Most people don’t run out of money because the stock market crashes or Social Security changes. They run out because they enter retirement with a story instead of a strategy. The story usually sounds like this: “I’ll spend less when I retire,” or “My taxes will be lower,” or “I probably won’t live that long.” None of these stories create a secure retirement. Real planning does.

One of the first questions people ask me is, “How much can I safely withdraw from my portfolio?” The famous 4% rule was built for a 30-year retirement with a 50/50 portfolio. Today, updated research suggests closer to 4.7% is reasonable, and some people should withdraw even less depending on longevity. For example, if I withdraw 4.7% from a million-dollar portfolio, that gives me $47,000 in year one. But your retirement shouldn’t rely on a fixed rule it should rely on a system. I prefer a guardrail strategy. If the market is strong, you can increase your withdrawals. If it’s weak, you pull back. This rhythm keeps your plan from falling apart during downturns.

Next is longevity, and this one surprises people. At age 65, half of all men will live past 83 and half of all women past 86. Most retirees underestimate their life expectancy by five years or more. If you retire at 65, odds are high that your retirement will last 30 years. Extend it to 35 years, and your chance of running out of money jumps by 41% unless your withdrawal plan accounts for it. Longevity isn’t something to fear, but it is something you must plan for mathematically.

Income stability is another major piece of the puzzle. Your portfolio may go up and down, but your Social Security won’t. It’s inflation-adjusted, it lasts for life, and the longer you wait to claim, the more you get. Pair that with portfolio withdrawals, and you suddenly have a mix of fixed income and flexible income something most retirees need. In the episode transcript, Mary is a perfect example. She had $1 million: $700,000 in an IRA and $300,000 in a brokerage account. She withdrew $40,000 from her IRA, $30,000 from the brokerage, and received $30,000 from Social Security. That gave her $100,000 of retirement income but her tax bill was only about $6,100.

Why? Because retirement income is taxed differently. You don’t pay payroll taxes anymore. After age 65, you get a larger standard deduction. Only part of Social Security is taxable. Once you understand this math, you realize retirement isn’t just about how much you’ve saved it’s about how you withdraw it.

Liquidity is another crucial piece. You must keep enough in cash reserves to avoid selling investments during a downturn. This doesn’t mean stashing everything in a checking account. It means building enough cash often 12 to 24 months of withdrawals—to avoid panicked selling. I’ve seen people with millions feel anxious because they lacked liquidity, while people with far less felt confident because they had a withdrawal plan supported by cash reserves.

It’s also important to understand how spending changes in retirement. Most retirees experience what researchers call the “retirement spending smile.” You spend more in your early years travel, fun, lifestyle. Then spending naturally declines through your 70s. Later, in your 80s and 90s, healthcare costs tend to rise again. Your spending isn’t linear, and your financial plan shouldn’t be either.

If there’s one takeaway I want you to have, it’s this: retirement should not be guesswork. There is clear math behind your withdrawal rate, your taxes, your longevity, your liquidity, and your lifestyle. When you understand that math, you stop fearing retirement. You start looking forward to it. You stop wondering if you’ll run out of money and start understanding exactly how your income will work year after year.

Intended for educational purposes only. Opinions expressed are not intended as investment advice or to predict future performance. Past performance does not guarantee future results. Neither the information presented, nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Consult your financial professional before making any investment decisions. Opinions expressed are subject to change without notice.

IMPORTANT DISCLOSURES:

• Investment Advisory and Financial Planning Services are offered through Pure Financial Advisors, LLC. A Registered Investment Advisor.

• Pure Financial Advisors, LLC. does not offer tax or legal advice. Consult with a tax advisor or attorney regarding specific situations.

• Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

• Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

• All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy.

• Intended for educational purposes only and are not intended as individualized advice or a guarantee that you will achieve a desired result. Before implementing any strategies discussed you should consult your tax and financial advisors.

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