Admin
11 August 2025

Retirement Income Is More Complex Than Ever—Are You Showing Clients the Gaps?

Key Takeaways

You can no longer assume your clients’ retirement income picture is complete just because they have a pension, Social Security, or a 401(k). The real need lies in identifying the income gaps—some hidden, some growing—that can derail long-term security.
You need to guide your clients beyond accumulation and focus more deliberately on distribution strategies, inflation impacts, Medicare-related expenses, taxes, and market risk during withdrawal phases.

Retirement Isn’t Just About Hitting a Number

Clients are often conditioned to think of retirement planning as a math problem: “How much do I need to retire?” But as a financial professional, you know it’s not just about reaching a savings milestone. The real complexity begins at retirement—when clients start drawing down assets, navigating healthcare costs, and adjusting to inflation-driven realities. In 2025, with market volatility and healthcare expenses on the rise, the risks are more layered than ever.

A more effective question is: “How will your income behave after retirement begins?” If you’re not walking clients through that conversation, they may have false confidence about how secure their future actually is.

Where Income Falls Short—And Clients Don’t Realize It

Many clients are unaware that their income picture is incomplete. They may assume their pension and Social Security will cover essentials, or they’ll tap their savings as needed. But the following realities often expose serious shortfalls:

Healthcare Costs Post-65

While Medicare kicks in at age 65, it does not eliminate healthcare expenses. In 2025, the average retiree pays:

$185 per month for Medicare Part B
A deductible of $257 annually
Additional out-of-pocket expenses for prescription drugs, premiums for supplemental coverage, dental, vision, and hearing care

These costs can exceed $6,000 to $10,000 per year per person—before factoring in long-term care. Most clients don’t realize the cumulative burden until it’s too late.

Inflation-Adjusted Lifestyle Needs

Inflation hasn’t been just a theoretical threat. Over the past 5 years, retirees have seen real price hikes in food, housing, insurance, and travel. Even at a 3% annual inflation rate, a client who needs $60,000 today will need over $80,000 in 10 years. That gradual squeeze is where the income gap often starts.

Tax Surprises in Retirement

Clients may believe that taxes will go down in retirement—but that’s not always the case. Required minimum distributions (RMDs) starting at age 73 in 2025 can push them into higher tax brackets. So can Social Security income, capital gains, or dividends. Tax-efficient withdrawal strategies matter more than ever.

Widowhood and Single-Income Risk

Many married couples plan for retirement based on dual income sources. But surviving spouses often see a significant drop in income—only one Social Security check continues, and pensions may not offer 100% survivorship benefits. If you’re not preparing clients for this scenario, their financial plans may be overly optimistic.

Why You Must Shift Focus to Distribution Planning

As the retirement landscape grows more complex, your role needs to evolve from accumulation advisor to income strategist. Accumulation is straightforward: set targets and save consistently. But distribution involves many more moving parts.

Here’s what your planning should now include:

Withdrawal sequencing strategies to minimize taxes and extend portfolio longevity
Bucket strategies or time-segmented income planning to match income with future liabilities
Longevity planning that models out expenses to age 90 or even 100
Health cost modeling that includes Medicare premiums, deductibles, coinsurance, and long-term care scenarios

Clients need a coordinated withdrawal plan, not just a diversified portfolio.

Spotting the Most Overlooked Gaps

As you help clients transition from work to retirement, here are the most common areas where income falls short:

1. Delays in Claiming Social Security

Delaying Social Security can increase monthly benefits, but that creates an income gap from retirement age to claiming age. You must help bridge that window, typically from age 62 to 67 or 70, without forcing clients to sell at a market low.

2. The Medicare Transition Window

Between ages 62 and 65, clients often lose employer-sponsored coverage and must purchase their own health insurance. Those premiums can be steep and create an unexpected cost bridge.

3. Long-Term Care Planning

By 2030, over 70% of retirees will need some form of long-term care. Without a plan, the out-of-pocket burden can devastate even a well-built portfolio. Yet many clients still resist this conversation, especially if it sounds like an upsell. Frame it instead as protection of their income stream.

4. Unplanned Early Retirement

Whether due to health issues or layoffs, many retirees stop working earlier than they planned. This compresses the accumulation window and increases pressure on savings. Modeling early retirement scenarios should now be standard practice.

5. Lifestyle Risk

Clients often expect to travel more, support adult children, or buy a second home. While these goals are valid, they often go unaccounted for in income planning. Help clients weigh wants vs. needs and assess their sustainability over time.

Building an Income Map Clients Can Actually Use

Your clients need more than projections—they need a visual income map that clearly outlines where money will come from at each stage of retirement.

This map should show:

Guaranteed income sources (e.g., Social Security, pensions)
Variable withdrawals (e.g., IRAs, Roths, taxable accounts)
Healthcare costs per year
RMDs and tax obligations
Optional expenses or lifestyle enhancements

Use tools that break this down by 5-year increments, especially as clients move from pre-retirement to post-retirement. Transparency builds confidence—and prompts action.

What to Prioritize in 2025 and Beyond

In 2025, retirement income strategies must contend with multiple pressures:

A rising Medicare Part B premium, now $185 per month
A $2,000 cap on out-of-pocket prescription drug costs under Part D, changing how clients view drug expenses
The phaseout of the Medicare donut hole, which alters client liability timing
Market instability, which makes sequence-of-return risk even more critical
Taxable RMDs, starting at age 73 under current IRS guidelines

You must show clients how all these factors interact—and how their plan will adapt across a 20–30 year retirement horizon.

Getting Clients to Take Action

Once you identify the gaps, the next challenge is getting clients to act. Many are overwhelmed or in denial.

To cut through the inertia:

Use visuals: Pie charts, income timelines, and heat maps can help simplify.
Create urgency with deadlines: For example, emphasize RMDs beginning the year a client turns 73.
Talk in ranges, not absolutes: Help clients understand best-case, worst-case, and expected scenarios.
Frame planning as control, not fear: Position your process as empowerment rather than disaster avoidance.

Your Opportunity as a Financial Professional

In 2025, clients aren’t just looking for someone to manage their money. They want a strategist who can:

Protect their income
Identify hidden gaps
Personalize solutions for longevity and uncertainty

If you shift your planning conversations to center on income outcomes, you won’t just increase retention—you’ll deepen trust and gain more referrals.

Let your value be measured not by how much clients accumulate, but by how confidently they can spend what they’ve saved.

It’s Time to Show Clients What’s Missing

Helping clients find income gaps isn’t about scaring them—it’s about preparing them. The decisions they make in the next five years will determine whether they experience retirement as secure or stressful.

That’s why we built Bedrock Financial Services—to support professionals like you with smarter tools, clear messaging, and automated systems that help you have better retirement income conversations. Our CRM and marketing automations are designed to take the guesswork out of follow-up, segmentation, and lead flow—so you can spend more time uncovering income risks and solving them.