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
Woman making confused faced with hands raised slightly. Text next to subject says "I inherited money now what?".

You’ve Inherited Money, Now What? 

Inheriting money can be both emotional and overwhelming. In this blog, Retirement Planners Loren Merkle and Clint Huntrods explain how different types of assets—cash, investments, retirement accounts, real estate, life insurance, and personal property—are treated, which tax rules to watch for, and how to make thoughtful decisions that fit into your bigger retirement plan. When…

Read More...
Man smiling next to an image that says "Top 10 Retirement Wake-Up Calls".

The Top 10 Retirement Wake-Up Calls 

Retirement may bring dreams of sandy beaches, golf outings, and more time with family—but it also comes with surprises that can catch many off guard. In a recent episode of Retiring Today, Loren Merkle and Chawn Honkomp counted down the top 10 retirement wake-up calls. These “uh-oh moments” highlight the realities retirees face and the…

Read More...
Man smiling next to the four types of investors.

Are You Making These Investor Mistakes? 

Market volatility is unsettling, and it’s easy to make mistakes when emotions take over. Retirement Planners Chawn Honkomp and Loren Merkle tackle the most common investor missteps—and how to avoid them. From panic selling during downturns to sitting on the sidelines waiting for the “perfect time,” and even holding on to investments too long, they…

Read More...
Woman holding two cards that say "Fact" and "Fiction respectively. A headline stating "The market is too risky?" sits above her head.

Retirement Fact or Fiction: Investments 

When it comes to retirement, some of the most common beliefs about investing sound true—but in reality, they can lead you down the wrong path. Misconceptions about the stock market, savings accounts, bonds, or even the 4% rule can cause retirees to make costly mistakes.  To help separate truth from fiction, Retirement Planners Loren Merkle…

Read More...
Man mid-sentence standing next to a visual example with the words "Same Couple 200K Difference" above it.

7 Essential Questions Your Financial Advisor Should Be Asking

Retirement planning isn’t just about saving money. It’s about making sure your plan supports the life you want to live once you stop working. Asking the right questions can uncover your goals, anticipate challenges, and create a plan that gives you and your loved ones peace of mind. Retirement Planners Loren Merkle and Clint Huntrods…

Read More...
Man smiling with townhomes in the background.

How Do I Stack Up? Understanding Where You Stand with Your Retirement Savings 

That comparison—how you “measure up” to your peers, your neighbors, or even a number you once read in an article—is normal. But it’s not always helpful without context. Retirement Planners Loren Merkle and Chawn Honkomp discussed what those averages really mean and, more importantly, how to start focusing on what matters: your own retirement goals…

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