When you’ve built significant wealth, retirement isn’t about whether you have enough—it’s about making sure your income strategy aligns with your lifestyle, tax considerations, and long-term goals. The way you structure withdrawals, investments, and distributions can have a lasting impact, not just on your financial security but on your family’s future as well.
While Social Security and pensions may be part of the equation, they’re hardly the full picture. Wealthy retirees need a sophisticated approach—one that balances liquidity, tax efficiency, and investment growth while preserving financial flexibility.
Review Your Cash Flow Needs
The first step is to understand your cash flow needs based on your retirement lifestyle.
You can proactively modify your withdrawal plans and investment allocations by periodically evaluating your retirement income sources, spending patterns, and possible medical expenses. This ongoing evaluation allows you to identify any gaps, make the required corrections, and maintain a fulfilling retirement lifestyle.
Working with a wealth manager is a smart way to optimize your retirement income streams. They can perform extensive data-gathering calculations based on the anticipated size of your expenses, provide accurate retirement income estimates, and then work with you to implement strategies that continue to evolve as your needs change.
Organize and List Your Retirement Income Sources
When you’ve built significant wealth, structuring your retirement income isn’t about covering the basics—it’s about maintaining flexibility, managing taxes, and keeping your investments working for you. A simple way to organize your assets is by thinking in terms of time: what you need now, what you’ll need soon, and what’s meant for much later.
A three-bucket strategy can help balance liquidity with long-term growth:
- Short-Term: This bucket holds cash and low-risk investments—enough to cover the next one to three years of expenses. It keeps your lifestyle uninterrupted and prevents you from having to sell investments in a downturn.
- Medium-Term: Designed for the next three to ten years, this bucket leans slightly more aggressive and typically holds a mix of stocks, bonds, and annuities. It provides growth while also generating income. Inherited IRAs often fall into this category since they must be drawn down within a decade.
- Long-Term: With a time horizon of ten years or more, this bucket holds stocks and other growth-oriented investments. It’s where your money continues compounding and where tax-advantaged accounts, like Roth IRAs or brokerage assets, play a role in sustaining wealth across generations.
This framework isn’t about rigid rules—it’s about giving you control. Having money set aside for the short term allows your long-term investments to grow uninterrupted. It also helps you make more intentional decisions, rather than reacting to short-term market moves or tax surprises.
Understand the Different Withdrawal Strategies
How and when you withdraw funds in retirement matters just as much as how you saved. A thoughtful withdrawal strategy can help maintain financial flexibility and reduce tax surprises over time.
Systematic Withdrawal Approach
The systematic withdrawal approach involves taking out a fixed percentage of your retirement funds per year, usually in the range of 3% to 5%. As a general rule, the amount should be increased annually to reflect inflation.
Another systematic withdrawal strategy to consider is leveraging lower tax brackets in the years between retirement and required minimum distribution (RMD) terms. This is especially pertinent now that the IRS raised the RMD age to 73 (and will rise to 75 in 2033).
Layered Withdrawals for Tax Efficiency
Another approach is to take withdrawals proportionally from taxable, tax-deferred, and tax-free accounts each year—rather than depleting one account type at a time. This method spreads out taxable income more evenly across retirement and may help keep you in a lower tax bracket.
For example, rather than relying solely on taxable accounts early in retirement and then shifting to tax-deferred accounts later—where large required minimum distributions (RMDs) could trigger higher taxes—you might draw a mix from each. This can help smooth out tax liabilities while keeping investment assets diversified.
Another consideration is managing the order of withdrawals with an eye on long-term tax impact. Taxable brokerage accounts, where long-term capital gains are taxed at lower rates, can be a good starting point for withdrawals. Then, a portion of tax-deferred accounts like IRAs and 401(k)s can be tapped to take advantage of lower tax brackets before RMDs begin. Roth accounts, which offer tax-free distributions, can serve as a valuable reserve for later years, when tax rates may be higher or when funding large one-time expenses.
The goal isn’t just to minimize taxes in any single year—it’s about balancing tax efficiency across decades of retirement. Working with a financial advisor can help you structure a withdrawal plan that aligns with your cash flow needs, investment goals, and evolving tax landscape.
Reach Out for Help Today!
Transitioning from decades of saving to actually spending in retirement can feel unfamiliar—even for those with significant wealth. Clients often ask, Where does the money come from for bigger, one-time expenses? Whether it’s a bucket list trip, a new car, a meaningful family gift, or a large charitable donation, these aren’t just withdrawals—they’re part of the overall income layering plan.
The key is knowing which accounts to pull from, when, and why. Some expenses are best funded from taxable accounts, others from tax-deferred or even Roth assets, depending on your broader tax picture and cash flow needs. Thoughtful planning allows you to make those big financial moves without disrupting your long-term investment strategy.
At Deerfield Financial Advisors, we help clients structure their wealth so that spending in retirement feels just as intentional as saving during their working years. If you’d like to take a closer look at your retirement income strategy, call (317) 469-2455, email ssteel@deerfieldfa.com, or use my online calendar See what my clients have to say about working with me here.
About Susie
Susie Steel is COO, Wealth Manager, and Senior Shareholder at Deerfield Financial Advisors, a fee-only financial advisory and wealth management firm with offices in Indianapolis and Chicago. With over three decades of experience in financial planning, Susie’s approach has always been rooted in a spirit of service, treating each client as an extension of her own family. She simplifies the complex for clients, with the goal of creating a calm, trusting, and nurturing environment. Her unwavering commitment to the principle of “To whom much is given, much will be required” serves as the driving force behind her dedication, diligence, and empathy.
Susie obtained a business management degree from Ball State University, holds the CERTIFIED FINANCIAL PLANNER® designation, and held the Accredited Estate Planner (AEP®) designation from the National Association of Estate Planners & Councils (NAEPC) from 2013 to 2018. Susie is actively involved with an extensive list of professional organizations, including NAPFA (The National Association of Personal Financial Advisors), a premier association of fee-only financial advisors, and has served on multiple boards, committees, and councils. Her consistent recognition as one of Indianapolis Monthly’s “Five Star Wealth Managers” for the past decade attests to her outstanding accomplishments (2009-2023).
Outside the professional realm, Susie has contributed to her community through numerous efforts including her involvement in the Financial Center First Credit Union (FCFCU), the Indianapolis Children’s Museum Planned Giving Council, the Kiwanis Club of Northwest Indianapolis, and Junior Achievement. She mentors women through the CFP® Board’s “WIN-to-WIN” program, embodies the spirit of Rotary Club of Carmel, advocates for Indiana Canine Assistant Network (ICAN), and actively serves on the board of the Mary Rigg Neighborhood Center (MRNC).
Susie and her husband, Kevin, reside in Carmel, Indiana, where they raised their three children. Outside the office, her focus centers around family, spirituality, and fostering meaningful connections. Embracing the concept of the body as a temple, her personal growth is nurtured through practices like strength training, yoga, and meditation. In her leisure time, she enjoys strolls with her dog, Lulu, and indulges in movies, podcasts, books, and the theater. To learn more about Susie, connect with her on LinkedIn.
