By Jim Joseph, CFP®
You spent decades building the number. Now retirement asks a harder question:
How do you turn that number into income that lasts 20 or 30 years, through markets that won’t cooperate on your schedule?
That’s the real work of retirement planning, and it looks nothing like the accumulation phase. The order you draw from accounts, the year you start Social Security, and the timing of a few tax moves can matter more than an extra percentage point of investment return.
Here’s where to focus and how we advise our clients at FSA Wealth Partners.
When the Market Misbehaves Right When You Need It Most
Sequence-of-returns risk sounds like a technical detail until you’ve lived through it. Two retirees can retire with identical average returns over 20 years and end up in very different financial positions, simply because of when the losses happened. Withdraw from a portfolio during a down year, and you permanently lock in losses; meaning your remaining money has to work twice as hard to recover when the market turns around, since you’re now pulling the same dollar amount from a smaller base.
A fixed withdrawal rate, the classic 4% rule, applies the same math every year no matter what markets are doing. We prefer “guardrail adjustments” instead. You set an upper and lower band around your target withdrawal percentage. When the portfolio performs well and the withdrawal rate falls below the lower guardrail, you get a raise. When markets drop and that rate creeps above the upper guardrail, you scale back spending for a while, rather than waiting until the portfolio is in real trouble.
Guardrails don’t make down markets disappear; what they provide is a clear signal for when to adjust, instead of guessing or reacting mid-decline.
Here’s a simplified, made-up example: A retiree pulling $50,000 a year from a $1.25 million portfolio might set guardrails at 3% and 5%. If a market decline pushes that withdrawal rate past 5%, that’s the cue to trim spending before the math gets worse, not after. If the portfolio drops to $1.0 million due to a market correction, that same $50,000 withdrawal suddenly becomes a 5% draw.
Tax-Smart Withdrawal Order: Taxable, Then Tax-Deferred, Then Roth
Which account you draw from first changes how much of your retirement income the IRS keeps. The common approach spends taxable brokerage accounts first, tax-deferred accounts like traditional IRAs and 401(k)s next, and Roth accounts last.
Taxable accounts often generate capital gains taxed at preferential rates, so spending them down early lets tax-deferred and Roth accounts keep compounding. Tax-deferred accounts come next because their withdrawals are treated as ordinary income.
Leaving them to sit indefinitely can create a ticking tax time bomb once required minimum distributions force them into the open. Roth accounts, funded with after-tax dollars, come last because they grow tax-free and pass to heirs without an income tax bill attached.
That said, “taxable first” isn’t automatic for everyone. Retirees expecting a much higher bracket later, or managing income for Medicare premium purposes, often benefit from blending withdrawals across account types each year instead of draining one bucket before touching the next. The right order depends on your tax situation.
Social Security Timing: Breakeven and Survivor Benefits
The decision of when to start Social Security often gets reduced to a breakeven calculation: at what age does waiting pay off compared to claiming early? That’s a fair starting point. Delaying from your Full Retirement Age to 70 increases your benefit by roughly 8% per year, and most breakeven ages land in the late 70s to early 80s depending on your birth year and benefit amount.
For the higher-earning spouse, delaying Social Security is less about a personal “breakeven” age and more about purchasing the highest possible inflation-adjusted insurance policy for the surviving spouse.
Breakeven math misses something important for married couples, though: survivor benefits. When one spouse passes away, the survivor keeps the higher of the two benefits, not both. If the higher earner delays claiming until 70, that larger check becomes the survivor benefit for whichever spouse lives longer, potentially for many years. For a couple where one spouse is likely to outlive the other by a decade or more, that survivor protection can outweigh what the breakeven age suggests on its own.
The Roth Conversion Window Before RMDs and IRMAA Thresholds
There’s often a stretch of years, after you retire and before required minimum distributions (RMDs) or Social Security begin, when your taxable income drops. That window deserves attention, because it’s frequently the cheapest opportunity you’ll get to convert traditional IRA or 401(k) dollars to Roth. Under SECURE Act 2.0, the RMD age changed to 73 (and will jump to 75 in 2033).
Converting fills up lower tax brackets with income you control, rather than letting future RMDs push you into higher brackets whether you need the money that year or not. Every conversion also reduces the account balance subject to RMDs later, which can lower your taxable income in retirement and shrink the size of future required withdrawals.
The other number to watch during this window is your Modified Adjusted Gross Income, which determines Medicare’s Income-Related Monthly Adjustment Amount (IRMAA). IRMAA uses your tax return from two years earlier, so a large conversion in 2026 will directly impact your Medicare premiums in 2028 The goal isn’t to avoid IRMAA altogether. It’s to convert with current and future thresholds in view, so the decision accounts for what happens down the road, not just this year’s tax bill.
A More Coordinated Approach to Retirement Income
None of these four pieces work well in isolation. A guardrail strategy shields the portfolio from sequence risk, a tax-smart withdrawal order stretches the accounts further, and Social Security timing locks in a base of predictable income while Roth conversions manage the tax bill across decades instead of in a single crunch year near RMD age. CPAs look back at last year’s taxes, investment managers look at today’s market, and the Social Security administration only looks at your age. The value comes from coordinating them.
This is exactly the kind of coordination the FSA Get Wealth Planning Process™ is built around: looking at your withdrawal strategy, tax picture, and Social Security timing together, rather than as separate decisions made at separate times by different people.
We’re Happy to Walk Through This With You
If you’re approaching retirement, or already there, and want a second look at how these pieces fit together for your situation, we’d love to talk. Visit our retirement planning page to learn more about how we approach this at FSA, or reach out directly.
To schedule a meeting, call (301) 949-7300 or email Questions@FSAwealthpartners.com.
Frequently Asked Questions
What is a “guardrail” withdrawal strategy?
It’s a withdrawal approach that adjusts your retirement spending based on preset upper and lower bounds around a target withdrawal rate. When the portfolio grows well beyond its target, you get a raise. When it falls and the withdrawal rate climbs too high, spending is trimmed for a period, rather than left on autopilot regardless of market conditions.
Should everyone withdraw from taxable accounts first?
Not necessarily. The taxable-then-tax-deferred-then-Roth order works well for many retirees, but those expecting a higher tax bracket later, or managing income for Medicare premium purposes, often do better blending withdrawals across account types each year instead.
Does Social Security timing matter if I’m not married?
Survivor benefits are specific to married couples, but the breakeven math still applies to individuals. Delaying benefits increases the monthly amount for as long as you live, so life expectancy, other income sources, and cash-flow needs all factor into the decision.
Why does the Roth conversion window matter so much before RMD age?
Once required minimum distributions begin, you lose control over how much taxable income you’re forced to recognize each year. Converting during the lower-income years beforehand lets you fill up lower tax brackets on your own terms and can reduce the size of RMDs down the road.
About Jim
Jim Joseph, CFP®, is the President and Partner of FSA Wealth Partners in Rockville, Maryland, where he has provided personalized financial advice and risk management strategies since 2004. Drawing on a financial career that began in 1997 at firms like Charles Schwab and Morgan Stanley, he specializes in guiding pre-retirees and retirees using the firm’s proactive FSA Safety Net® strategy to protect capital. A West Virginia University finance alumnus whose insights have appeared in The Wall Street Journal, Jim spends his free time with his three daughters, playing ice hockey, and working toward his private pilot’s license.
FSA’s current written Disclosure Brochure and Privacy Notice discussing our current advisory services and fees is available at www.fsawealthpartners.com/disclosures or by calling 301-949-7300.
