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Investing after Retirement: Tips for Spending After Retiring
investing-my-money | Read Time: 3 minutes
By Charles O. Posnecker IV, CFA, CFP®, CTFA | Published: June 2022

There are countless articles about saving, investing, and budgeting for retirement, otherwise known as asset accumulation, because a few general principles apply to many, e.g., live within your means, utilize tax-advantaged accounts, avoid high-interest debt, and automate savings where possible. Unfortunately, not as much is written about asset decumulation, or how you should go about spending your hard-earned savings during retirement. This is a much more personal decision and will depend on numerous unique factors, such as family health history, “bucket list” goals, and what you intend your legacy to be. Luckily, there are a handful of similar considerations that apply to many retirees.
Assuming you now have a sufficient nest egg and are ready for retirement, make a list of your post-employment income sources income, such as a 401(k)s, IRAs, Social Security, and any taxable accounts. Consider consolidating certain accounts, such as older 401(k)s from previous jobs. An initial consultation with a financial adviser can be invaluable and provide an objective understanding of what you have available now and what is realistic going forward. More importantly, they can help you avoid any severe missteps that could throw off your retirement plans (or even necessitate a return to work).
Once you know what you have, you can begin drawing from your accounts. A general rule of thumb is withdrawing 4% per year, then adjusting the amount each year depending on inflation. For example, if 4% of your portfolio is $40,000 (i.e., a $1,000,000 portfolio), that would be your withdrawal amount the first year. The next year, if inflation is 3%, you would increase your withdrawal amount to $41,200 ($40,000 x 1.03%). You also probably want to withdraw from your taxable accounts first, allowing the tax-deferred accounts, such as IRAs, to continue to grow.
An important caveat is your overall asset allocation. If you still have a tolerance for risk and are more heavily invested in stocks, understand that your portfolio may fluctuate much more than a less volatile fixed income portfolio. This ultimately means that your withdrawal amount may differ materially from year to year, but it also may not grow as much as a stock portfolio or keep pace with inflation. Here is where a balanced mix of stocks and bonds to allow for growth and mitigate volatility may be preferred.
Further, the 4% withdrawal rate is not written in stone and should be flexible. Consider a year with great returns and your portfolio grows 12%. Your 4% amount is therefore much larger, and you may be inclined to spend beyond your usual living expenses. Conversely, a bad year may see your portfolio decline 12% and your 4% amount is smaller, leading you to dip more into principal. Instead, aim to keep your withdrawal rate flexible and in line with your cost of living.
Given that you are now retired, your living expenses will likely decline. Your house is probably close to being paid off, as are any cars or college expenses for children, and you are no longer saving for retirement. Thus, your living expenses are probably 70-80% of what they were while you were working. Now is a great time to enjoy the fruits of your labor—picking up hobbies, traveling to visit friends, doting on grandchildren, and getting involved with philanthropy are all great uses of time that you have certainly earned. You may also want to set up others for future success, so setting up a 529 plan to cover tuition expenses may make sense.
Another consideration is your legacy, or how you would like to be remembered. A profound topic to think about is passing on any family values to future generations. If you are passionate about giving your time and money to support a nonprofit organization such as your church or the local museum, consider involving a grandchild, and maybe even let them pick the nonprofit and a reasonable donation amount. It will create great and lasting family memories and teach them about giving back while providing some understanding of financial literacy.
There is no question that spending in retirement should not be overlooked. A good adviser will listen openly to help you to understand your goals and how they may be achieved.
About the Author – Charles O. Posnecker IV, CFA, CFP®, CTFA
Chuck Posnecker joined Cypress Capital Management in 2017 after working for Christiana Trust, a division of WSFS Bank, for 12 years in their personal trust and investment groups. He graduated from the University of Nevada, Las Vegas, where he received his BSBA in International Business (2002) and MBA-Finance concentration (2005). Chuck is also a graduate of the Pennsylvania Bankers Association School of Trust, Investments & Relationship Management, where he completed a three-year program focused on various aspects of trust administration and investments. Chuck obtained his Certified Trust & Financial Advisor designation in 2011, his Chartered Financial Analyst designation in 2016 and earned the CFP® certification in 2019.
This article is provided by Cypress Capital Management, LLC ("Cypress" or the "Firm") for informational purposes only. Investing involves the risk of loss and investors should be prepared to bear potential losses. Past performance may not be indicative of future results and may have been impacted by events and economic conditions that will not prevail in the future. No portion of this commentary is to be construed as a solicitation to buy or sell a security or the provision of personalized investment, tax or legal advice. Certain information contained in this presentation is derived from sources that Cypress believes to be reliable; however, the Firm does not guarantee the accuracy or timeliness of such information and assumes no liability for any resulting damages.
Cypress is an SEC registered investment adviser that maintains a principal place of business in the Greenville, Delaware. The Firm may only transact business in those states in which it is notice filed or qualifies for a corresponding exemption from registration requirements. For more information about Cypress’ registration status and business operations, please consult the Firm’s Form ADV disclosure documents, the most recent versions of which are available on the SEC’s Investment Adviser Public Disclosure website at www.advisorinfo.sec.gov. Cypress is wholly owned by WSFS Financial Corporation.
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