In my previous post, I asked how Jack and Diane should treat the money in their retirement portfolio. (If this is your first introduction to our series, start reading here.) Here’s how you voted in the poll, as of December 3:

  • 62.3%: Spend a little more when markets are up, but cut back on discretionary spending when markets are lower.
  • 25.3%: Enjoy the money they worked hard to save.
  • 8.6%: Spend as little as possible.
  • 3.8%: Other.

You blog readers are smart! I’d also ask Jack and Diane to consider spending from their portfolio principal, but with guide rails in place to help them ease into this phase of their investing life. I often have this conversation with my clients about spending in retirement. Some of my clients think if they draw down from their portfolio, they’ll outlive their retirement savings. I think that fear comes from investors assuming they have to follow the “4% rule,” which espouses that retirees take 4% of their portfolio every year. That amount might work for a lot of people, but it won’t work for everyone. So, if my clients simply don’t have the retirement assets to support a steady 4% withdrawal rate, or if they’re nervous they’ll run out of money, I’ll introduce them to the dynamic spending approach. And if later in life, our financial planning model suggests their assets will sustain them and their goals, we’ll talk about whether they want to increase their withdrawal rate.

Happy in retirement

What’s up with Jack and Diane these days? They’re in their mid-70s, and it’s clear they’ll have enough money to live on and be able to leave something to their son Evan, his spouse, and their children. They converted a portion of their rollover IRAs to Roth IRAs, mostly so they could leave that money to Evan. But they aren’t neglecting themselves in retirement either. They’ve started to fix up their vacation home by the lake, where they live 9 months of the year, and Evan frequently visits with his family.

Enjoy the ride

You’re going to have to make difficult decisions throughout your life. But if you explore all your options and think through the possible scenarios, you can “choose your own adventure” and enjoy the ride. (And if you need help talking through these decisions, you can always partner with an advisor.) Thanks for going on this adventure with me (and Jack and Diane). And best of luck wherever your road may lead.


All investing is subject to risk, including the possible loss of the money you invest.

The amount you convert to a Roth IRA isn’t subject to the 10% penalty charged on traditional IRA withdrawals taken before you reach age 59½.

Withdrawals from a Roth IRA are tax-free if you are over age 59½ and have held the account for at least five years; withdrawals taken prior to age 59½ or five years may be subject to ordinary income tax or a 10% federal penalty tax, or both. (A separate five-year period applies for each conversion and begins on the first day of the year in which the conversion contribution is made).

You may wish to consult a tax advisor about your situation.

Advice services are provided by Vanguard Advisers, Inc., a registered investment advisor, or by Vanguard National Trust Company, a federally chartered, limited-purpose trust company.