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Retired · Stage 5

Decumulation is the harder game.

You spent 40 years building. Now you have 25-35 years of withdrawing without running out. The math is different — sequence risk, taxes, RMDs, healthcare, and longevity all stack up. The good news: a few well-chosen rules carry most of the weight.

Your priorities, in order

  1. Stick to a sustainable withdrawal rate

    4% in year one, adjust for inflation thereafter — historically lasts 30+ years with high probability. For early retirees with 40+ year horizons, drop to 3.25-3.5%. Variable strategies (Guyton-Klinger) cut withdrawals during bear markets to extend the portfolio.

  2. Withdrawal order matters for taxes

    Conventional order: taxable brokerage → traditional 401(k)/IRA → Roth. Modern thinking: blend to fill lower tax brackets each year. Roth conversions during low-income years (between retirement and Social Security) can save tens of thousands.

  3. Plan for RMDs (age 73+)

    Required minimum distributions force you to withdraw from traditional 401(k)/IRA starting at 73, taxable as ordinary income. Roth conversions in your 60s can shrink future RMDs and the resulting tax bracket creep.

  4. Insure against longevity

    Half of 65-year-olds will live past 85; one in four past 90. Plan for 30-35 year retirement. Single premium immediate annuities (SPIAs) covering essential expenses can hedge longevity for 20-30% of needs without giving up most of your portfolio.

  5. Stay invested in equities

    30-50% in stocks even in retirement. Going to 100% bonds feels safe but locks in inflation losses over 25-35 years. Stocks are your inflation hedge. Bonds and cash are your sequence-risk hedge. You need both.

Calculators built for this stage

Retirement calculator
Test withdrawal rates against your portfolio.
Inflation calculator
How spending power erodes over 20-30 years.
Compound investment calculator
Project remaining portfolio across decades.
Simple interest calculator
For Treasuries, CDs, and basic income calc.

Recommended reading

How much do you need to retire?
The 4% rule applied to longer retirements.
Sequence of returns risk
How early withdrawals interact with crashes.
HYSA guide
Cash bucket best practices.
Expense ratios in retirement
Why fees hurt even more during withdrawal.

Frequently asked questions

Is the 4% rule still safe today?

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For 30-year retirements: yes, with high probability per Bengen and Trinity studies. Recent research using current valuations and lower expected returns suggests 3.5-3.8% is more conservative for new retirees. The 4% rule is a starting point, not a law.

How much will healthcare cost in retirement?

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Fidelity's 2024 estimate: $165,000 per person from age 65, lifetime. That's in addition to Medicare premiums. Couples should budget $300K+. HSAs are uniquely powerful for this — tax-free withdrawals for medical expenses at any age.

Should I do Roth conversions in retirement?

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For most retirees with traditional 401(k)/IRA balances and low-income years before Social Security and RMDs: yes. Convert enough each year to fill the 12% or 22% bracket. This shrinks future RMDs and creates tax-free Roth balances for late-life and heirs.
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