefits at age 62. As the JPM chart below depicts, if you take benefits before your full retirement age, which is 67 for most people born in 1960 or later, your monthly payments will be permanently reduced by 30 percent. If Social Security is approximately 50 percent of your retirement income, then your total income is reduced by 15 percent (30 percent of 50 percent) for the rest of your life.
If you wait until your full retirement age, you will receive 100% of your benefit. But if you can wait until age 70, your benefits increase significantly to 124% of your full retirement age benefit.
Of course, if you are in poor health and don’t expect to live to a very old age, you may be better off claiming sooner. But keep in mind that, according to figures from the Society of Actuaries, a 65-year-old man has a 41 percent chance of reaching age 85 and a 20 percent chance of reaching age 90. A 65-year-old woman has a 53 percent chance of reaching age 85 and a 32 percent chance of reaching age 90.
The percentages are even higher for couples. If a man and a woman are married, the likelihood that at least one of them will live longer increases. There’s a 72 percent chance that one of them will live to age 85 and a 45 percent chance that one will live to age 90. There’s even an 18 percent chance that one of them will live to age 95. Therefore, couples need to optimize their benefits together. For example, an unhealthy spouse who was the higher earner should consider securing a higher survivor’s payment for his wife by delaying his own Social Security benefit.
You could also annuitize some of your savings to guarantee and increase the payout. You can tap the equity in your home for additional income.
Beyond income planning: The other two principles
While income planning is the critical financial task at this stage, your 60s demand attention to the other dimensions of stewardship:
Caregiving principle in Your 60s
This is when caregiving transitions from planning to reality:
Finalize documents: Ensure all estate documents are current and accessible:
- Review and update wills
- Confirm powers of attorney (financial and healthcare) are current and appropriate
- Update beneficiary designations on all accounts
- Consider whether trusts need updating
- Ensure executor/trustee/agent selections are still appropriate
- Make documents easily accessible to those who will need them
Communicate clearly: Make sure your spouse, children, and healthcare proxies know your wishes:
- Have explicit conversations about end-of-life preferences
- Discuss what level of care you do and don’t want
- Explain your financial situation so they know what resources exist
- Share location of important documents and passwords
- Discuss funeral/burial preferences
- Don’t assume they know—actually tell them
Organize information: Create a comprehensive file with account information, passwords, contacts:
- List all financial accounts with account numbers and institutions
- Document insurance policies and contact information
- Create a password manager or secure document with access credentials
- List important contacts (attorney, financial advisor, accountant, insurance agents)
- Document location of safe deposit boxes and keys
- Consider creating a “What to do when I die” document
Long-term care: If you haven’t purchased LTC insurance, decide on your care plan:
- Family care: Have explicit conversations with potential family caregivers
- Self-funding: Ensure you have adequate savings if paying out-of-pocket
- Home equity: Understand how to access home equity for care costs
- Community resources: Research what’s available in your area
- Medicaid planning: If assets are limited, understand Medicaid rules
Parent care: You may be actively caring for aging parents:
- Ensure their legal and financial affairs are in order
- Know their wishes and resources
- Coordinate with siblings
- Don’t neglect your own needs while caring for them
- Consider respite care to avoid caregiver burnout
Ministry principle in Your 60s
This is when retirement purpose becomes reality:
Execute your calling: You’ve spent years accumulating resources and time; now deploy them for kingdom purposes:
- If God has laid something on your heart, pursue it
- Don’t wait for the “perfect” time—now is the time
- Use the freedom retirement provides to serve boldly
- This is what you’ve been preparing for
Serve intentionally: Volunteer, mentor, serve in your church, go on missions trips:
- Increase church involvement now that you have time
- Take short-term missions trips you’ve always wanted to do
- Volunteer regularly with organizations you care about
- Use your professional skills to serve non-profits
- Teach, train, or mentor in areas of your expertise
Give generously: With more margin, increase giving to support God’s work:
- Consider increasing your giving percentage
- Make strategic gifts to ministries and organizations
- Fund missions trips for others
- Support church building projects or special needs
- Give to causes that align with your values and passions
- Consider qualified charitable distributions from IRAs (age 70½+)
Use your skills: Decades of professional experience can bless ministries and non-profits:
- Serve on boards
- Provide pro bono consulting
- Help with strategic planning
- Train staff or volunteers
- Share business wisdom with ministry leaders
Build legacy: Invest in younger generations through mentoring, teaching, discipling:
- One-on-one mentoring relationships
- Teaching Sunday school or Bible studies
- Discipling younger believers
- Sharing your testimony and life lessons
- Being available and accessible to those who seek wisdom
Stay fruitful: Psalm 92:14 says the righteous “still bear fruit in old age”—retirement is not permission to become passive:
- Continue growing spiritually
- Keep learning and developing
- Stay engaged with your church and community
- Find new ways to serve as circumstances change
- Model faithful aging for those watching
The danger is becoming so focused on portfolio management and withdrawal strategies that you miss the point: Biblical stewardship exists to glorify God and serve others, not merely to sustain ourselves comfortably. Income planning is essential, but it’s a means to an end—the end being purposeful, fruitful service in this new season God has given you.
Decide on a strategy, but remain flexible
You need to choose a plan that makes the most sense for you. Just keep in mind that you may need to be flexible, as things can change.
You may need to adjust your spending or withdrawal rate, or both. Or, you may need to consider a flexible withdrawal rate tied to market performance. But no matter what, it would be folly to retire without some idea of how you’re going to convert a lifetime of savings to a regular paycheck that will last the rest of your life.
Proverbs 16:9 says, “The heart of man plans his way, but the Lord establishes his steps.” We need to plan, but always recognizing that our loving, sovereign God is the One who ultimately determines whether they will come to fruition. Therefore, we must continually seek His wisdom and guidance and trust Him in all things.
Connecting to the complete framework
This article addressed the Self-Sustaining Principle—specifically, the complex but critical task of converting accumulated wealth into sustainable retirement income. Getting this right requires careful planning around Social Security optimization, withdrawal strategies, and income source diversification. This is the culmination of decades of faithful saving and wise investing.
However, retirement stewardship involves much more than financial planning. In your 60s and beyond, the Caregiving Principle becomes immediate and concrete: You must finalize documents, communicate your wishes clearly, organize information for those who will need it, and, if needed, execute care plans for aging parents or for yourselves. This isn’t optional; it’s faithful stewardship that protects and serves your family.
Most importantly, the Ministry Principle takes center stage in retirement. Biblical retirement is not about ceasing productive work but about deploying a lifetime of accumulated resources—time, talent, treasure—for kingdom purposes. God didn’t bring you through decades of work, saving, and preparation just so you could play golf and travel. He brought you here to serve Him with the freedom, wisdom, and resources you now possess.
Retirement isn’t the end of your story—it’s a new chapter where you can write some of your most significant contributions to God’s kingdom. You have time you’ve never had before. You have wisdom gained from decades of experience. You have resources you’ve accumulated. You have skills refined over a lifetime. How will you deploy all of this for His glory?
To understand how these three principles work together to create biblically faithful and purposeful retirement, see the complete Biblical Framework for Retirement Stewardship.