Retirement Withdrawal Strategies That Can Stretch Your Savings

You’ve worked hard to save enough for retirement, and now it’s time to enjoy some of the fruits of your labor. Now that you’ve officially left full-time work behind, you’re concerned about making your money last. That’s a valid concern and one that 33% of retirees share, according to a 2025 Schroders report.¹ Reviewing retirement withdrawal strategies that stretch savings can help you make the most of your money.

A financial advisor can help you build and expand your retirement plan. Speak with an advisor today.

Understanding the Importance of Your Retirement Withdrawal Strategy

Making the transition from saving to spending in retirement may feel stressful. The right retirement withdrawal strategy can help you feel more confident about the choices you’re making with your money.

Additionally, a well-thought-out strategy can help you:

Minimize your taxes in retirement
Preserve the longevity of your assets
Ensure compliance with required minimum distributions (RMDs), reducing the risk of costly penalties
Manage risk to minimize losses during downturns
Pace your spending and manage your retirement budget more efficiently

You can also gain some peace of mind. For example, the Schroders report asked retirees what they were most concerned about. The biggest worries cited were inflation (92%), higher than expected healthcare costs (86%), major market downturns (80%), and outliving their assets (70%). A clear withdrawal strategy can help ease those fears if you share them.

4 Retirement Withdrawal Strategies Can Stretch Your Savings

Here are four common withdrawal strategies that can help make your savings last for a more comfortable retirement.

4% Rule (Now 4.7%)

How does it work? The 4% rule is a popular retirement withdrawal strategy that involves withdrawing 4% of your total retirement savings during your first year of retirement. In subsequent years, you adjust the withdrawal amount for inflation, ensuring that your spending power remains consistent. The idea is that if you follow this plan, you should never run out of money in retirement.

The 4% rule was developed based on historical market performance, with the expectation that investors who use it will spend 30 years in retirement. Its creator has since updated the initial withdrawal rate to 4.7%. This is the amount you should be able to safely withdraw in your first year of retirement, with subsequent withdrawals adjusted for inflation.

Who should use it? The 4.7% rule can work well for retirees who have a moderate risk tolerance and are comfortable maintaining a diversified investment portfolio. Again, it’s designed for people who plan to spend 30 years in retirement so if you have a shorter window (or a longer one because you retired early) it may not work as well. If you decide to apply the 4.7% rule, be prepared to adjust your spending during periods of extreme market volatility.

Fixed-Dollar Strategy

How does it work? The fixed-dollar strategy involves withdrawing a specific, predetermined amount from your retirement savings each year, regardless of market performance. This approach offers simplicity and predictability, making it easy to plan your annual budget. However, the fixed-dollar amount doesn’t account for inflation, which may decrease your purchasing power.

Who should use it? This strategy is best suited for retirees with stable income from pensions or Social Security who want a predictable supplement from their savings. Of course, it assumes that your retirement budget won’t change much from year to year. While a fixed-dollar strategy does offer stability, it may not work as well for longer retirements.

Total Return Strategy

How does it work? The total return strategy focuses on maintaining a diversified investment portfolio that creates an income stream in retirement through a combination of interest, dividends and capital gains. Retirees withdraw a certain percentage based on their portfolio’s total returns, adjusting the amount each year based on market performance. This strategy is more flexible and can help extend the life of your savings, but it requires active management and a higher risk tolerance.

Who should use it? It’s ideal for retirees who are comfortable with market fluctuations and are willing to adjust their withdrawals in response to investment performance. You may also appreciate the potential for more growth over the long term, which could leave you with more wealth to pass on to your heirs.

Bucket Strategy

How does it work? The bucket strategy divides your retirement savings into three separate “buckets” based on time horizons: short-term, mid-term and long-term. The short-term bucket contains cash or low-risk investments to cover immediate expenses, while the mid-term and long-term buckets have higher growth potential. As you draw down funds from the short-term bucket, you replenish it with gains from the other buckets.

Who should use it? This strategy provides stability and growth potential, making it suitable for retirees who want to balance income needs with the potential for long-term investment growth. You might prefer this approach if you have guaranteed income from a pension, annuity or even a reverse mortgage.

How to Choose the Right Retirement Withdrawal Strategy

A senior couple discussing different retirement withdrawal strategies.

When choosing a retirement withdrawal strategy, consider the factors that affect your financial needs and goals, such as:

Life expectancy: Consider your health, family history and lifestyle when estimating your life expectancy. If you expect to live a long life, you’ll need a strategy that ensures your savings last. Those with a longer life expectancy may benefit from more conservative withdrawal rates, while those with shorter horizons might be able to withdraw more aggressively.
Required minimum distributions (RMDs): Once you reach age 73, you’re required to start taking RMDs from certain retirement accounts, such as traditional IRAs and 401(k)s. Failure to take RMDs can result in hefty penalties, so be sure to incorporate RMDs into your withdrawal strategy. (RMDs start at age 75 if you were born in 1960 or later.)

Estimate your annual RMDs and see how they fit into your broader retirement picture. SmartAsset’s RMD Calculator gives you a clear snapshot of your withdrawal obligations.

Required Minimum Distribution (RMD) Calculator

Estimate your next RMD using your age, balance and expected returns.

Quickly estimate your RMDs and when to take them

RMD Amount for IRA(s)

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RMD Amount for 401(k) #1

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RMD Amount for 401(k) #2

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About This Calculator

This calculator estimates RMDs by dividing the user's prior year's Dec. 31 account balance by the IRS Distribution Period based on their age. Users can enter their birth year, prior-year balances and an expected annual return to estimate the timing and amount of future RMDs.

For IRAs (excluding Roth IRAs), users may combine balances and take the total RMD from one or more accounts. For 401(k)s and similar workplace plans*, RMDs must be calculated and taken separately from each account, so balances should be entered individually.

^*The IRS allows those with multiple 403(b) accounts to aggregate their balances and split their RMDs across these accounts.

Assumptions

This calculator assumes users have an RMD age of either 73 or 75. Users born between 1951 and 1959 are required to take their first RMD by April 1 of the year following their 73rd birthday. Users born in 1960 and later must take their first RMD by April 1 of the year following their 75th birthday.

This calculator uses the IRS Uniform Lifetime Table to estimate RMDs. This table generally applies to account owners age 73 or older whose spouse is either less than 10 years younger or not their sole primary beneficiary.

However, if a user's spouse is more than 10 years younger and is their sole primary beneficiary, the IRS Joint and Last Survivor Expectancy Table must be used instead. Likewise, if the user is the beneficiary of an inherited IRA or retirement account, RMDs must be calculated using the IRS Single Life Expectancy Table. In these cases, users will need to calculate their RMD manually or consult a finance professional.

For users already required to take an RMD for the current year, the calculator uses their account balance as of December 31 of the previous year to compute the RMD. For users who haven't yet reached RMD age, the calculator applies their expected annual rate of return to that same prior-year-end balance to project future balances, which are then used to estimate RMDs.

This RMD calculator uses the IRS Uniform Lifetime Table, but certain users may need to use a different IRS table depending on their beneficiary designation or marital status. It's the user's responsibility to confirm which table applies to their situation, and tables may be subject to change.

Actual results may vary based on individual circumstances, future account performance and changes in tax laws or IRS regulations. Estimates provided by this calculator do not guarantee future distribution amounts or account balances. Past performance is not indicative of future results.

SmartAsset.com does not provide legal, tax, accounting or financial advice (except for referring users to third-party advisers registered or chartered as fiduciaries ("Adviser(s)") with a regulatory body in the United States). Articles, opinions and tools are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual. Users should consult their accountant, tax advisor or legal professional to address their particular situation.

Taxes: Different retirement accounts have varying tax implications. For example, withdrawals from traditional IRAs and 401(k)s are taxed as ordinary income, while Roth IRAs offer tax-free withdrawals. Understanding the tax implications of your withdrawals can help you optimize your strategy.
Social Security and pension benefits: Consider how your Social Security and pension benefits will impact your overall retirement income. If these benefits cover a significant portion of your expenses, you may have more flexibility with your withdrawal strategy. Conversely, if you rely heavily on your portfolio, you’ll need an approach that can stretch your savings.

Keep in mind that some retirement expenses may be planned, while others might take you by surprise. If you’ve always been a healthy person, for example, you may be caught off guard if a serious health condition leaves you needing long-term care. Likewise, if you find yourself having to assume the role of caregiver to a grandchild, that could disrupt your withdrawal plans. Anticipating these types of situations can help you build a contingency plan for retirement withdrawals.

Bottom Line

Selecting a retirement withdrawal strategy is an important step that could help your savings last a lifetime. Make sure to prioritize your needs, like housing and healthcare, before wish listing things like hobbies and vacations. Balancing your financial needs with your risk tolerance and different withdrawal strategies can help you develop a sustainable plan.

Tips to Help You Save for Retirement

A financial advisor can help you build a long-term retirement plan. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Social Security benefits alone won’t be able to support your current lifestyle. However, they can certainly help with your living expenses in retirement. Try SmartAsset’s Social Security calculator to see how much of a benefit you can expect.
If you want to know how much your retirement savings can grow over time, SmartAsset’s free retirement calculator can help you get an estimate.

Article Sources

All articles are reviewed and updated by SmartAsset’s fact-checkers for accuracy. Visit our Editorial Policy for more details on our overall journalistic standards.

Schroders 2025 US Retirement Survey. Schroders, https://www.schroders.com/en-us/us/institutional/clients/defined-contribution/us-retirement-survey/living-in-retirement/.