What is a Retirement Plan? Hint: It’s Not Your 401(k)

Many people assume their retirement savings tell them everything they need to know about the future. This article explores why a 401(k) is only one piece of the puzzle and what a true written retirement plan includes, from income and taxes to health care and legacy planning. 

The 401(k) Balance

For many people approaching retirement, the quarterly 401(k) statement feels reassuring. The balance is there. The performance is tracked. It looks like a plan. 

But as Retirement Planner Chawn Honkomp explains, that sense of security can be misleading. He notes that people look at their statements and think, “all right, here’s my plan,” because they can see balances and performance, but “there’s much more to your stage of life as you get closer and closer to retirement.” 

A 401(k) shows how much you’ve saved. It doesn’t show how retirement actually works. 

What a 401(k) Is Good For 

A 401(k) plays an important role, just not the one many people assume. Retirement Planner Loren Merkle describes it as really good for enabling you to enter a phase of your life where you can live and have fun and not have to work, because it allows you to accumulate money consistently over time. 

Loren points out that the real advantage is time. Contributing each pay period and letting those dollars grow, whether pre-tax or after tax, builds the foundation for retirement. As he puts it, “time is by far your biggest weapon.” 

That foundation matters. But accumulation alone doesn’t answer retirement’s biggest questions. 

The Questions a 401(k) Cannot Answer

As retirement gets closer, people start asking questions about their account that statements likely won’t answer.

A 401(k) doesn’t outline when you can retire. It doesn’t tell you how much you can safely spend each month. It doesn’t include details about a retirement income plan that includes your other sources of income, like Social Security, and how those sources will be taxed.  

Chawn emphasizes that investment balances are just one piece, adding that a written retirement plan includes multiple components because when you are getting ready to retire everybody knows they’ve got to start thinking about more.” 

Thinking Ahead

Loren says that sometimes people don’t recognize how complex retirement is until they are “on the doorsteps of retiring.” Suddenly, decisions appear that they’ve never had to make before, including how to take money out of their 401(k). 

Loren highlights a rule that can catch some off guard: “(In many cases) when you take money out of your 401(k) plan, there is a mandatory federal tax withholding of 20%.”  

Add in early withdrawal rules, tax penalties, and income timing, and the simplicity of saving turns into a maze of decisions. 

What a Written Retirement Plan Really Is 

A written retirement plan can help bring clarity to retirement decisions. The plans that Loren and Chawn help families and individuals create are called a RetireSecure Roadmap, built around six pillars: lifestyle, income, taxes, investments, health care, and legacy. 

Loren explains that the RetireSecure Roadmap helps people “make the decisions that they have to make.” Instead of guessing, families can see how their retirement decisions work together. 

Starting With Lifestyle 

The foundation of the plan is lifestyle. Loren says this pillar answers a simple but powerful question: “What are you going to do in retirement?” 

Travel, time with grandkids, seasonal living — all of it gets written down. Loren explains that the lifestyle plan matters because “that’s going to determine how much your retirement is going to cost you,” and every other pillar supports that vision. 

Turning Lifestyle Into Income 

Once lifestyle goals are clear, the income plan shows how to fund them. Chawn describes starting with the basics: “What a typical month is going to look like for you,” including expenses that don’t happen every month. 

From there, income sources are coordinated — Social Security, pensions, and portfolio withdrawals. Chawn notes that the goal is to “take the right distributions from the right accounts at the best time.” 

Loren adds that answering whether you can fund your lifestyle before retirement provides clarity. “You’re going to come up with one of two answers,” he says. Either you have enough, or you don’t — and knowing sooner gives you time to adjust. 

Planning for Taxes Before They Surprise You

Taxes don’t disappear in retirement, and Loren says nearly everyone will face a retirement tax bill. The question is “how big is that retirement tax bill going to be?” 

A written plan can show the long-term impact of retirement income and outlines strategies — year by year — that can potentially reduce that burden. Chawn emphasizes control, noting that without planning, people simply pay taxes on the IRS schedule instead of being intentional. 

Investing With Income in Mind

Retirement investing is different. Loren explains that market drops feel very different when your lifestyle depends on withdrawals. “If your portfolio drops by 30%,” he says, “your lifestyle could also drop by 30%.” Loren says that building a portfolio designed with income in mind can help provide stability through different market conditions, helping retirees avoid running out of money before they run out of time. 

Addressing health care and Legacy

Health care is often one of the biggest concerns. Loren explains that plans must reflect whether someone is pre-Medicare or post-Medicare and adapt as options and costs change over time. 

The legacy pillar brings everything full circle. Chawn explains it’s about making sure assets transfer efficiently to the people or causes that matter most, with beneficiary designations and legal documents aligned with the overall plan. 

Clarity Changes Everything

At the heart of a written retirement plan is clarity. Seeing everything in one place can help people answer the question they worry about most: Do I have enough? 

As Chawn puts it, once people see the full picture, they move from worrying about money to understanding it — and that shift can make all the difference. 

Watch the full episode on YouTube and learn more about written retirement plans.

FOLLOW US ON SOCIAL

Visual-Insights-Newsletter-Ad_v2

Sign-up for our Visual Insights Newsletter for the latest retirement information and strategies – straight to your inbox.

  • This field is for validation purposes and should be left unchanged.

Discover more strategies you could be missing out on
Man standing nect to a chart that reads, "balance: $1,000,000".

Should You Do a Roth Conversion with a Million-Dollar IRA? 

Many retirees are surprised to learn that a large IRA balance can create a significant tax bill later in retirement. This blog explores how Roth conversions work, why taxes may become one of your biggest retirement expenses, and how a proactive tax strategy could help reduce the lifetime taxes you pay while creating more flexibility…

Read More...
Woman pointing up at a tax bill.

Your Tax Bill Dropped When You Retired. Here Is Why It May Not Stay That Way.

Retirement often brings a welcome reduction in taxes, at least initially. But for many retirees, Required Minimum Distributions, tax-deferred retirement accounts, and changing tax laws can eventually cause tax bills to rise again. This article explores why that happens and how tax diversification may help create more control and flexibility throughout retirement. Retirement Doesn’t Automatically Mean Lower…

Read More...
Woman sitting on a chain with a man and woman standing on either side of her and a caption over the photo that says, "I had all these questions"

The Retirement Decisions That Let Her Retire Earlier Than She Thought.

Retirement can feel like a finish line, but for many people, it’s really a series of decisions.  For Angie, retirement had always seemed tied to age 65. Like many workers, she assumed she would continue working until she became eligible for Medicare. Yet after nearly five decades with the same employer, she began wondering whether retirement might be…

Read More...
Woman standing next to a folder labeled "Annuity" with a caption above that states, " Are they for you?".

Annuities Explained for Retirees: How to Know If One Is Right for Your Retirement Plan

Annuities are one of the most discussed—and often misunderstood—retirement planning tools. This blog explains what annuities are, the different types available, their potential benefits and drawbacks, and how to determine whether an annuity belongs in your overall retirement plan. Why Annuities Can Cause So Much Confusion  Few retirement planning topics generate as much confusion as annuities. Part of the challenge is…

Read More...
Woman standing next to a blue screen that reads, "Retirement Blueprint".

How to Turn Retirement Savings Into Income That Outlasts Inflation, Taxes, and a 30 Year Retirement

Many people spend decades accumulating retirement accounts, investments, and financial products, but far fewer have a written strategy showing how everything works together. This blog explores the difference between owning financial tools and having a retirement blueprint, how recent tax law changes may impact retirement decisions, and why planning for income, taxes, inflation, health care, and longevity…

Read More...
Two men standing next to each other. Between them is a folder that is titled "Estate Planning" with "Outdated" stamped in red on the front of the folder.

Your Estate Plan May Not Protect Your Family the Way You Think It Does. Here Is Why. 

Estate planning today is about much more than avoiding estate taxes. This blog explores how changes to tax laws, the SECURE Act, probate rules, and beneficiary planning are reshaping the estate planning conversation and why flexibility, protection, and coordination matter more than ever. Why Estate Planning Still Matters Many people assume estate planning is only…

Read More...

Ready to take your retirement to the next level?

Let's chat! Schedule a RetireReady Call to talk with a retirement planner about your retirement vision.

Ready to take your retirement to the next level?

Let's chat! Schedule a RetireReady Call to talk with a retirement planner about your retirement vision.

Call Now Button