Living in Retirement — The Decumulation Stage

Retirement is not a uniform experience, financially or personally. Researchers and practitioners who study retirement income planning describe three distinct phases:

     The Go-Go Years  —  roughly the first decade of retirement

• Typically characterized by higher discretionary spending, greater activity, and the full realization of the retirement you planned for. Travel, family, pursuits long deferred. This phase tends to carry the highest spending and, because it coincides with the early years of portfolio drawdown, the greatest exposure to Sequence of Returns Risk.
  
  The Slow-Go Years  —  a natural moderation of activity
  
• Health becomes a more prominent consideration. The portfolio has typically had time to recover from early volatility. The planning work shifts toward income stability, healthcare cost management, and beginning to think more seriously about legacy.
  
  The No-Go Years  —  more limited mobility and activity
  
  
• Often higher healthcare and long-term care costs, and an increasing focus on estate planning, wealth transfer, and the question of what happens to the assets that remain.
   

We plan across all three phases from the outset — because the decisions made in the Go-Go Years have direct consequences in the No-Go Years, and because the people who navigate retirement most successfully are the ones who have prepared beforehand.

New clients in retirement often arrive with a version of the same practical problem, expressed in different ways:

“How do I actually pay myself from my investments? The paycheck is gone. Social Security arrives automatically. But the gap between what Social Security covers and what life costs needs to be filled — from which account, in what amount, taxed how, in what order.”

“My husband just passed away, and everything has changed. The income structure shifts. The estate plan may need updating. The financial life that was built for two now needs to be rebuilt for one.”

“I want to help my children, but I don’t want to hurt myself. How do I support the people and causes I care about while the plan is still intact?”

“I’ve been retired for ten years and I’m not sure the plan is still working. I want to know whether the structure is still sound.”
 

We start wherever you are.

When a spouse passes away For clients navigating the loss of a spouse, the immediate financial priorities require prompt attention. Filing status changes from married filing jointly to single, often resulting in dramatically higher effective tax rates on the same income — a situation known as the Widow’s Tax. Social Security income may change. The estate plan may need to be updated. Beneficiary designations require review. We work with surviving spouses through this transition carefully, with full attention to both the immediate practical decisions — which accounts to consolidate, what to do with required distributions, how to update the income structure — and the longer-term restructuring of the financial plan for a life now organized around different resources and different needs. 

For newer retirees especially, the planning work looks very similar to what we describe on the Transition page — because the questions are the same. The Household Balance Sheet may be newly built or recently updated. The retirement readiness ratios are being checked for the first time in the new context. The income structure is being implemented, perhaps for the first time.

As retirement matures, the work evolves. The intensive first-year analysis gives way to a steady annual rhythm. New decisions emerge — Medicare Part D elections, Roth conversion windows that open and close, RMD calculations, QCD opportunities, estate plan reviews — that require ongoing attention.

The three areas we focus on most deliberately with Decumulation clients are these:

Paycheck replacement and cash flow management

The income structure needs to feel like a paycheck — predictable, reliable, and sufficient to cover the life you’ve built. Managing the coordination of Social Security, any pension, portfolio distributions, and RMDs into a coherent monthly cash flow is both a technical and a behavioral challenge. Clients who understand where their income comes from, and why, are more confident retirees.

Tax efficiency in drawdown

Every withdrawal decision has a tax consequence. The sequence in which accounts are drawn down is not a fixed rule but a variable strategy, adjusted each year based on your income, your tax brackets, your charitable intentions, and the composition of your portfolio. For clients with charitable intent, the Qualified Charitable Distribution — directing IRA distributions to charity before they hit your taxable income — is one of the most powerful and underused tools available. It satisfies the RMD, eliminates the taxable income, and delivers the full value of the gift to the charity rather than the fraction that would remain after tax.

Intentional wealth disposition

The question of what to do with what remains is one that many clients defer indefinitely — and then run out of time to answer well. We help clients think through, with intention and clarity, which people and causes matter to them, what they want to support, and whether it makes more sense to give while living — warm hands, when you can see the impact — or through the estate after death. This is not a morbid conversation. It is often one of the most meaningful ones we have.

• Step 1 Annual cash flow plan

  Each year, we build or update a cash flow plan that accounts for all income sources — Social Security, any pension, required and optional portfolio distributions — and maps them against your upcoming spending needs: essential, lifestyle, and reserves. The goal is a structure that is both financially optimal and emotionally reassuring. You should know, with confidence, that the bills will be paid.

• Step 2 Withdrawal sequencing and tax optimization

  We determine, year by year, which accounts to draw from and in what order — optimizing for after-tax income rather than gross distributions. This involves monitoring marginal tax brackets, identifying Roth conversion opportunities in years when income is lower than usual, managing capital gains in taxable accounts, and ensuring that the overall drawdown strategy is aligned with the lifetime tax landscape we built during Transition.

• Step 3 RMD management

  Required Minimum Distributions from pre-tax accounts begin at age seventy-three (or seventy-five for those born on or after January 1, 1960) and must be calculated accurately each year. We manage this process, ensure compliance, and integrate RMDs into the broader withdrawal and tax strategy — including the QCD option for clients with charitable intent.

• Step 4 QCD strategy

  For clients who have reached seventy and a half years of age and have charitable intent, the Qualified Charitable Distribution is typically the most tax-efficient giving vehicle available. We identify the amount, timing, and destination of QCDs as part of the annual tax planning cycle — often in conjunction with the spring tax return review.

• Step 5 Household Balance Sheet — ongoing

  We keep the Household Balance Sheet updated and use it as the primary monitoring tool for retirement health. Are the retirement readiness ratios still sound? Has spending changed in ways that affect the plan? Has the portfolio performed in ways that create new opportunities — Roth conversions, accelerated giving — or new risks that need addressing?

• Step 6 Roth conversion analysis

  The years between retirement and the onset of Social Security, and between Social Security and the start of RMDs, often represent the lowest-income tax years a retiree will experience. These windows are among the most valuable Roth conversion opportunities in a lifetime — converting pre-tax assets at current rates before RMDs push future income into higher brackets. We analyze this opportunity annually and make targeted recommendations.

• Step 7 Medicare Part D review

  Medicare drug coverage plans change their formularies and premiums each year. The plan that was optimal last year may not be optimal this year. We review Part D coverage during the annual open enrollment window as a standard part of the ongoing service.

• Step 8 Estate plan coordination

  We review estate plan documents — wills, powers of attorney, healthcare directives, trust structures, beneficiary designations — periodically and whenever life circumstances change. We coordinate with estate planning attorneys as needed to ensure that the financial plan and the estate plan are consistent and current.

• Step 9 Charitable giving discussions

  Ongoing conversations about giving — to family, to charity, to causes that matter — are a regular part of the Decumulation relationship. We bring the financial analysis; clients bring the values. Together we find structures and timing that maximize the impact of the giving while protecting the plan.

Decumulation carries its own risk profile, distinct from both accumulation and the Transition stage:

Sequence of Returns Risk — remains most acute in the first years of retirement, particularly the Go-Go Years. The portfolio structure established at Transition, with Social Capital and fixed income funding essential spending, is the primary defense.

Inflation — the quiet, compounding erosion of purchasing power over a thirty-year retirement. Healthcare inflation is a particular concern. TIPS holdings and Social Capital sources with inflation adjustments help. Annual cash flow reviews catch drift before it becomes a problem.

Long-term care events — the single most common source of sudden, severe plan disruption. We monitor the adequacy of any insurance or self-insurance strategy established during Transition and revisit it as health circumstances evolve.

Longevity — we continue to plan to age ninety-five for both spouses. The longer the retirement, the more consequential the early decisions become.

The Widow’s Tax and survivor penalty — if one spouse predeceases the other, the survivor’s tax situation changes immediately and dramatically. The asset location and Roth conversion work done during Transition is the primary mitigation; we continue to monitor and adjust.

Social Security and benefit solvency — the long-term funding picture for Social Security warrants ongoing attention. We build plans that are robust to a range of scenarios, including a partial benefit reduction if legislative action does not address the projected shortfall in the next decade or two.

Higher future tax rates — a risk for all retirees with significant pre-tax assets. The Roth conversion strategy, executed annually within available tax capacity, is the primary structural hedge.

The Decumulation relationship is the most enduring we have with clients — and in some respects the most personal. The conversations shift over time from financial optimization to meaning, from strategy to values, from what is the best decision to what matters most to you.

Each spring, we review the tax return — comparing actual results against what we modeled and planned, identifying where expectations diverged from the record, and updating the model accordingly. We update the Household Balance Sheet, check the retirement readiness ratios, and assess whether any adjustments are warranted.

Each fall, we review Medicare Part D coverage for the year ahead.

Throughout the year, we are available. When something changes — a health event, a family situation, a decision about giving, a question about the plan — you reach out and we respond.

The goal of it all of is simple, even if the work is not: that you can engage your retirement with confidence, be fully present with the people you love, and not spend your energy worrying about the money.

If you are approaching retirement and reading this page, the most important thing to know is that the Decumulation stage is far easier to navigate when the Transition planning has been done well. The income structure, the portfolio alignment, the tax landscape, the retirement readiness ratios — all of it built during Transition carries forward into retirement. The earlier that work begins, the stronger the foundation it provides.

Whether you are newly retired, long retired, or approaching the threshold, we’d be glad to hear from you. The first conversation is free, and it starts wherever you are.