Webinar: Solving the Retirement Income Puzzle

The largest and final cohort of baby boomers are reaching retirement age, and they need help anticipating what their spending will be like in retirement and finding how to make the most of their savings to enjoy this next chapter.

Welcome to Solving the Retirement Income Puzzle. My name is Stuart Ritter, insights director and CFP at T. Rowe Price.

Today, we're going to dig into a challenge that every financial professional faces: helping clients build a retirement income plan that actually works, not just on paper, and not just for today, but in real life throughout a client's retirement.

I'm joined by Parker Leese, business development manager at T. Rowe Price, who brings a real-world perspective from advisors in the field facing this very real challenge, and by Lisa Harris, senior offer manager and expert of the Retiree Inc. Income Solver, an award-winning tool that can set your practice apart with its powerful capabilities. It's a differentiator in the industry, and Lisa is here to tell us more.

Lisa, Parker, thanks for being here.

Thanks, Stuart. Glad to help financial professionals tackle some of these tough retirement income questions.

Stuart, it's great to be here.

I'm looking forward to sharing what I'm hearing from advisors and, most importantly, how they're building trust and navigating real client needs every single day.

Let's kick off today's discussion with what may sound like a simple question: What are we really solving for in retirement income planning? Is it just as easy as following a set of rules, or is there more to the puzzle? Lisa?

The reality is, clients in the decumulation stage need more than the set-it-and-forget-it conventional strategies. They want confidence that their plan will adapt to life's twists and turns, so they can stop worrying about the number one concern of retirees: running out of money. And that's where good planning and the right technology can help.

Let's take a look at the key puzzle pieces of retirement income planning: spending guidance, Social Security, and tax-efficient withdrawal strategies. If we get those right, everything else will begin to fall into place.

Parker, what are you hearing from financial professionals? What do end investor clients want to know?

Yeah, Stuart, what I'm hearing, the clients are asking these big, common questions.

First off, "When should I claim Social Security?”, “Will my money last?”, “How much will I need each year?", and I think most importantly, "How do I make my money last through times of uncertainty?". 

And I think what I'd point out is, except for the Social Security questions, clients are asking these every single year. It's a continuous conversation with these clients, and I think the conventional rules of thumb they've learned along the way aren't always the answer.

That's a great point, Parker.

Conventional wisdom rules typically tell us that whatever you spend the first year, you're just going to increase it by the rate of inflation each subsequent year.

Start Social Security when you retire, spend from taxable accounts first, then pretax, and then Roth to fill the gap between what you're getting from Social Security and what you want to spend in any given year.

I think it's a great point, Stuart. I would just add that I don't think that's enough of an answer to put preretirees' worries at bay, and I think that's why preretirees are increasingly turning more to financial professionals for help. And I think this is a great opportunity, as that financial advisor, to prove your value proposition to existing and prospective clients as that financial professional in their life.

Lisa, why don't these rules provide the best solution for most clients?

Well, the best answer is really that retirement is not a straight line. I believe it's what you call it, Stuart, the “retirement squiggle.”

Life happens. A great example about spending in retirement was shared with me, was that in retirement, all of a sudden, every day is a weekend, so your spending patterns tend to change. In some years, clients will spend more; some years, they will spend less, even when working with a targeted spending amount.

So of course, there are unpredictable events, like health care changes, market dips, and furnaces that need replacement unexpectedly in what feels like the worst possible time. On top of that, in retirement, there are some predictable changes that need to be accounted for, like when you start collecting Social Security, when you start paying for Medicare, and when your required minimum distributions, those RMDs, kick in, all of which are likely to happen in different years during retirement. And if your client is married, these different start dates may compound.

If we stick to cookie-cutter strategies, we miss the chance to help clients make smarter decisions for the predictable and unpredictable events along the way; make the most of the money they worked so hard to save; and maybe more importantly, weather uncertainty.

Yeah, let's look at that retirement squiggle. Here it is.

Now, obviously, this is not the exact path of spending of any individual person who's going to go through it. It's just conceptual. But it's important to keep in mind that no matter how hard retirees plan for a fixed income, spending volatility happens.

Our recent T. Rowe Price Retirement Spending Study shows that over any two-year span, a quarter of retirees see spending increase by 20%. Now, that probably doesn't surprise anybody, but what may surprise you is that another quarter saw their spending decrease by 20%. That means there's a lot of volatility that this squiggle represents. It isn't a steady straight line.

If we only plan for or expect a steady increase, we're setting clients up for surprises.

Exactly right. So flexible, dynamic planning is key.

If we help clients anticipate the squiggle, they won't be caught off guard by the changes that feel uncomfortable, like years that may have higher taxes. Being prepared will help retirees feel more confident as they navigate the journey, which should be enjoyable in retirement.

Yeah. Parker, how does this translate to financial professionals?

Yeah, Stuart, I think helping clients not only plan for, but actually understanding real-life cash flow changes, that's where, in my view, financial professionals have the opportunity to really shine.

I think by proactively managing those spending ups and downs and preparing their clients that this is going to happen, but don't worry. You'll be ready. We've prepared for this. We're ready to handle this and any sort of situation that comes about. That's what builds those deeper client relationships that tend to last.

Yeah, that's so important, building those deeper client relationships and your clients' confidence.

OK, we've talked about spending, now let's shift our discussion to Social Security, or what I like to call guaranteed lifetime income.

Most people think, "Well, I'll just start claiming Social Security when I retire," and I certainly understand people who have that idea. They've had a steady paycheck coming in. When they retire, that stops, so they're thinking, "Well, I can turn on Social Security, and that's steady money coming in." When people are taking that perspective, they may be missing the true impact Social Security can have on monthly spending, and because many people don't understand this, nearly 90% of Americans reduce their benefit by claiming before they receive their maximum amount at age 70.

Lisa, is this a missed opportunity?

Yeah, Stuart, I mean, it may certainly be an opportunity missed for some clients, and to explain why, I'll share here that for an individual worker benefit, claiming at age 62 means you will get 55% of the maximum monthly benefit that you might be eligible to receive.

Wait, Lisa, let me interrupt there.

Did you just say essentially half? You cut your benefit nearly in half every month, every year for the rest of your life.

Can you hear the dramatic music welling up behind me?

I harp on this because I expect that age 62 being the most popular age for people to start Social Security, I don't think people really understand that if they started at 62 instead of waiting for the maximum at age 70, compared to that, they're cutting their benefit essentially in half.

That's right. So that monthly amount, other than inflation increases that they do receive every year, is not going to get any future increases or bumps down the road, so that monthly benefit decrease, that new impact at the point of decision and claiming, is a permanent decision.

So waiting until 70, regardless of the full retirement age Congress has assigned you, means a bigger inflation-adjusted guaranteed income for life. Even waiting as many years as comfortable, can increase that amount.

But this isn't just about the individual, and obviously situations may vary with individuals in their home. But predictions for life expectancy also have to be taken into account as we think about that claiming technique. Additionally, married couples, again, face extra complexities, and they really need to think differently about Social Security claiming because they need to coordinate the two claiming strategies together to optimize for their household.

So those decisions, again, compound in coordinating those together with two people.

That's an excellent point, Lisa.

Social Security is an individual benefit, so you make individual decisions about it, and the fact that you need to coordinate among couples is something that can be easily overlooked.

For married couples, it's all about the cumulative benefit for the household over the entire household's lifetime, which means you've got to be thinking not just about each person's life expectancy individually, but how long the surviving spouse might live after the first spouse passes away.

The higher earner should determine their claiming age based on the life expectancy of the person they expect will live longer, and that's not always themselves, which makes this really counterintuitive.

But if they coordinate their strategies, that means both spouses are bringing in the maximum Social Security dollars for the household together over both lifetimes. That's a nuanced conversation, and it's where technology like Income Solver really helps advisors model the impact.

Lisa, tell us a little bit more about that particular feature.

Yeah, absolutely, Stuart.

Again, the reality is that this married couple has thousands of combinations of potential claiming opportunities. That means potential claiming dates and potential lifespans.

So how do we consider all of those things without spending hours on Social Security planning? Let's focus on these two things: the claiming date and potential lifespans, which are very important to consider together, as Stuart shared with us.

Income Solver uses this patented tool, the Social Security Zone, to help financial professionals look quickly at a variety of claiming strategies mapped over multiple potential lifespans. The chart in this Social Security Zone, maps the total cumulative benefits for each strategy.

They're represented by a different color, so the visual is easy to understand, and maps those across the two life expectancy ranges. So thinking now about life expectancy as a range of years, and again, with a married couple, a range of combined potential life expectancy years, instead of having to pick a single point in time to estimate a guess.

In other words, it shows where the cumulative lifetime benefits occur across this range of lifespans. What this gives to the advisor is a more intuitive visualization, seeing where different claiming strategies and the potential cumulative benefits are mapped across these different life expectancies.

So it's a lot easier conversation with a client to look at that and quickly see where the strategy lands for both spouses and help them see where the opportunity is, right? Where the cumulative benefits are, but also where the client feels they are the most comfortable with a range of life expectancies, and then understanding where the potential claiming strategy that finds them more cumulative benefit.

So in short, it takes the guesswork out of going through all the variations and picking one particular strategy for the client. Seems like that's missing opportunity when there really are thousands of different decisions that are being made, all wrapped into this one claiming decision. All the factors are important for this decision.

So the Social Security Zone, quick, easy visualization to help advisors bring more confidence to the conversation of Social Security claiming decisions.

So two things I'm taking away from this, Lisa. One is, instead of looking at, "Well, here's what happens if you claim at 62, and here's what happens if you claim at 65, and we'll see which of those is bigger, and then we'll try out 67 and just compare those two," the first thing is it tells you all the possibilities, here's the one that the math says would give you the most income. You get right to that.

The second one is, it gets advisors out of playing the game of their clients saying, "OK, well, what if we live to age 80? OK, now go back and model it if we live to age 82. OK, now try 85." As you point out, that picture says, look, this whole section, it's all the same strategy for these particular life expectancies. It gives clients the confidence in their Social Security decision.

Now, related to that, Parker, what are your thoughts from a financial professional perspective?

Yeah, Stuart, you know this well, but this is one of my favorite charts for a financial professional, and I think it's because it really gives you the ability to drive home that optimal claiming strategy for your client, right?

The Social Security Zone, I think, is a really powerful differentiator for financial professionals, and I'm not naive to the fact that there are other Social Security tools out there, but not with the Social Security strategy analysis that Income Solver provides. And I think what's key for advisors is it'll save you time as a financial advisor, which at the end of the day, that is your biggest asset, OK? And there's no more guessing which age might be the best fit for your client, or, as you said, manually entering ages to try different scenarios.

That Social Security Zone provides an overview of all ages and cumulative benefits in one comprehensive chart to easily select the strategy most fitting for your client, which I think is really powerful.

And on top of that, I think the bottom line is getting Social Security right for your clients means more guaranteed monthly income and clients spending less of their own money, and that ultimately helps increase and build long-term relationships and trust with your clients and with you, which is incredibly powerful.

I think leveraging this deep claiming strategy analysis can make a real difference when building an income strategy and finding time back into your day as a financial advisor.

And then if you also look at the data visualization, that makes it easy to communicate these benefits to your clients, which is critical when having these conversations on a daily basis, and especially when you think about these complicated situations.

At this point, we've covered spending, and now we've covered how to make the most of your Social Security claiming strategy, and especially those cumulative benefits for married couples. As Parker said, the more you have coming in in Social Security, the less your clients have to spend of their own money.

So let's move on to how people actually fund their spending each year, that gap between what they're getting from Social Security and what they want to spend in a particular year. We'll dive into withdrawal strategies.

Conventional wisdom tells us, well, just withdraw from taxable accounts first until they're empty, then pretax, and then Roth.

But I think we all know this might not be the best approach.

What are your thoughts, Lisa?

Absolutely. I have several thoughts on this subject, and the approach you just described, and that we will continue to talk about, this conventional wisdom strategy doesn't take into account all the variables in retirement.

We're withdrawing from all of these accounts to fulfill annual spending needs. What we miss in doing that is potential taxes. Medicare, actually one to two years before they're going to impact Medicare premiums and surcharges, those IRMAA costs I'm sure you've all heard about, and the reality of tax bracket creep.

Similar to our other earlier emphasis with you Stuart, I'm going to pause on this.

A reminder that even one dollar of extra taxable income can spike your taxes or Medicare premiums two years forward by thousands of dollars a year. And you need to think about this two years ahead about Medicare. You'll have to think about it year over year over year to help navigate both the squiggle and tax changes, life changes. So we need a different approach to help analyze all these variables.

Income Solver uses what we call a multidimensional approach, evaluating what I would sum up in three major decision points. So the first is the withdrawal sequence.

So, as Stuart mentioned, withdrawals. How do we make withdrawals to fulfill the rest of our spending outside of our Social Security check? This is, the order of how you draw out of accounts and how much you take from accounts each year. Sounds simple enough.

The conventional approach is to withdraw from those taxable accounts first until they are fully depleted, then from tax-deferred accounts, and finally from any tax-exempt accounts, if they have any savings there. Seems pretty straightforward.

The challenge is, typically, a retiree or preretiree have on average seven accounts, making it a bit more difficult. And as we said, the conventional approach to withdraw from taxable accounts first, tax-deferred accounts, and tax-exempt accounts. So right off the bat, with more accounts than three, how would we pick even from multiple taxable accounts, right?

The methodology behind the multidimensional strategy coordinates three important components. First, we're thinking about this order, right? The order of withdrawals or sequence of withdrawals, and there are ways that these can impact tax efficiency, including withdrawing from two account types in a single year, not just those two taxable, but a tax-deferred and a tax-exempt account in a single year. So how do we do that?

Second is that threshold, or also referred to as a target threshold. A threshold is basically the upper limit for withdrawals, or if we're doing Roth conversions in a single year, this is that upper limit we want to stay under. So most of the time, that's a tax bracket, and that's where we see advisors still living and addressing tax brackets, which is extremely valuable. And we would want to keep under those, right, to avoid jumping into a higher tax bracket in a single year. And that one dollar of extra withdrawals, and Roth conversions can do that when combined.

Advisors do a great job of encouraging clients to utilize Roth conversions when those are valuable. We've seen the industry grow a lot in understanding of how to use these to add value for clients. But even this is not an easy solution. Most of the time, we see that threshold as a tax bracket that we're targeting.

But again, different in retirement than when we were accumulating and saving, clients are now affected by more components. Even more thresholds we need to be aware of to keep us from jumping into other types of tax events. In retirement, ordinary income tax brackets aren't the only thresholds to watch. They can include income ranges that increase how much Social Security is taxed, and the levels where Medicare premiums spike, those terms as we've talked about.

And I might add, all of these taxes you've mentioned: ordinary income, Social Security, Medicare IRMAA premiums, unhelpfully, they all have different income levels and different definitions of income. When you line them all up, there are actually 16 different brackets that are involved.

It's complicated!

Stuart and Lisa, I'd just jump in, too, and  just add how powerful this is, right?

I mean, clients need advisors' help with all of this, and this is an incredibly powerful way to illustrate your value as a financial advisor.

Yeah, absolutely, Parker, and, and Stuart, you nailed it.

I mean, this is so much more complicated than a retiree client is used to dealing with when they get to this stage, especially when all of these taxes have to be considered, and again, coordinated, otherwise one can spike the other in a single year. So important to focus on these thresholds.

OK, the third decision is phases. This may mean time segments, as we talked about in the squiggle, in retirement, there are phases where the withdrawal sequence and target thresholds could find more value by changing to accommodate the cash flow squiggles.

And because even if our spending changes, guess what?

We may also have new income sources. Everybody has the new income source of Social Security when they begin those benefits. Other people may have an annuity payout that starts in a future year, pension. In short, you know all this. You encounter this with your clients. It's complicated, and advisors need more tools to help navigate all of these puzzle pieces.

Income Solver is a powerful tool that integrates all of these factors to coordinate withdrawals across multiple accounts, multiple phases, and multiple thresholds to deliver more tax-efficient and personalized strategies to solve for these complex answers.

And Lisa, I would just add, I think the need to navigate all of these complexities, it clearly illustrates why clients need so much help.

You know, I can see why advisors struggle to face this challenge with their clients every single day, not only making these decisions, but I think coordinating all of these decisions, and for an advisor, even having these layered and complex discussions.

But at the end of the day, what a great opportunity for advisors to differentiate with this type of expertise, right?

Absolutely.

And this is a great moment to pause and recap our key learnings so far.

First, we discussed real-life spending in retirement and how it isn't a straight line for any of us. Instead, it looks more like a retirement squiggle that we need to plan for. All retirees will experience both ups and downs in their spending, so it's important to be ready from both an expectation standpoint and a planning standpoint.

Next, we talked about Social Security and the importance of potentially waiting until age 70 to get the maximum benefit of this guaranteed lifetime income.

And for married couples, it's especially important to focus on cumulative benefits and to have a coordinated strategy. It isn't just what you receive while you're alive, but when one person passes away, there is potentially a survivor benefit that the surviving spouse will pick up for the rest of their life. Because the more money you get from Social Security, again, as Parker pointed out, the less you have to use of your own.

So now let's take a look at an example to begin bringing the puzzle pieces together. The purple line is our retirement squiggle of spending, and the green line is our coordinated Social Security strategy for this married couple. You can see how one of the Social Security benefits starts at 70, and then it drops down later on when the first spouse passes away.

But take a look at these spending peaks. We know these years are going to be challenge years, even if we don't know exactly when they'll happen, but that's when they may need to withdraw more from their portfolio, and that's what people are worried about.

But now, look at these lower spending years. This is when the need to withdraw from their own money in this example is the smallest. These lower spending years can, in fact, be opportunity years, when you can help your client plan to be more strategic and take advantage of Roth conversions. We know Roth conversions are critical, and planning early, ideally before retirement, to lower RMDs, or potentially during these lower spending years in retirement, can make a big difference. They can withdraw more than they're actually going to spend and, counterintuitively, pay more in taxes during those opportunity years, but do so at a lower bracket, converting to Roth at those lower rates.

Now, this gives them a source of tax-free money, so they're ready for the challenge years, and then they don't have to push themselves into those higher tax brackets and higher premiums that you mentioned, Lisa.

So Lisa, what are your thoughts about this approach to Roth conversions?

Stuart, I love that framing, the opportunity and challenge years.

Even when we look at those, sometimes they're obvious, and sometimes they're not. Sometimes it is counterintuitive to see when those will appear and know how to take advantage of those opportunities.

As you mentioned, the research actually shows that for many households, converting money into tax-exempt accounts before RMDs begin, and while both spouses, if married, are alive, can provide critical tax diversification for those unpredictable, spiky spending challenge years. So the challenge is solving for these and the optimal timing to do Roth conversions.

And then communicating back to the clients the positive impacts that these can have on the long-term plan, including minimizing RMDs and projected taxes over time.

Clients want actionable strategies with visuals that can help them understand how much less in taxes they could pay and potential trade-off of doing Roth conversions.

This is a lot to digest, really, for anyone, but having all of these details, specifics, and visuals can really showcase your value as an advisor. For example, some clients will not have the stomach to do aggressive Roth conversions because of those big tax years, and most will, however, want to execute something that adds value to their portfolio, but that is just a little bit more digestible. 

The exercise is really looking at these trade-offs of doing Roth conversions. How much would we pay less in taxes over time? Even if we do pay more in taxes for one year or maybe two, what do we see as the impact over 20 to 30 potential years in the future?

What a great way to interact with clients and tell this as a more compelling story to, again, behaviorally, influence their decisions, so they're confident in doing this Roth conversion.

That's a great point, Lisa. Trade-offs are key, and so is understanding what those trade-offs are and why they make sense for you.

Parker, weigh in here as well.

Yeah, Stuart, I think that's always the goal when advisors are working with their clients, right? I think you want to get them comfortable with, and also understand all of these decisions.

You know, so for example, being able to show clients the long-term benefit of Roth conversions, where they might be paying huge taxes and potentially huge capital gains, or depending upon where their money is coming from in general. 

You know, these are not comfortable decisions, especially without seeing the long-term potential return on the decision.

Most will want to find something to execute that's more digestible, which is great. Yeah, and we can help them do that while still adding value to the portfolio. Finding more from what we often refer to as that Goldilocks strategy.

We help them find a strategy that fits their preferences, their comfort level, and that long-term strategy for the client, while still outperforming conventional wisdom or doing nothing at all. Regardless of where they land, we want to help clients feel confident.

Income Solver does this by helping analyze the variations, generate strategies to include Roth conversions, instead of making advisors do the guesswork or estimations or running multiple iterations to come up with those. Using automatically generated strategies frees up the advisor to focus on client conversations and those important decisions of assessing trade-offs, customizing a plan that truly fits their needs.

Parker, why does this matter to financial professionals?

Yeah, Stuart, so like we've been talking about that conventional wisdom term, I think advisors who go beyond conventional wisdom, and they add in this multidimensional withdrawal strategy, I think you can potentially add up to seven more years of retirement income for their affluent clients, and that's really powerful.

To me, that's the kind of value that sets you apart, and the beauty of this is it's all done for you right at your fingertips, right? I mean, that means efficiency and valuable hours back into your day. There's no spreadsheets, no hours of analysis.

It's just thousands of personalized scenarios run for you, quickly quantifying your value to your clients, which is incredibly powerful, which is also incredibly important value to you as an advisor. Think spending more time with your clients, right? I have yet to meet a financial advisor that says, "I don't love and enjoy spending more time with my clients," and I think solving the retirement income puzzle, that results in real results for your clients and your practice.

What I hear you emphasizing is that Income Solver enhances expertise. It doesn't replace it. It means you're spending less time sitting in front of a spreadsheet. It can be a real game-changer for our financial professionals and their clients.

Absolutely. Yeah, there's a lot of power in that.

Now, let's take a look at how this all comes together.

Let's begin with the retirement squiggle, representing spending and cash flow volatility, and this example, couple's projected Social Security income.

But let me spend another second on that cash flow volatility.

It's helpful to manage your clients' expectations. So if they have a year where they're spending more, they want to go on a special trip, or they're helping a child or a grandchild, they don't panic because, "Well, I just thought it was going to go up by the inflation rate every year." You've managed their expectations. It keeps their anxiety down. You're the one that's making them feel comfortable.

So they've got their projected Social Security income coming in. There are a couple of years where they'll be facing a spending spike. They don't know when that'll be, but it'll happen, and then you've got the  years that represent an opportunity, when they're getting the most from Social Security and their expenses are lower. As Lisa pointed out, those are years where they can withdraw more than they actually need to spend from pretax accounts, and do so deliberately to fill those lower brackets, convert to Roth at those lower rates, and then have that bucket of tax-free money. So when they do have the challenging tax year, they're ready.

They take what they would normally spend from the pretax account, but then beyond that, they can just withdraw from Roth, and they don't have to worry about moving into higher tax brackets, whether it's ordinary income, capital gains, IRMAA, that just comes off the table, and you can even do that at the beginning of retirement.

A lot of people have a bucket list, so there's this spike of spending early in retirement. Maybe they're going on a dream vacation or maybe buying an RV.

Let me give you an example. Let's say a couple is nearing retirement, and they've decided to buy that RV and travel across the country. When they go to the dealership to purchase the RV, they have to write a check for, let's say, $100,000 for the RV. So they need to withdraw money from their accounts to cover all of their normal expenses, plus they need an additional $100,000 to cover the cost of the RV. Well, to have $100,000 left to write the check for the RV, you know where I'm going with this, now they need to withdraw even more than $100,000 to cover all the tax ramifications. But because doing so moves them through another bracket, now they need to withdraw even more money, which becomes a huge spiral. And this is what can happen if all of your money is tied up in pretax. You have to increase your withdrawals, potentially over and over again, to cover the tax liability, which can create even more tax liability.

On the other hand, if your client uses pretax to fill the lower brackets, and you can then use Roth to avoid the bracket creep, you have an opportunity to coordinate from all of the accounts someone already has to avoid that additional tax liability.

And if they use the Roth money at that point, they'll probably have the opportunity to replenish it in the future. They'll have a year, as our research showed, where their spending can drop, and that's when they can replenish the Roth money.

If you were simply going by the conventional wisdom of expecting to just increase spending each year by the inflation rate, not only would you be missing opportunities, but then you get the panic when something happens, and the spending goes up.

So those are just a few examples of how to put all of these retirement income puzzle pieces together. You get the idea. It's critical to do the integration and the coordination so that all of the elements solve this puzzle for your clients and ease their worry.

Lisa, we've talked a lot about the problem we're trying to solve. You've given us some great insights into how Income Solver can give advisors answers and save them time. Can you walk us through an example of how this all comes together using Income Solver?

I'd love to. So let's imagine David and Patricia, a married couple, both age 60, with $2.25 million in their current savings.

Income Solver analyzes the personalized data, including all of those spending goals, other cash flows, integrating and analyzing all of the account information coming from their brokerage, IRAs, Roth IRAs, and other income sources like pensions or annuities. It will pull together and create a complete strategy based on all of David and Patricia's accounts for the most complete and tailored strategy for the household. The more information you put in, the better, the more detail you will be able to get.

The advisor using the software selects or builds a customized investment strategy for that household. We emphasize this, that the advisor is in control of applying your own knowledge of the client's risk tolerance and potentially proposing, asset allocation model.

The software allows you to build and input, select those, and then the Income Solver decides all the other decisions we talked about on how and where to generate the money. It will generate the income using those earlier decisions we discussed, while aligning and bringing it back to the set asset allocation model to generate these tax-efficient outcomes. As the advisor, it's important that you are able to bring your expertise in to the investment decisions and let the software do the complex tax calculations.

So the difference for this household, David and Patricia, is the results of over $1 million in after-tax cumulative value, compared to if we had drawn out of their accounts in the conventional wisdom withdrawal sequence. That equates to approximately seven additional years of retirement income and more legacy for their heirs, all of which is a win.

Talk about a compelling story, helping clients keep more of their hard-earned money and providing them with the detail needed to solve the complex puzzle. Using the software, Income Solver, to generate the strategies instead of making you, the advisor, enter in all the drawdown variables, is going to do a couple of important things.

As Parker has emphasized, give you more time to engage your clients and do so with easy-to-understand reports, comparison charts, and the details they need to make these decisions.

Lastly, it's for clients to make these decisions with confidence, and to feel confident in you as their partner.

You can see a more detailed analysis of this case, as that was very high level, by reading our recently published white paper from Dr. Bill Reichenstein and Bill Meyer, titled "Outsmart conventional planning to extend retirement income by up to 7 years for your clients." 

Yeah, Lisa, I know I've mentioned it a couple times now, but I do want to reiterate that efficiency and what it means. It means as an advisor, you're going to spend less time crunching numbers, more time building relationships, sitting down and having real, meaningful conversations, answering those tough questions, and understanding your clients' retirement vision and their worries, right?

And ultimately, when you think about that in your own practice as a financial professional, yeah, it's incredibly important to have that time available to assist clients and prospective clients, with what's most important to them.

And I think after all, this is going to help you build your clients' confidence in their future retirement income plan, and in you overall.

Well said, Parker. That's what clients see, the time you've spent with them. They notice less how much time you've spent in front of your computer doing analysis. So if you can shift that ratio, it gives them more connection with you, and that builds that relationship.

Now, let's challenge one more myth: Retirement planning is set it and forget it. I just add that inflation rate to whatever I spent last year and, poof, I have this year's plan.

Why are annual reviews so much better, Lisa?

Oh, only if it was that easy.

Well, first of all, as we've illustrated, generating income in retirement is more complicated than getting that nice, regular paycheck when you're working. And of course, life changes, spending shifts, health events, families grow and shrink. Annual reviews are a great way for advisors to adjust plans quickly, keep the clients on track, and maybe more importantly, to gain and nurture those client relationships.

An annual Income Solver review, the advisor has then the opportunity to quantify their value year after year and share what they're doing with their clients and why.

What do you tend to see, Parker?

So Lisa, we typically see clients who meet with their advisors annually. I think they feel a lot more confident and more likely to refer friends and family.

And at the end of the day, when you think about this, regardless of how confident you are in your retirement journey, I think having that check-in is really important. Everybody likes to know that they're doing the right thing.

And let's not forget, these are also times to learn more about your clients. How's retirement going? Are there any bucket list items they'd like to tackle? And grandkids heading to college, they may be considering helping to fund that. These conversations show your value well beyond dollars and charts.

So I think that it is really powerful, and at the end of the day, that ongoing engagement with your client is going to help deepen those relationships, and ultimately, grow your practice over time.

And I would insert here, Parker, that growing those relationships also helps you to keep clients, especially in retirement.

And I can share a personal story about this very thing happening, as my two parents, have been seeing the same financial planner for many years, Bob, who they meet with annually, and have been doing so for about 20 years together. And, while dad mostly runs the finances, mom always attends the meeting and is able to engage with the advisor and feel comfortable with him. Really important.

And in the last year, with my dad's health declining, mom has still been comfortable going to and engaging with this financial advisor as they now are shifting in their roles of managing their finances, and that relationship she can trust to continue to go to as she has to learn and take on the burden more heavily, is huge, instead of having to look and try to find a new place to go, a new place for help.

So regular engagement with your clients can also help keep your clients for the remainder of their retirement years.

That's wonderful, Lisa, 'cause that's what it's all about.

And today, we've talked about the opportunity to go beyond conventional wisdom, static spending, Social Security at retirement, withdrawal sequencing, and one-time planning.

So let's wrap this up.

Lisa, what is your key takeaway if viewers remember nothing else?

Well, with tools like Income Solver, financial professionals can better deliver personalized, flexible retirement income plans, tax-efficient coordinated strategies, which means more years of retirement income, more legacy, and ongoing trust through those annual reviews.

Very powerful, Lisa.

Parker, same question. What should our viewers take away from today's discussion?

Yeah, Stuart, I think when you go beyond conventional wisdom as a financial advisor, you leverage technology, you become a trusted resource for clients and families, I think now, but more importantly, for generations to come.

And I think with easy integration, personalized visuals, instant updates, financial professionals can focus on what matters most, which at the end of the day, is helping clients build their confidence in their retirement journey and in their advisor.

And at the end of the day, that's what matters most.

Thank you, Lisa and Parker, and thanks to all of you for joining us.

To see Income Solver in action, or to learn more about our comprehensive Practice Management program, Solving the Retirement Income Puzzle, contact your T. Rowe Price representative or visit our website, and you can register to attend a live Income Solver demo. It's time to solve the retirement income puzzle.

Your clients' futures and your practice's growth deserve every piece in place.

Thank you.