Retirement drawdown strategies

For your entire working career, you're told to save, save, save. The moment you retire, the script flips completely — now you need to spend in a way that doesn't run out of money before you run out of life. This reverse psychology catches a lot of retirees off guard.

The strategies

• Fixed percentage (4% rule) — withdraw 4% of the starting portfolio, adjust for inflation every year. Simple, historically robust, but brittle in bad markets.
• Dynamic withdrawal — start with 4–5%, cut spending in down years, boost in good years. Reduces sequence risk at the cost of variable income.
• Bucket strategy — split assets into short-term (cash, 1–2 years), medium-term (bonds, 3–10 years), and long-term (stocks, 10+ years). Spend from cash, refill from bonds, let stocks grow untouched.
• Guardrails (Guyton-Klinger) — set upper and lower portfolio bands and trigger spending adjustments when you cross them. More sophisticated, higher sustainable withdrawal rates.
• RMD-based — starting at age 73 you have Required Minimum Distributions anyway; some retirees just withdraw the RMD and spend what they need from it.

Tax-optimized withdrawal order

Which account you pull from first makes a huge difference in lifetime taxes. Conventional wisdom: pull from taxable brokerage first, traditional retirement second, Roth last. Newer research suggests a more blended approach, pulling from traditional during low-income years to fill up low tax brackets and keep Roth for later. A CPA or fee-only financial planner can optimize this for your situation — the savings over 30 years of retirement can be six figures.