What is an Income Path?

An Income Path reflects anticipated changes in real (inflation-adjusted) income needs as household members age and advance through retirement. Income Lab allows you to plan for the following types of future income paths:

Age-Based

Planned household income is different at different points in the plan based on client ages and the household's income level. The shape of this planned path follows generally observed patterns of retirement spending in the US population. In general, this will result in income needs that stay the same or go up in early retirement, reduce in real (inflation-adjusted) terms as retirement progresses, and increase again later in retirement. 

Note that, even with relatively low levels of inflation, the Age-Based Income Path does not tend to result in reductions in nominal planned income. Instead, it may result in nominal planned income that does not increase as quickly as inflation. (You may have heard this income path referred to as the retirement "S-Curve", "smile," or in the phases of "go-go, slow-go, and no-go years.") 

Flat

Planned household income will not change, in real (inflation-adjusted) terms, as clients age.

Custom

If neither the Age-Based nor Flat paths match a household’s planned income needs, you can design a path with specific time periods of stable, decreasing, and increasing real (inflation-adjusted) income. The custom path mimics the Age-Based path but allows the user to define the parameters of the path. Users can specify when inflation-adjusted planned income will begin to adjust downward, if and when end-of-life increases will take effect, and the magnitude of these downward and upward adjustments.