Financial Planning for Santa Fe Retirees: 5 Steps to Generate Income
Retirement in Santa Fe brings opportunities to enjoy a rich lifestyle rooted in natural beauty, art, and community. But without a steady paycheck, ensuring a reliable income stream becomes one of the most important financial challenges facing retirees.
Whether you’re approaching retirement or are already living it, having a plan in place to generate consistent income can mean the difference between financial stability and uncertainty. Cost-of-living considerations, tax planning, and market volatility all play a role. The good news is that a thoughtful approach to retirement planning in Santa Fe, NM, can help support your lifestyle and preserve your financial wellness.
Here are five steps designed to help secure retirement income, based on strategies that a fiduciary financial advisor in Santa Fe may recommend.
1. Optimize When You Claim Social Security
Social Security may be one of your most reliable sources of retirement income, and the timing of when you claim your benefits can significantly affect how much you receive over your lifetime.
Claiming early, as soon as age 62, means locking in a lower monthly payment. Waiting until your full retirement age (typically between 66 and 67) or even until age 70 can increase your benefits significantly. For some retirees, the long-term value of delaying outweighs the benefit of claiming sooner, particularly when considering longevity and spousal benefits.
This decision is even more important in New Mexico, where Social Security income may be subject to state taxation depending on your adjusted gross income and filing status. A financial advisor in Santa Fe can help you evaluate your specific tax situation and run projections to determine the most beneficial time to claim your benefits.
2. Use a Bucket Strategy to Manage Cash Flow and Risk
The bucket strategy is a popular method of managing retirement withdrawals because it segments your savings into distinct “buckets” based on time horizon and purpose.
- The short-term bucket includes cash or cash equivalents that cover one to three years of expenses.
- The mid-term bucket holds conservative investments like short- to intermediate-term bonds, offering a balance of income and stability.
- The long-term bucket consists of growth-oriented investments, such as equities, designed to outpace inflation over time.
This structure can help to reduce the risk of selling investments at a loss during market downturns while keeping enough cash on hand to cover near-term needs. A retirement income strategy in New Mexico that incorporates this approach can potentially provide both flexibility and confidence in unpredictable markets.
3. Withdraw Strategically to Help Minimize Taxes
Where you withdraw money from, and when, can make a big difference in how much you keep after taxes. Most retirees draw income from a mix of tax-deferred accounts like traditional IRAs or 401(k)s, taxable investment accounts, and tax-free Roth IRAs.
Sequencing withdrawals in a tax-efficient way can help reduce your tax liability and extend the life of your savings. For example, in some cases, drawing from taxable accounts first may reduce required minimum distributions later. In other cases, spreading income across multiple sources can help manage tax brackets more effectively.
New Mexico taxes most retirement income, although some recent changes have introduced partial exemptions for Social Security and other sources. The rules continue to evolve, so working with a financial advisor in Santa Fe who understands both federal and state tax laws can help you make the most of your income in retirement.
4. Diversify Your Income Sources Within Your Portfolio
Beyond Social Security and account withdrawals, your investment portfolio itself can serve as a steady income source. We believe diversifying how your portfolio generates income is a smart way to reduce reliance on any single stream and improve resilience.
Many retirees benefit from a mix of:
- Dividend-paying stocks, which can offer both income and long-term growth.
- Municipal or corporate bonds, providing interest payments and lower volatility.
- Real assets, depending on risk tolerance and overall strategy.
A diversified portfolio that balances income, growth, and risk can help you meet current expenses while staying aligned with long-term goals. Your advisor can help ensure your investments are properly structured to support these objectives while remaining tax aware.
5. Create a Custom, Flexible Retirement Income Plan
No two retirees are alike. Your retirement income plan should reflect your lifestyle, values, and financial picture. It should also evolve with your needs over time.
A personalized strategy includes:
- Regular reviews of income and expenses.
- Adjustments based on market performance and changing priorities.
- Coordination between investment planning, tax strategy, and estate goals.
Savant Wealth Management operates as a fee-only fiduciary, meaning the advice you receive is always in your best interests. Our financial advisors focus on building retirement income plans based on evidence and tailored to the individual.
By working with a local financial advisor, we believe you also can gain insight into Santa Fe’s cost-of-living dynamics, property considerations, and the impact of New Mexico’s tax structure on retirement planning.
Build a More Resilient Retirement Income Plan with Savant in Santa Fe
Securing your income in retirement doesn’t happen by accident. It takes proactive planning, informed decisions, and regular guidance designed to help to ensure your financial resources support the life you want to live.
If you’re retired or preparing to retire in Santa Fe, now is the time to align your income strategy with your goals. Work with a financial advisor in Santa Fe to build a customized, flexible retirement income plan that supports your lifestyle today and adapts to whatever tomorrow brings. Schedule a call with a Savant advisor in Santa Fe to help take the first step toward building a more confident retirement.