For your entire working life, the instruction was the same: save more, put money in, don't touch it. You got good at it. And then you retire, and overnight the question inverts into one nobody really trained you for — how much of this can I actually spend? Take too much and you risk running short later; take too little and you deny yourself the retirement you spent decades funding. The fear of running out is one of the most common anxieties in retirement. A plan is how you quiet it.
Turn your savings into a paycheck
The goal is to convert a big, intimidating lump sum into something that feels like a steady income. Rather than withdrawing money in unpredictable chunks, you set a sustainable rate and draw from it on a regular schedule — monthly, like a paycheck. Financial researchers have long used guidelines in the ballpark of around 4% of your savings in the first year (adjusted for inflation after that) as a starting point for making money last across a long retirement. Treat it as a conversation-starter, not gospel — the right number depends on your age, your mix of investments, and your other income.
Keep a cash cushion
Markets go down sometimes, and the worst thing you can do is be forced to sell investments while they're low just to pay the electric bill. The fix is a buffer: keep one to two years of spending money in cash or a high-yield savings account, separate from your invested money. When markets dip, you live off the cushion and give your investments time to recover instead of selling at the bottom.
Know the withdrawal order
Which accounts you tap, and in what order, affects how much you keep after taxes. A common general approach is to spend from taxable accounts first, then tax-deferred accounts (like a traditional 401(k) or IRA), and leave Roth accounts for last, since they keep growing tax-free. Your own best order depends on your tax situation, so this is a great thing to confirm with a tax professional.
Don't forget Required Minimum Distributions
Here's a rule you can't ignore: with traditional IRAs and most workplace retirement plans, the IRS requires you to start taking required minimum distributions (RMDs) at age 73. Your first one can be delayed to April 1 of the following year, but after that they're annual. Miss one and the penalty is steep — a 25% excise tax on the amount you should have taken (reduced to 10% if you correct it promptly). Roth IRAs, by contrast, have no RMDs during your lifetime.
Make Social Security part of the plan
Your Social Security benefit is guaranteed, inflation-adjusted income for life — a valuable anchor. As the Social Security Administration explains, claiming later (up to age 70) increases your monthly amount. Coordinating when you claim with how you draw down savings can meaningfully change how long your money lasts.
Making your money last isn't about a single magic number — it's a system: a steady withdrawal rate, a cash cushion so you never sell low, a sensible account order, and a yearly check-in. Build that, and "will I run out?" turns from a fear into a plan.
Your first step today
Add up your guaranteed income — Social Security and any pension — and compare it to your essential yearly expenses. The gap is what your savings need to cover. Knowing that one number is the foundation of every withdrawal decision that follows, and it's worth reviewing with a trusted professional as you build the full plan.