Retirement Income Secrets with Tom Hegna - Author of Paychecks & Playchecks

When it comes to retirement planning, few voices are as respected as Tom Hegna’s. An economist, author, and retired Army Lieutenant Colonel, Tom is best known for his books Paychecks and Playchecks and Don’t Worry, Retire Happy. His work has inspired me, along with thousands of financial professionals, to design retirement plans centered on guaranteed income.

I recently sat down with Tom for a Retirement Income School™ conversation about the biggest retirement risks, how to plan for the go-go, slow-go, and no-go years, and why annuities and life insurance play such a critical role in creating financial security.

Every Day is Saturday

Tom often says, “In retirement, every day is Saturday.” Think about it—Saturday is the day most people spend the most money. Golf, hobbies, home projects, travel, dinners out… it all adds up. Retirement doesn’t necessarily mean spending less—it often means spending more, especially in the early years.

This is why he emphasizes the three phases of retirement:

• Go-Go Years: Active years full of travel, adventure, and new experiences.

• Slow-Go Years: Spending slows as energy and mobility shift.

• No-Go Years: Healthcare becomes the dominant expense.

A smart retirement income plan anticipates all three phases.

Why Tom Owns 13 Annuities

Tom doesn’t just talk about annuities—he owns 13 of them. His reason is simple: guaranteed paychecks. By laddering annuities, he creates income streams that start at different ages, helping hedge against inflation and giving him peace of mind.

Instead of worrying about market crashes or whether his savings will last, he knows his annuities will keep paying for life. The math and science back it up too: research shows that adding guaranteed income to a portfolio improves performance, increases happiness, and even helps retirees live longer.

Don’t Live a “Just in Case” Retirement

Too many retirees live too cautiously, hoarding their money “just in case” something happens. They never join the country club, never take the trip, never spend the money. Then they pass away, leaving large sums to their kids—who go out and buy boats and vacations.

Tom’s advice? Spend your money. Leave your kids life insurance. For pennies on the dollar, you can create a tax-free legacy while enjoying the money you worked hard to save.

The Role of Life Insurance and Roth Annuities

Beyond annuities, Tom is a big believer in high-cash-value life insurance and Roth IRA annuities. With rising debt and the likelihood of higher taxes in the future, he encourages positioning as much income as possible to be tax-free.

As he shared, most of his own annuities are Roth-based, and his life insurance policies give him flexibility to flip a switch and turn on tax-free income when he wants it.

Mortality Credits: The Secret Sauce

One of the most powerful concepts Tom explained is mortality credits—the unique advantage that only annuities can provide. Every annuity payment you receive is made up of principal, interest, and mortality credits. These credits are created by pooling risk across large groups of people, allowing insurance companies to pay more income than bonds or CDs ever could.

It’s the “secret sauce” that makes annuities the most efficient way to generate lifetime income.

The Seven Steps to Retire Happy

In Don’t Worry, Retire Happy, Tom lays out seven practical steps:

1. Have a plan.

2. Maximize Social Security benefits.

3. Consider a hybrid retirement.

4. Protect yourself against inflation.

5. Secure guaranteed lifetime income.

6. Have a long-term care plan.

7. Use home equity wisely.

And when it comes to leaving a legacy? Spend your money and pass wealth through life insurance for pennies on the dollar.

Final Takeaways

Tom’s message is clear:

1. Cover your basic expenses with guaranteed lifetime income.

2. Optimize the rest of your portfolio for growth and inflation.

3. Have a plan for long-term care.

4. Use life insurance to pass on wealth efficiently.

With this framework, you can enjoy retirement with peace of mind—knowing you’ll never run out of money, no matter how long you live.

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DISCLAIMER:
The information in this podcast is provided for general educational purposes only and does not constitute financial, legal, or tax advice. Retirement Income School™ and Dr. Amanda Barrientez do not provide individual investment recommendations. Always consult with a licensed advisor or tax professional before implementing any strategy discussed.