How to Increase Retirement Income (Without Running Out of Money)

Good morning, life adventurers!

For some of us, retirement still feels like a distant horizon.
For others, it’s just around the bend.

Wherever you are on the path, one thing’s certain: the sooner you understand what you’re aiming for, the smoother the journey becomes.

If you’ve ever heard of the 4% Rule of retirement withdrawals—put it on the back burner. It’s outdated, overly rigid, and more often than not, causes people to leave behind far more money than they intended to.

Today, we’re uncovering a little-known approach to increase retirement income safely.

A method that adapts with you and doesn’t hold you back.

If you’d like to go deeper—with real fund examples, a watchlist, and step-by-step wealth-building strategies—join the Founding Members Waitlist for early access (and lifetime perks!) to The Wealth Expedition membership platform.

In the meantime, enjoy this secret method for raising your average retirement income beyond what most advisors, or investors, ever achieve.

Onward together,

Daniel

FINANCIAL TOOL
How to Increase Retirement Income (Without Running Out of Money)

As people approach the great chapter of life called retirement, they naturally ask the question:

That’s the heart of the retirement income problem: you want to maximize retirement income and enjoy life, but you also need to make sure your savings last.

It’s tricky because two things are uncertain:

1. How long you’ll live.

2. How markets will behave.

Most retirees rely on rules of thumb, especially the famous 4% rule for retirement, to calculate what’s generally considered to be a safe withdrawal rate. While that simple rule helped a generation of investors, it can lead to two problems:

• You might outlive your assets if markets perform poorly early in retirement.

• Or you could live far below your means, spending less than you safely could, and leave behind a much larger legacy than intended.

Today, we’ll look at a smarter, research-backed way to calculate retirement income: one that adapts to changing markets, helps you spend confidently, and still keeps you from running out.

🧭 The (Secret) Way to Think About Retirement Income

A recent paper* from the Financial Analysts Journal (CFA Institute) proposed a framework that challenges old models like the 4% drawdown rule.

The researchers built what’s called an Annually Recalculated Virtual Annuity (ARVA) strategy. But don’t worry about the jargon. Here’s what it means in plain English:

You build your portfolio around two pieces:

1. A Safety Floor — created with Treasury Inflation-Protected Securities (TIPS) or similar inflation-indexed bonds of your respective country.

2. A Flexible Growth Engine — built from a low-cost equity index fund.

The combination lets you create what is effectively a personalized pension plan:

• The TIPS ladder provides predictable, inflation-adjusted lifetime income for essential expenses.

• The stock portion provides flexibility: you withdraw a recalculated amount each year based on market performance and remaining time horizon.

This design has one goal:

*Sharkansky, S. (2025). The Only Other Spending Rule Article You Will Ever Need. Financial Analysts Journal, 81(4), 59–83. https://doi.org/10.1080/0015198X.2025.2541567

⚖️ Why the 4% Rule Falls Short

The 4% rule for retirement was groundbreaking in the 1990s, but it assumes a fixed withdrawal rate and static portfolio mix: usually something like 60% stocks, 40% bonds.

That’s where it fails modern retirees:

• It doesn’t adapt to changing markets or life spans.

• It can lead to chronic underspending or unnecessary income cuts.

• It doesn’t distinguish between “essential” and “discretionary” spending.

Even with “guardrail” methods (spending less during market downturns), retirees often end up living below their safe capacity from year to year.

Instead of sticking to a one-size-fits-all safe withdrawal rate, the ARVA approach recalculates your available income each year, based on:

• Your remaining time horizon,

• Your portfolio’s current balance, and

• Long-term average market returns.

That makes it far more dynamic. In simulations, it provided higher lifetime income without increasing risk of depletion.

💰 A Top Strategy for Increasing Retirement Income

To increase retirement income safely, you need both stability and growth.

That’s exactly what a TIPS ladder plus an equity index fund can provide.

🪙 The TIPS Ladder (Your “Income Floor”)

A TIPS ladder is built from individual Treasury Inflation-Protected Securities (TIPS) held to maturity. Each bond provides a guaranteed, inflation-adjusted cash flow in the year it matures, creating a predictable, year-by-year stream of income throughout retirement.

In theory, this structure gives you complete control:

• A 1-year TIPS covers next year’s spending.

• A 2-year TIPS covers the following year.

• And so on, often extending up to 30 years out.

That precision is what makes the ladder so powerful. It turns your retirement savings into a personal pension that rises with inflation.

You can even tailor the plan to match your expected lifestyle, with such goals as:

• Keeping spending steady

• Frontloading it for early travel and leisure

• Saving more for later healthcare costs

And you can manually adjust the plan based on whether you want spending to remain constant, or if you want to frontload spending in the early years, or backload them for covering potential health care costs—or both!

But it’s also a lot of work. Building and maintaining a full 30-year ladder means buying dozens of individual bonds, each with its own maturity, yield, and price. It’s doable through brokerages like Schwab, Fidelity, or Vanguard (some even automate it), but it’s not for everyone.

👉 Simplified option: A low-cost TIPS ETF can serve as a close substitute. It won’t perfectly match specific income years—because it holds a rotating mix of maturities—but it delivers similar inflation protection in the long-run and general stability for far less effort.

👉 Middle ground: Some investors might build a shorter 5–10 year TIPS ladder to lock in near-term income, then use a TIPS ETF to cover the rest. This hybrid approach captures most of the benefit with a fraction of the hassle.

Either way, with this strategy, your TIPS allocation forms the foundation of your retirement plan—the stable “paycheck” that covers housing, food, insurance, and other essential expenses.

📈 The Equity Index Fund (Your “Bonus Income”)

• Represents your long-term growth engine.

• Historical data (1871–2023) showed a 100% stock portfolio paired with a TIPS ladder often produced higher total withdrawals than a blended 60/40 or 80/20 stock/bond portfolio without worse downside risk.

• The key insight: stock returns tend to mean-revert over long horizons (more predictable within a range of likely outcomes), making long-term equity exposure more reliable than most people think.

So, if you want to increase retirement income without taking unnecessary risk, consider skipping the bond funds to use a mix of:

• Low-cost index equities for growth, and

• TIPS ladder for stability.

This approach also makes calculating retirement income much simpler and more realistic.

⚖️ Finding Your Balance: Certainty vs. Flexibility

How much you hold in stocks versus TIPS depends on what matters most to you: stability or potential.

• If your goal is a higher certainty of a lower-bound income, a roughly 50/50 mix of stocks and TIPS may be more appropriate. It smooths out volatility and gives you steadier, inflation-adjusted income through both good and bad markets.

• If you care more about maximizing long-term average income — even if that means some years come in lower — you might lean closer to 100% stocks, paired with a modest short TIPS ladder for essentials.

Many investors fall somewhere in between, and that’s perfectly fine. The key is aligning your portfolio with your peace-of-mind level of confidence. The strategy, correctly applied, allows you to rest assured that your essential expenses are covered while allowing your growth engine to work in the background.

🧩 How to Structure Your Spending

The research introduced a behavioral framing that helps manage expectations and perspectives:

Priority Income (Floor)

This covers the non-negotiables:

• Mortgage or rent (if it remains into retirement)

• Utilities and groceries

• Insurance and healthcare

Fund this with your TIPS ladder + Social Security + any pensions.

Bonus Income (Flexible)

This covers the enjoyments:

• Travel

• Gifts

• Upgrades and extras

Fund this with withdrawals from your stock portfolio using the ARVA framework. In good years, your “bonus” is larger. In bad years, it shrinks. But your essentials are still covered.

In practice, this flexible ‘bonus’ approach actually softens the blow during particularly tough markets.

Research comparing the ARVA framework with the more popular Guyton-Klinger “guardrail” strategy (a similar rules-based approach that adjusts withdrawals up or down based on market performance) found that while both methods reduced the chance of running out of money, ARVA led to smaller income declines in the worst market environments.

In other words, when markets stumble, your “bonus” shrinks, but not as much as it would under most traditional withdrawal rules. And when markets recover, your spending naturally rises again.

Treating this variation as a semi-regular bonus, rather than a lifestyle reduction, turns volatility into a feature rather than a bug. Instead of feeling like you’re “cutting back,” you’re simply getting a smaller bonus one year and a bigger one the next.

🧮 Rethinking “Success” in Retirement

Traditional financial plans talk about “probability of success,” often saying something like:

But what does that really mean? Usually, “success” means “not running out of money before age 95.” That’s a low bar. Not that exciting.

In contrast, the ARVA framework reframes success as:

That reframes the entire conversation around what retirement ‘success’ means while maintaining a higher average withdrawal rate over its course, without increasing risk of outliving your money.

It focuses on thriving rather than simply surviving.

🪙 Final Thoughts: How to Safely Increase Retirement Income

The best investment for retirement income will depend on several factors specific to each investor.

But to discover your personal strategy, think in layers:

1. Floor first — TIPS ladder, Social Security, pensions.

2. Growth second — low-cost total stock market funds.

3. Automation — set withdrawals to recalculate annually based on time horizon.

4. Mindset shift — treat variable income as bonuses, not failures.

This approach offers flexibility, clarity, and higher long-term satisfaction — all while avoiding the biggest risk of all: running out of money.

If you’d like to see how to build this kind of plan step by step — including real fund examples and practical strategies — join the Founding Members Waitlist for the upcoming Wealth Expedition community. Inside, I break down frameworks like these into simple, actionable steps you can apply directly to your own retirement blueprint.

And because retirement planning is only one part of a larger journey, you’ll also discover how each area of personal finance — from budgeting and investing to income growth and entrepreneurship — fits together into a single, harmonious wealth-building strategy.

You’ll progress alongside a community of like-minded individuals (and myself), finding encouragement, strategy, and accountability as you move confidently toward your goals.

Daniel Lancaster, CFA

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