Retirement income looks simple on paper. Then the paycheck stops, and the numbers feel tighter than expected.
Recently, a client in his seventies sat across from me and said, “I don’t have enough retirement income.” He had cut back to part-time work, and his monthly income dropped sharply. He had also received a large inheritance. Yet he refused to touch it. He wanted to live only off the interest.
That instinct feels responsible. Protect the principal. Spend only what the account earns. Leave the rest behind.
The interest-only mindset
Many retirees believe they should never dip into principal. The idea sounds safe. In reality, it can create new risks.
Retirement income that relies only on interest depends on factors no one can control. Interest rates fall. Dividends change. Markets shift. When rates stay low, income shrinks. When companies reduce payouts, cash flow tightens.
In this case, the interest did not cover his desired lifestyle. By focusing only on income-producing assets, he limited flexibility and reduced growth potential. Over a retirement that may last decades, that limitation can strain a plan.
Inflation adds pressure. Even steady, moderate price increases reduce purchasing power. A portfolio built only for yield today may struggle to keep up tomorrow.
Rethinking retirement income
We shifted the focus to “total return.” Instead of isolating interest, we looked at the portfolio’s overall growth, including appreciation and dividends.
With a balanced mix of investments, he could take structured withdrawals from both earnings and principal while still aiming for long-term growth. Principal is not off-limits. It exists to support life in retirement.
When I asked what mattered most, he said he wanted stability in his current lifestyle, confidence he would not run out of money, and the ability to leave something meaningful behind. Those goals required a plan, not a rigid rule about never touching savings.
If your retirement income feels tight, review your withdrawal rate, total return, and inflation exposure. Make sure your strategy reflects your real priorities.
If you would like to review your retirement income strategy, schedule a free introductory call at www.profile-financial.com/call. We will determine whether and how we can help.
Douglas Goldstein, CFP® is the director of Profile Investment Services, Ltd. www.Profile-Financial.com. He is a licensed financial professional both in the U.S. and Israel. Call (02) 624-2788 for a consultation on how to set up your American assets to meet your financial goals. Securities offered through Portfolio Resources Group, Inc. Member FINRA, SIPC, MSRB, FSI. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates. Neither PRG nor its affiliates provide tax or legal advice.
Published March 24, 2026.