Start by subtracting expected income from planned spending. The difference is what savings may need to cover. Then check taxes, investment risk and required withdrawals before choosing which account to use.
The retirement planner brings entered household facts together. The retiree hub links to Medicare, Social Security and local financial-help guidance. Neither a plan nor a published withdrawal rate guarantees income for life.
Work out the spending gap
List essential bills, flexible spending and irregular costs. Use income amounts on a consistent basis: a benefit before Medicare deductions is different from the amount deposited. Include taxes and premiums without counting the same cost twice.
For example, assume monthly spending of $5,000 and $3,200 of available income after the costs already included in that budget. Savings must cover $1,800 a month, or $21,600 a year. This is a cash-budget example, not a tax calculation or a withdrawal recommendation.
Check what withdrawal research actually tested
Morningstar’s original State of Retirement Income: 2025 report, dated December 3, 2025, modeled a 3.9% starting rate for fixed, inflation-adjusted spending. Its base case assumed 30 years and a 90% chance of money remaining. The highest rate used portfolios with 30%–50% stocks. These are assumptions from the 2025 study, not a verified rate for your household.
The report’s flexible methods used different spending rules. Its 5.7% constant-percentage approach changed withdrawals with portfolio values and imposed a floor of 90% of initial spending. It did not preserve purchasing power through an automatic inflation increase. Its 5.2% guardrails approach could raise or cut spending under specified rules.
A longer retirement, different investments or limited ability to cut spending may change the answer. Before using a research estimate, check the duration, inflation treatment and definition of success. The withdrawal-rate calculator is an illustration under its displayed assumptions, not a replacement for those checks.
Test a poor start as well as an average return
Losses early in retirement can leave less invested to recover while withdrawals continue. This is often called sequence-of-returns risk.
Assume $1,000,000 initially and a $40,000 withdrawal after each year’s return. Compare the same returns in opposite order:
| Year | Bad start | Reverse order |
|---|---|---|
| Start | $1,000,000 | $1,000,000 |
| 1 | −20%; $760,000 left | +5%; $1,010,000 left |
| 2 | −10%; $644,000 left | −10%; $869,000 left |
| 3 | +5%; $636,200 left | −20%; $655,200 left |
The ending difference is $19,000. This example excludes inflation, tax, fees, rebalancing and other income. With no withdrawals, reversing these returns would not change the ending value. It does not establish a sustainable long-term withdrawal rate.
A cash reserve may reduce forced sales, but its size and replenishment need a plan. Decide which expenses could change after a loss. A drawdown illustration helps examine assumptions; it cannot promise recovery or a particular retirement outcome.
Compare the tax treatment of each account
Avoid treating taxable, traditional and Roth accounts as a fixed spending sequence.
- Taxable brokerage: selling can realize gains or losses. The sale proceeds are not automatically all taxable income.
- Traditional retirement accounts: untaxed amounts withdrawn are generally taxable. Previously taxed basis can change the calculation.
- Roth accounts: withdrawals that meet the tax-free rules are not taxable. Other distributions require checking the account’s rules.
See the Internal Revenue Service’s (IRS) capital-gain guidance and Publication 590-B. Required withdrawals, household deductions, state tax and benefit taxation can change which combination fits. A withdrawal can also affect later income-related Medicare premiums.
Check required distributions before conversions
Required minimum distributions (RMDs) depend on birth year and account facts. The current final regulation assigns age 73 to births in 1951–1958 and age 75 to births from 1960. The paragraph for 1959 remains reserved in the checked text. Do not treat the proposed age 73 as final.
First-year timing, workplace-plan delays and inherited accounts require separate checks. Delaying a first distribution until the following April can put two RMDs in one tax year. The IRS RMD FAQ explains those distinctions. Original-owner Roth exemptions do not remove beneficiary distribution rules.
Calculate a required minimum distribution, then estimate remaining distribution need, QCD impact, tax withholding, IRMAA headroom, and missed-RMD penalty exposure.
Use the retirement account balance as of December 31 of the prior year.
Enter the birth year for the 2026 calculation. For 1959 births, no owner RMD is required in 2026; the future legal start age remains unresolved in the reviewed federal rule.
Inherited accounts and the Joint Life table require additional facts; the calculator will stop and flag those cases.
For 2026, QCDs are generally limited to $111,000 and must go directly from an eligible IRA to a qualified charity.
The canonical 2026 IRMAA package supplies the threshold. A 2026 RMD may affect Medicare premiums after the usual two-year lookback.
Tax figures use the marginal federal and state rates entered; they are planning estimates, not a tax-return calculation.
Required Minimum Distribution
$20,325
Review the entered assumptions and model limits before changing a financial decision.
What to do
Open retirement planner
Estimates use your entered assumptions. Confirm the relevant rules before acting.
A Roth conversion generally adds the untaxed part converted to current taxable income. It may affect current tax, benefit taxation and later Medicare premiums. An RMD cannot be converted. Compare alternatives using full account and tax facts instead of assuming every lower-income year calls for a conversion.
Coordinate income without assuming a best claiming age
Delaying Social Security beyond full retirement age can increase monthly benefits until age 70. It also means waiting for payments. Health, available income and family benefits matter. Use Social Security’s own estimates and the claiming guide before deciding how savings might fund the wait.
Sources and worked calculations were checked November 1, 2026. This is educational information, not personalized investment, tax or legal advice. Confirm account rules and tax effects with the administrator or a qualified professional.
Frequently Asked Questions
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