Retirement Income Strategy Guide

An honest framework for the decisions at hand. Not tax or investment advice — your specifics matter.

The three buckets model

• Cash bucket (0-2 years of spending): high-yield savings, money market, ultra-short bonds. Covers immediate needs, shields portfolio from forced selling in down markets.
• Bond bucket (3-7 years of spending): intermediate-term bonds, TIPS. Refills cash bucket in bear markets.
• Growth bucket (8+ years): stock index funds. Refills bond bucket over time.

Social Security — when to claim

• At 62: earliest, 70-75% of full benefit. Good if health is poor, you need income immediately, or you're single with no longevity history.
• At full retirement age (66-67): 100% of benefit. Middle of the road.
• At 70: 124-132% of full benefit. Best for healthy, married, higher-earning spouse (survivor benefit carries on).
• For couples: higher-earner often delays to 70 (locks in survivor benefit); lower-earner may claim earlier.

Withdrawal order: which account first

• Conventional: taxable → tax-deferred → Roth.
• Better: fill up low tax brackets each year with tax-deferred withdrawals or Roth conversions, then fund spending from taxable.
• Goal: manage lifetime tax bracket, not just this year's. Avoid a cliff where RMDs push you into higher brackets at 73+.

Roth conversion window

• Years between retirement and SS+RMDs are often the lowest-tax years of your life.
• Converting traditional IRA to Roth during this window can save 5-15% of total tax.
• Watch: IRMAA Medicare premium cliffs, ACA subsidy cliffs if pre-65.

Safe withdrawal rate — the honest version

• The '4% rule' assumes 30-year retirement. Works historically with 95%+ success.
• For 25-year retirement: 4.5-5% is defensible.
• For 35-40 year retirement: 3.25-3.75% is safer.
• Dynamic withdrawals (cut 5-10% in bear markets) raise sustainable rate by 0.5%.