Turning your savings into a retirement paycheck

Start with essentials

List what you must pay: housing, food, utilities, insurance, health costs, and taxes. Then add the things that make life good: travel, hobbies, and gifts. Splitting the list tells you how much income you need to be steady and how much can flex.

Match steady income to steady costs

Social Security, a pension, and in some cases an annuity are sources that keep paying no matter what markets do. If they cover most of your essentials, you have a floor, and your other savings do not have to carry as much worry.

Savings in investments can then cover the flexible part of your spending and the surprises.

Withdrawal rates are a starting point, not a promise

You may have heard of the 4% rule, which says you can withdraw about 4% of your starting balance each year, adjusted for inflation. It is a useful rule of thumb, but it was built on past market data and cannot promise future results.

Your own number depends on your age, your other income, your taxes, and how markets behave early in retirement.

The risks that matter most

Sequence of returns. Losses early in retirement hurt more than the same losses later. Inflation. Costs rise whether or not your income does. Longevity. A plan should work if you live well into your 90s. Taxes. The order you withdraw from accounts changes how much you keep. Health costs. Medicare and long-term care deserve their own line.

Review every year

A plan is not a one-time document. Each year, check spending, markets, and taxes, and adjust. Small corrections made early are much easier than big ones made late.