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% of PIA if your FRA is 67 (75% if FRA is 66).¹ Good if health is poor, you need income immediately, or you're single with no longevity history.
• At full retirement age (66-67 depending on birth year): 100% of Primary Insurance Amount.
• At 70: 124% of PIA (FRA 67) or 132% (FRA 66) via Delayed Retirement Credits at 8%/yr from FRA.
• For couples: higher-earner often delays to 70 (locks in max survivor benefit for surviving spouse); lower-earner may claim earlier to generate household bridge income.

Withdrawal order: which account first

• Conventional rule-of-thumb: taxable → tax-deferred → Roth.
• Better: fill up low tax brackets each year with strategic tax-deferred withdrawals or Roth conversions, then fund spending from taxable basis + qualified dividends.
• Goal: manage lifetime marginal bracket, not just this year's. Avoid a cliff where RMDs under IRC § 401(a)(9) push you into 32%+ brackets at age 73+.²
• For most, withdrawals from taxable + small tax-deferred withdrawals to fill the 12-22% bracket produces a flatter lifetime tax bill.

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%.

Sources

1. SSA — Reductions for Early Claiming and Delayed Retirement Credits.
2. IRC § 401(a)(9) — Required Minimum Distributions. SECURE 2.0 § 107 set RMD age to 73 (2023-2032) / 75 (2033+).
3. Bengen (1994) — 4% Withdrawal Rule.
4. Kiplinger — 2026 IRMAA Brackets.
5. Kitces — Dynamic Withdrawal Strategies (Guyton-Klinger, VPW). Flexibility adds ~0.5% to sustainable SWR.

Retirement income planning requires multi-year tax-bracket choreography across Social Security, RMDs, Roth conversions, and IRMAA. Verified as of April 2026.