Income X-Factors

The New Strategies Of Long-Term Planning

Advisors are key guides to building, and securing, income adequacy

by Mike DeKoning

Mr. DeKoning is Senior Vice President of Insurance & Wealth Management Solutions at Thrivent, a diversified financial services organization. Visit or find us on Facebook and Twitter.

Over the past few years, Americans have faced many financial obstacles, from navigating the pandemic to high inflation, market volatility and more. A recent Thrivent survey underscores how much pressure these factors are putting on people’s personal finances. We found that more than three quarters of Americans (78%) wish they had more breathing room in their finances, and when asked about their top financial priorities, 36% of Americans said it would be to increase income and 31% said it would be to save for an emergency.

The survey reveals the degree to which Americans rely on weekly income to sustain them financially. But what would happen if that income suddenly disappeared due to an unexpected event, like the untimely death of a spouse or a medical emergency that rendered them unable to work? We know that some Americans wouldn’t be able to recover, given their current finances. Also, at the end of their careers, most Americans aspire to have a long, healthy and happy retirement. How can they sustain a level of income from their retirement savings that provides them with the comforts they have grown accustomed to?

As people focus on generating and growing their income throughout their careers, they should pay equal attention to how they plan – and protect – that income over their lifetime. As such, income planning is the bedrock of a sound financial strategy – and it’s a great starting point for everyone. By protecting income and assets, people can work toward their short and long-term financial goals, no matter what comes their way.

In this sense, financial advisors can help clients game-plan different scenarios and how they may affect their income, cash flow and personal goals. For example, how would a client continue to save for retirement or their child’s college education if their income was interrupted due to prolonged job loss? Would they be able to pay their fixed expenses if they couldn’t work anymore? If giving back to their church or community is important to them, how can they set aside some of their income to contribute?

And looking ahead to the future, how can clients ensure their retirement savings will last long enough to provide for them and their spouse?

These critical conversations can help clients grasp the importance of financial planning so they can make decisions that are best for their families, and our financial advisors help clients prepare for key life moments.

Early Career

As people begin their careers, they often struggle to see the big picture of their finances and align their goals against it. They’re earning an income, but unsure how to use it. A financial advisor can help them develop a plan for using and protecting their income, which could include planning and saving for higher education, retirement, extended care and their estate, along with strategies for managing taxes throughout their lifetime.

To start, we recommend that people take advantage of the employee benefits offered through their jobs, including health, life and disability insurance, as well as signing up for their employer-sponsored retirement plan. With the skyrocketing cost of healthcare, health insurance is essential for protecting income, and opting into life or disability insurance through an employer often allows people to take advantage of group benefit pricing. This can reduce the overall cost and free up income for other needs. By enrolling in a retirement plan and leveraging their employer match, those in their early career can effectively receive “free money” to kickstart their retirement savings.

A critical next step is for people to understand their financial position by looking at cash flow. One of the best ways to safeguard income is to follow a budget. It sounds basic, but a financial advisor can assist in identifying fixed and discretionary expenses and help people create a budget that helps ensure positive cash flow. Ideally, any extras can then be used to start an emergency savings fund to safeguard against unexpected costs.

While building emergency savings can help protect people in the short-term, protecting against a prolonged disability, illness or untimely death requires proper insurance coverage. Even if basic life and disability insurance is offered as an employer benefit, people may need additional coverage to meet their needs, and a financial advisor can help. Life insurance can help protect families from the potentially devastating financial loss of a spouse or parent by helping them pay off debts, living expenses and more. Disability income insurance can be used to help maintain income if someone in the family was suddenly sidelined by an illness or injury for an extended period. Both types of coverage can be tailored to provide essential financial protection and are vastly more affordable when people are younger.

Finally, even as they navigate competing priorities during this stage, people shouldn’t lose sight of their long-term savings goals, including retirement or saving for a child’s college education. It’s never too early to explore tax efficient savings options that maximize and protect income. This could mean choosing a savings plan that allows for tax-deferred growth or tax-free withdrawals. For example, contributions to a 529 college savings plan offer tax-free growth potential and any earnings are not subject to federal income tax. Similarly, withdrawals from a Roth IRA are tax-free, allowing individuals to keep more income in retirement.


With the skyrocketing cost of healthcare, health insurance is essential for protecting income, and opting into life or disability insurance through an employer often allows people to take advantage of group benefit pricing...

As people settle into their careers, it’s easy to get complacent about financial goals. This could be detrimental – while income is hopefully increasing as people progress in their careers, financial pressures could be mounting. People in this stage are approaching retirement faster than they think and may have children who need financial support or elderly parents with caregiving needs.

With rising rent, uncertainty around landing a job and challenging market conditions, there’s no question that today’s financial environment is making it harder for adult children to become financially independent. In another survey, we found that 41% of parents currently have an adult child living with them at home. Parents are feeling the strain: 51% report compromising on their short and long-term financial goals due to providing financial support for their adult children. Having conversations with kids about this scenario, establishing clear expectations and outlining parameters for financial support are crucial to preserving income and not depleting savings at a crucial time.

This is also a good time for people to reevaluate their financial goals, review their life insurance coverage and discuss whether they have enough savings for retirement. They may find that their family needs have changed and want to update their policies to ensure their beneficiaries receive financial support if the unthinkable were to happen. They may also discover they need more disability income insurance as their income has grown. Finally, as their future plans start taking shape, they’ll likely have a better idea of how much income they’ll need in retirement. A financial advisor can help them navigate options as their life circumstances change.

Last but not least, people in this stage should evaluate their personal health and think about what they’ll need during retirement. Are there current healthcare concerns that will carry over into retirement? Will a spouse need to play an active role as caregiver? Would a loved one prefer to receive professional care inside or outside the home? Proactively anticipating future healthcare costs and developing a written extended care plan can help people understand any gaps in health coverage and determine if they need additional insurance coverage or savings, like long-term care insurance, hybrid life insurance or a health savings account. In addition, for those who are providing care to an elderly parent, having early discussions with family members regarding an extended care plan and financing options are essential to avoid tapping into other income sources.

Approaching Or Entering Retirement

As people approach retirement, this is where all their planning finally comes to a head. Instead of generating income, the focus shifts to managing fixed income in retirement, converting their retirement “nest egg” into an income stream and sticking to a monthly budget.

People should keep in mind that changing market conditions and fluctuating factors, like inflation or interest rates, will continue to impact their financial picture in retirement, including the overall value of their investments and how they’re able to meet their income needs. Working with a financial advisor during this period can help people establish a budget and consider how these factors will impact their day-to-day cash flow. Depending on their financial position, people may want to explore ways to lock in guaranteed income through a fixed or variable annuity. Many solutions today take the current market environment into account and offer options to customize income and time horizons while taking advantage of tax benefits, like Thrivent’s new multi-year guarantee annuity.

Beyond a budget, people should determine how they will withdraw from their retirement funds over the next several years or decades. A financial advisor can help retirees think through specific tax implications. For example, they may suggest to a client that they start taking distributions from their IRAs or 401(k)/403(b) accounts to reduce the tax impact of required minimum distributions. If a client’s financial situation allows, they may also suggest waiting to collect Social Security benefits to potentially get more income to offset losses from taxes. Or they may suggest considering a Roth conversion of some or all of the client’s retirement savings, which can be beneficial in certain circumstances. No matter the situation, a financial advisor can help people plan their income in a flexible and efficient way that meets their needs in retirement.

While sometimes uncomfortable, we encourage clients to have conversations with loved ones about extended care plans, how care will be executed on an individual’s behalf if they can no longer advocate for themselves, and how to pay for that care. In addition, people should put their legacy and estate plans into writing and ensure their healthcare directives and power of attorney decisions have been communicated and acknowledged by their loved ones.

When our financial advisors talk with clients about income planning, they reinforce it’s not something to set and forget. It should be revisited often throughout life as financial circumstances change. By making wise money decisions with their income, people can achieve their short and long-term goals with confidence while simultaneously protecting their loved ones.