Retirement income planning at EP Wealth Advisors turns a business sale and your savings into a dated schedule showing which account pays each year's spending until Social Security and required withdrawals begin. If you were born in 1960 or later, your full Social Security retirement age is 67, and the IRS requires withdrawals from traditional IRAs beginning at 75. An owner who sells at 58 and waits for the full benefit has nine years to fund from savings and sale proceeds.
Most founders reach this crossroads when an exit suddenly feels real. For decades the business has paid for family health coverage, the vehicles and the phone plans. Once you sign the closing papers, those company draws stop overnight. You need to know which account to draw from first and how to keep the 10% early-withdrawal tax off your bills. You also need room for your children and parents while your liquid accounts carry you to 67.
What does retirement income planning cover for an owner who plans to sell?
For an owner who sells, retirement income planning lines up your personal cash flow for the years between the closing and the ages when Social Security and required withdrawals arrive. We set which liquid account pays living costs in each of those years and estimate the income tax on each draw. We also mark which assets are set aside for your children, so nobody has to raid an IRA before 59½.
Take Danielle and Marco, a hypothetical couple aged 48 and 50 who co-own three craft-beer taprooms producing nearly $900,000 in annual profit. With an exit targeted roughly eight years away, their main question at their initial review was straightforward: once the taprooms belong to someone else, which money pays the bills each year?
Each income source has its own start date. Taxable sale proceeds pay for spending first. IRA and 401(k) money generally waits until 59½, because the IRS adds a 10% tax to earlier distributions unless an exception applies. Social Security pays its full benefit at 67 for anyone born in 1960 or later. For that same group, the IRS requires IRA withdrawals once the owner turns 75.
Take a close look at the 58-to-67 rows in the schedule below. They highlight nine years without Social Security support, with the first 18 months arriving before Marco turns 59½. Because Danielle and Marco have children who will be 17 and 20 when the sale closes, university tuition will land right in the middle of these bridge years. EP Wealth Advisors isolates college payments as a standalone cash outflow, keeping it separate from baseline household expenses so tuition never depletes daily living reserves.
| Marco's age | Main income source | Rule behind it |
|---|---|---|
| 58 to 59½ | Taxable sale proceeds | IRA withdrawals usually add 10% tax |
| 59½ to 66 | Proceeds plus IRA withdrawals | Penalty ends at 59½ |
| 67 | Social Security begins | Full retirement age, born 1960+ |
| 75 | Required IRA withdrawals start | RMD age, born 1960 or later |
- Identifies which liquid accounts supply monthly draws before penalty ages expire.
- Prevents premature withdrawals subject to the IRS 10% additional tax.
- Coordinates family commitments like tuition so they do not crowd out daily living funds.
Which mistakes cost owners the most when the draws stop?
The most expensive mistake business owners make is underestimating their baseline living budget by looking only at official owner distributions. When you run an operating business, company accounts frequently absorb major personal overhead. Leaving those figures out leaves a massive cash deficit across your post-sale bridge.
When Danielle and Marco went through their bank records, they found the taprooms were quietly paying part of their personal bills. Hypothetical: Danielle and Marco take $200,000 a year from the taprooms for household spending. The business also pays roughly $3,000 each month in costs they'll keep carrying after a sale: $2,000 of family health insurance and $1,000 for two vehicles and phones. Their real spending is $200,000 + ($3,000 × 12) = $236,000 a year. If they sell when Marco is 58 and wait for his full retirement age of 67, that's nine years with no Social Security: $236,000 × 9 = $2,124,000 from savings and sale proceeds, before taxes and inflation. Planning from the $200,000 figure would have left $36,000 × 9 = $324,000 unfunded.
A second common error involves claiming Social Security benefits early at age 62 to patch that spending hole. For an individual with a full retirement age of 67, filing at 62 permanently reduces the monthly benefit by about 30% for life according to the Social Security Administration. That reduction lingers permanently into your eighties and nineties, shrinking survivor income for a spouse.
A third trap is pulling money from qualified retirement accounts before 59½. Those distributions count as ordinary income, and the IRS adds a 10% additional tax. Take $50,000 out early and you owe $5,000 extra, in addition to the regular income tax. Some owners also spend the transaction proceeds right away and forget to reserve for the federal and state tax the sale itself creates.
Here is a straightforward rule: before you agree to a sale date, multiply your real yearly spending (your draws plus every personal cost the business pays) by the years until your first Social Security check. That total has to come from money you can reach without a penalty, unless a consulting agreement or seller note covers part of it.
- Omitting business-paid insurance, mobile plans, and vehicles creates an immediate budget deficit.
- Filing for Social Security at age 62 locks in a permanent 30% benefit reduction.
- Withdrawing qualified balances prior to age 59½ triggers an unnecessary 10% IRS penalty.
How does the income plan connect to succession, sale taxes and the estate plan?
Retirement income planning serves as the operational hub that links ownership transition, transaction tax structure, and multi-generational wealth transfers. It calculates the exact amount of liquidity required to sustain your lifestyle, establishing clear boundaries for what can be gifted or committed to long-term trust vehicles.
Danielle and Marco considered gifting company equity to an irrevocable trust for their two children well before selling. The legal reality is clear: shares given away no longer belong to you, so the proceeds generated by that gifted equity belong exclusively to the trust and cannot cover your personal retirement years. Your spending schedule can count only the shares you keep in your own name.
Business succession planning determines the exit date and buyer structure, which dictates the start of your personal bridge period. Business sale tax planning establishes whether your liquidity arrives as a single cash sum, an installment note, or an earnout, dictating the spendable cash on your schedule each season. Estate planning for business owners establishes how much wealth passes to future generations, while the income plan shows how much equity you can afford to surrender without shortening your bridge. Danielle and Marco chose to set their trust gift amount only after their nine-year cash reserve was confirmed on paper.
- Succession timing sets the starting year for your bridge draws.
- Tax deal structuring determines the annual arrival of liquid funds.
- Estate gifts to children are sized only after personal cash flow is fully secured.
What can a retirement income plan not do for you?
A retirement income plan cannot control equity market volatility or set the final enterprise value of your private company. Investing involves risk, including loss of principal. While structured planning reduces operational uncertainty, your investment accounts remain subject to macroeconomic shifts and variable business valuations.
When Marco asked our advisors for a single guaranteed yearly figure eight years before an exit, EP Wealth Advisors gave an honest answer: long-range plans are working roadmaps. The distribution order cannot be set in stone until purchase agreements confirm whether proceeds arrive via upfront cash, a promissory note, or milestone earnouts.
Healthcare introduces another boundary. Medicare eligibility begins at 65, which means private health insurance remains a personal out-of-pocket obligation from the moment you leave the company until age 65. Once Medicare starts, the Centers for Medicare & Medicaid Services adjust Part B premiums based on your modified adjusted gross income from two tax years prior. In 2026, standard Part B premiums run $202.90 per month, but climb to $689.90 per month for joint filers with incomes of $750,000 or more. A major liquidity event around age 63 will trigger those top-tier healthcare costs two years later.
We prefer to hold roughly two years of spending in cash during the bridge. Selling investments in a down year early in retirement does the lasting damage. With that cushion, Danielle and Marco could keep paying the household bills and the tuition for a couple of years while the portfolio recovered.
- Does not guarantee future investment returns or business transaction valuations.
- Cannot fix distribution steps until buyer purchase contracts are signed.
- Requires active planning for pre-65 health insurance and post-65 IRMAA surcharges.
What people ask about retirement income planning
How much of my Social Security will be taxed?
Up to 85% of your Social Security benefits become subject to federal income tax if your combined income exceeds IRS statutory thresholds. Combined income includes your adjusted gross income, nontaxable interest, and half of your annual Social Security benefits. Most business owners with investment portfolios or transaction proceeds easily exceed the $34,000 single or $44,000 joint filing thresholds.
Can I start Social Security at 62 if I sell my business early?
Yes, you can file for Social Security as early as age 62, but doing so permanently cuts your monthly check. For workers born in 1960 or later whose full retirement age is 67, claiming at 62 results in an enduring 30% reduction in benefits. That cut also lowers the baseline survivor benefit available to your spouse.
How do I pay for health insurance between selling and Medicare at 65?
Private health insurance must be funded directly from your cash reserves from your exit until you reach age 65. You can purchase coverage through public health exchanges or private carriers, or explore COBRA continuation for up to 18 months. Because private premiums often exceed $2,000 monthly for couples, these costs must be explicitly written into your schedule.
Can I take money from my IRA before 59½ without a penalty?
Early distributions from an IRA prior to age 59½ generally incur ordinary income taxes plus an IRS 10% additional tax. Limited statutory exceptions exist, such as using substantially equal periodic payments under IRS Rule 72(t), disability, or specific unreimbursed medical expenses. In most cases, owners should preserve qualified retirement funds until past age 59½.
Will a large income year raise my Medicare premiums later?
Yes, Medicare Part B and Part D premiums use income-related monthly adjustment amounts based on your tax return from two years prior. In 2026, standard Part B premiums are $202.90 per month, but increase up to $689.90 per month if joint income reaches $750,000. A large business sale at age 63 will trigger top-tier Medicare premiums at 65.
How do you start retirement income planning with EP Wealth Advisors?
To start retirement income planning with EP Wealth Advisors, submit your details through the consultation request form on our website. Our team conducts client discovery meetings over secure video conferences or telephone calls, working with business owners across the nation from our office in Boulder, Colorado.
Before your introductory session, gather your last two years of business and personal federal tax returns, your latest brokerage and retirement statements, and your Social Security benefit estimates from ssa.gov. Bring an itemized list of the personal costs your company currently pays as well. EP Wealth Advisors requires at least $500,000 in investable assets to open an engagement, and you receive our full written fee schedule before any advisory engagement begins.
Your first deliverable is a comprehensive year-by-year income schedule. It maps out your bridge years, accounts for children's tuition, and highlights key statutory ages: early retirement access at 59½, Medicare enrollment at 65, full Social Security at 67, and required minimum distributions at 75.
- Submit a meeting request through our online web form to arrange an initial call.
- Gather business tax returns, retirement account reports, and company-paid expense lists.
- Receive a custom withdrawal calendar outlining your exact path to full retirement age.
In short
- EP Wealth Advisors builds dated schedules that map out which accounts fund living expenses until Social Security at 67 and required minimum distributions at 75.
- Omitting business-paid personal costs from your budget can leave hundreds of thousands of dollars unfunded across an early retirement bridge.
- Filing for Social Security at age 62 locks in a permanent 30% benefit cut compared to waiting until full retirement age 67.
- EP Wealth Advisors requires a $500,000 investable asset minimum and provides its full fee schedule in writing before any engagement begins.
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This material is general information only, not individualized investment, tax or legal advice for your circumstances. Investing involves risk, including the possible loss of principal. Before making financial decisions, consult a qualified professional about your own situation.