Retirement Income 2026

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You're 55, successful, and sitting on the couch watching Michigan take down UConn in the Final Four.

A drug ad comes on, you're reminded of an upcoming doctor's appointment next week, your mind then shifts to how much you've already spent this year on healthcare, you then think about the markets and how your 401(k) is down 10%, you then recall the headline about Social Security "running out of money" right when you want to retire.

You lean back, subtly shake your head, and snap out of it.

This happened in a matter of 15 seconds, the definition of a train of thoughts. Your brain is the locomotive and this one little ad triggered the train.

We are humans, we take these thoughts as they come, we fight and push through. But one thing I know would make life so much easier: if you knew just how reliable your future retirement income would be, when it'll be sufficient for you, and how to get the most out of it.

In December 2024, I wrote about why the income math most people learned no longer works: why the stocks you own barely pay dividends, and what to do about it. This is the 2026 edition. The mechanics haven't changed. The world has.

Let's start where every conversation about retirement income should start.

Social Security

Social Security is the bedrock. You pay half of the FICA tax in, your employer pays the other. If you own a business, you do both. Almost every retirement income plan is built around it, and for good reason: it's the one guaranteed income stream most retirees have that adjusts for inflation and lasts as long as you live.

The problem is that "guaranteed" is doing a lot of work in that sentence right now.

I wrote about this earlier this year in Where Confidence Should Lie, but it bears repeating: the projected shortfall in the Social Security trust fund, if unaddressed, would trigger an automatic benefit cut of roughly 23% sometime in the mid-2030s. If you've thought about this recently, it's because it made the news. Congress will almost certainly act before that happens, they always have, but the mechanism for how they act matters enormously. Higher taxes on benefits, means testing, changes to COLA adjustments, a retirement age shift. Each one affects your plan differently.

What I can tell you is it will look different in the years to come, if the last five years are any indication of what's ahead.

So to start your 2026 income projections, pull your Social Security statement at ssa.gov. Look at your benefit at 62, 67, and 70. Build two scenarios: full benefit, and a 20% haircut. That range is your planning baseline. Keyword: range.

Your Accounts

Once you've got your Social Security down, and if applicable, your spouse's, the next question is: where does the rest of your income come from, and what does it cost to access it?

This is where most retirement planning conversations go wrong. Not all money is the same. A dollar in a traditional IRA is not the same as a dollar in a Roth IRA, which is not the same as a dollar in a taxable brokerage account. Each one has a different tax profile, and drawing from the wrong account at the wrong time can lead to expensive mistakes down the road. Remember, everything compounds, including mistakes.

Your account structure matters almost as much as your investing strategy. They can't be separated.

So map it out. List every account, its type, and its rough balance. That inventory is the foundation for everything that follows, and without it, the system-building below doesn't work.

Your Assets, And What They Produce

Knowing your accounts is one thing. Knowing what those accounts are doing, what they're producing and what they're exposed to, is another. Here's a quick rundown:

Stocks: historically low dividend yields. Why? Companies are investing in AI. They don't want to lose market share, they want to grow margins, they need to invest in this technology or get left behind. In retirement, stocks are the inflation hedge. To generate income from them, you take profit. That's not a bad thing. Just different.

Bonds: fixed income yields are tight. US High Yield is at a premium right now, meaning expensive. Munis are a bright spot.

Cash: the Fed is likely to pause rate cuts, which means cash yields will stay elevated. That's mostly a net positive here, though it will continue to pressure the housing market and anyone who needs credit. With the volatility we've seen, cash is looking good right now.

Hard assets: real estate, gold, crypto. Commercial real estate in downtown cores is under significant pressure. Defaults are high, and yields are compressed. Gold is performing well but doesn't produce cash flow. Crypto is trading off and doesn't produce cash flow either.

Privately held businesses: to my fellow business owners: AI is both a massive opportunity and a real threat. Harvesting your business equity is going to be more challenging through this transition. I'll write more about this in the coming months, but stay sharp. It will affect your exit plan, and by extension, your retirement income.

The System

In Where Confidence Should Lie this past February, I put it this way: 'Retirement is the placement of assets designed to send trust back to you every month in the form of income and disciplined growth.'

Knowing what you have is different from knowing how to turn it into a paycheck. Your assets become your de facto employer. You've spent decades building the balance sheet. Now the balance sheet works for you. But it only works well if you run it like a system.

That system has three moving parts.

First, sequencing. Which accounts you draw from, in what order, determines how much of your income you actually keep after taxes. Pulling from a traditional IRA in a high-income year, for example, can push you into a bracket that costs you more than the draw was worth. Sequencing is where a lot of retirees quietly lose money without realizing it.

Second, allocation. Not just what you own, but what each holding is for. Cash for near-term income. Bonds as a buffer. Stocks for long-run growth and inflation protection. Each piece has a role, and when something is out of position, too much in cash when inflation runs hot, or too much in equities right before a sequence-of-returns event, the whole system absorbs the cost.

Third, discipline. Markets will misbehave. The temptation to sell at the bottom or hold too long at the top is real. The system is what keeps you from making expensive emotional decisions at the wrong time. You don't need to be perfect. You need a plan that holds up when the world doesn't cooperate.

Get this right and it can meaningfully extend how long your portfolio lasts and the income it generates. Get it wrong, or never think about it at all, and you'll leave money behind.

Everything compounds. Inflation, mistakes, habits, systems, assets, income, expenses, relationships. To what degree and in what direction, that's what counts.

So what's different in 2026?

In 2025, the dominant narrative was excitement: what AI might do, what was possible, what was coming. 2026 feels different. It's here. And now we're grappling with what that actually means: for business valuations, for labor markets, for interest rate policy, for your exit plan if you own a business.

Layer on a geopolitical situation that is, without question, more fraught than a year ago, a new war, elevated uncertainty at home, and 2026 isn't one thing. It's everything, simultaneously, at a higher magnitude.

For retirement income planning, that changes the inputs. It doesn't change the framework. You still need to know what you have, where it sits, what it produces, and how to draw from it efficiently.

The numbers are almost never the problem. The system is what holds up when the world doesn't cooperate.

Thanks for your time this week.

If you’d like to talk through how this applies to your own financial life, you can learn more about our work at Fjell Capital here.

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More next week.