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Vanguard research found that focusing on income planning leads to better retirement outcomes. By Jennifer Lea Reed

In an investor guide released in early June, the Valley Forge, Pa.- based fund giant offered a framework for helping clients convert portfolios into sustainable income— a topic that is increasingly on the minds of about-to-be retirees.

And while a multimillion-dollar 401( k) would be a great start, Vanguard is adamant that the withdrawal rate is key to making people’ s assets last through retirement and that protecting income is more important for investors with fewer assets who are expected to live longer lives.

“ The research is grounded in a simple idea: Retirement outcomes depend not only on how much investors have saved, but also on how effectively those assets are converted into income that supports their desired lifestyle in retirement,” said the report summary.

Vanguard’ s report offers five detailed case studies— including one for a 59-year-old pre-retiree with $ 56,000 and another for a 68-year-old couple with $ 5.1 million— to illustrate how the same principles apply differently depending on a client’ s income gap, tax situation and legacy goals.

“ This isn’ t about prescribing one‘ right’ way to generate income,” said Joel Dickson, Vanguard’ s global head of advised strategies, in a statement.“ It’ s about helping people understand the decisions that matter most and giving them a clearer way to think through the trade-offs behind those decisions.

“ Without a clear understanding of what their retirement savings can support, people often either limit spending out of fear they’ ll run out of money or overspend in ways that threaten their long-term financial security and lifestyle,” he said.

The guide, called“ Vanguard’ s Principles for Retirement Income,” organizes retirement income decisions around four familiar principles: start with purpose( in other words, define your goals), cover the essentials, make wealth last, and simplify.

When it comes to withdrawal rates, the research found that many retiree households can support a 30-year retirement drawing roughly 3.5 % to 4 % of savings per year after accounting for Social Security and other guaranteed income. The guide notes that trimming a withdrawal rate by just half a percentage point can add roughly five years to a portfolio’ s life, providing a little more wiggle room for longevity. But it also warns of the risk of unnecessary austerity.

To cover baseline expenses— such as housing, food and healthcare— Vanguard recommends that clients anchor essential spending to guaranteed income sources like Social Security, pensions and annuities. In particular, the guide makes a case for income annuities, framing them as longevity insurance rather than an investment product.

In one scenario, a 67-year-old retiree with a 6 % withdrawal rate who allocated 60 % of her portfolio to a single-premium immediate annuity was able to sustain nearly 70 % of her initial spending target at age 100— thousands more per year than a portfolioonly approach would have supported.

However, a case study for 59-year-old“ Noel,” a single male pre-retiree with $ 56,000 in portfolio

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