Ready For Retirement 3 Steps to Build a Retirement Paycheck That Lasts
Oct 28, 2025
Navigating early retirement income can be simpler than it seems! A flexible withdrawal strategy may allow for a 5% starting point instead of the traditionally conservative 4%. Learn how taxes significantly impact retirement income and can lower your overall tax bill. Discover how coordinating different income sources like Social Security and IRA withdrawals can create a streamlined paycheck. Plus, there’s insight on managing big costs and the concept of the retirement spending smile across different life stages!
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Set A Realistic Withdrawal Rate
- Calculate a sustainable withdrawal rate based on your portfolio allocation and retirement length.
- Consider starting near 5% rather than defaulting to 4% if allocation and adjustments support it.
Mary’s $1M Case Study
- Mary is 65 with $1M: $700k in a traditional IRA and $300k in brokerage, illustrating withdrawal math.
- Applying a 5% rate gives a $50,000 portfolio-derived paycheck before taxes and coordination.
Why The 4% Rule Can Be Too Low
- The classic 4% rule is often overly conservative for many retirees with the benefit of hindsight.
- Uncertainty about future market sequences forces lower initial rates despite potential for higher sustainable draws.