Retirement income planning is evolving—not just in terms of financial strategies, but in how advisors communicate those strategies to clients. As behavioral finance and investor psychology become more integrated into the planning process , advisors must recognize that perception often drives satisfaction more than performance alone. Ultimately, retirement income planning is not just about numbers—it’s about how those numbers are framed.

Our 2025 Investor Survey explored this concept by presenting a retirement income scenario, framing it in two distinctly different ways, and gauging respondents’ preferences based on that framing. Here, I’ll share what we learned about how investors perceived the results of a Monte Carlo simulation based on how they were framed.

Framing retirement risk: From “failure” to “adjustment”

Traditional Monte Carlo simulations often emphasize a probability of “success” or “failure.” While technically accurate, this framing can inadvertently trigger emotional responses of fear and uncertainty. When clients hear “failure,” they may envision catastrophic outcomes, even if the actual financial impact is minimal.

To counter this, advisors can reframe retirement risk in terms of adjustments rather than failures. For example, instead of saying a plan has a 10% chance of failure, advisors might explain that there’s a 10% chance the client may need to make modest spending adjustments. This shift from catastrophic to manageable language reduces emotional resistance and helps clients feel more in control.

Not surprisingly, that’s exactly what our survey revealed: Respondents showed a preference for Montel Carlo results that focused on future spending adjustments rather than the odds of failure.

Behavioral barriers to spending in retirement

Many retirees struggle with the idea of spending the assets they’ve accumulated. This reluctance stems from several factors, including:

Shortfall risk
Limited financial knowledge
Uncertainty around lifespan
Mental accounting

The Behavioral Lifecycle Hypothesis (BLH) offers a compelling explanation: I mentally separate income from assets. As a result, retirees often derive more satisfaction from spending income (like dividends) than from selling appreciated shares—even when the economic outcome is identical.

Turning assets into income: The power of dividends

Our survey found a strong preference among retirees for dividend-paying stocks as a primary source of retirement income. Specifically, 60% of respondents reported either investing in or planning to invest in dividend-paying stocks to support retirement cash flow. This made dividends the most popular choice, just ahead of annuities (54%).

Why the preference for dividends? From a financial standpoint, dividend-paying stocks:

– Help retirees keep pace with inflation
– Tend to be less volatile than non-dividend stocks
– Are often taxed at favorable long-term capital gains rates
– Could provide a steady stream of income that can be taken in cash or reinvested

But the appeal goes deeper. Through the lens of BLH, retirees derive more emotional satisfaction from spending dividend income. In a study comparing two retirement income scenarios—one based on selling shares (capital gains) and the other on receiving dividends—respondents rated the dividend scenario significantly higher in satisfaction (mean score of 3.84 vs. 3.26, p < 0.001).

Advisor strategies: Enhancing retirement confidence

To help clients turn assets into income and improve retirement satisfaction, advisors can implement the following strategies:

• Reframe risk with empathy: Use language that emphasizes flexibility and control. Replace “failure” with “adjustment” to reduce emotional resistance.
• Design portfolios with income framing: Highlight the role of dividends, interest, and predictable cash flows. Use terms like “steady income stream” rather than “withdrawals.”
• Implement guardrails and dynamic spending plans: Use structured withdrawal strategies (e.g., Guyton-Klinger) to define when and how spending adjustments occur. Turn uncertainty into a proactive, rules-based process.
• Visualize income streams: Create retirement income maps showing sources and timing. Help clients mentally separate income from assets.
• Educate with behavioral coaching: Normalize the discomfort around spending. Use behavioral insights to explain why clients feel hesitant—and how to overcome it.

Confidence is the new currency

Retirement planning is no longer just about building portfolios—it’s about building confidence. By aligning financial strategies with behavioral insights and thoughtful framing, advisors can help clients not only retire securely but live more fully.

The information contained herein is for educational purposes only and should not be construed as financial, legal or tax advice. Circumstances may change over time so it may be appropriate to evaluate strategy with the assistance of a financial professional. Federal and state laws and regulations are complex and subject to change.  Laws of a particular state or laws that may be applicable to a particular situation may have an impact on the applicability, accuracy, or completeness of the information provided. Janus Henderson does not have information related to and does not review or verify particular financial or tax situations, and is not liable for use of, or any position taken in reliance on, such information.