How a Couple Near Retirement Rebuilt Their Withdrawal Plan

How a Couple Near Retirement Rebuilt Their Withdrawal Plan

This is an illustrative scenario, representative of the kind of retirement planning work described below. Details are anonymized and any figures are for illustration; outcomes vary by household and are not guaranteed.

The riskiest years for a retirement portfolio are the ones right around when you stop working. A retirement withdrawal plan that looked fine in a rising market can quietly fall apart if the market drops just as you start drawing income. This representative case study follows a couple near retirement who rebuilt their plan after exactly that kind of scare.

They had done a lot right, saved diligently, stayed invested, avoided panic selling in past dips. What they had not done was think carefully about the order and timing of withdrawals once the paychecks stopped. That gap is common, and it is where a market drop near retirement does its damage.

The Problem

The couple was a year or two from retiring when a market downturn cut into their portfolio. Their plan, to the extent they had one, was simple: retire on schedule and start withdrawing a set amount each year. What worried them was the thing they could not un-see. If they began drawing down a shrunken portfolio, they might be locking in losses they would never recover.

That worry has a name: sequence-of-returns risk. Two portfolios with the same average return can end very differently depending on when the bad years hit. Poor returns early in retirement, while you are withdrawing, do more lasting harm than the same returns later. The couple sensed the danger without having the framework to address it.

The Approach

Working with a planner, the couple's focus shifted from "how much do we have" to "in what order do we spend it." In planning work of this kind, a few levers come up. A cash buffer, a reserve of one to two years of spending held outside the market, so you are not forced to sell investments at a low. A withdrawal order that draws from the right accounts first for tax efficiency. And a hard look at whether the retirement date or the first-year spending needed to flex given the starting point.

None of these are exotic. They are the difference between a portfolio that has to sell into a downturn and one that can wait for recovery. The planning also meant confronting trade-offs honestly: a larger cash buffer is safer but earns less, and adjusting a retirement date is not a small thing to ask of someone who is ready to be done.

What Changed

In this illustrative scenario, the couple did not get a guarantee, because no honest plan offers one. What they got was a structure that gave the portfolio room to breathe: a cash reserve to fund the early years, a withdrawal order designed with taxes in mind, and a plan flexible enough to adjust spending in a bad year rather than sell into it.

Just as important, they got peace of mind. A written plan they understood replaced a vague intention, and that clarity is often what lets people actually retire instead of anxiously working "one more year" on repeat. The honest caveat is that markets are unpredictable and every household's situation differs; a good plan improves the odds and the resilience, it does not remove risk, and outcomes are not guaranteed.

The broader lesson is that the years right before and after you retire deserve more planning than the decades of simply saving that came before. The math of drawing down is genuinely different from the math of building up.

Why Working With a Planner Helped

Sequencing withdrawals, sizing a cash buffer, and pressure-testing a retirement date are the kind of decisions that benefit from someone who does them regularly. Calculated Wealth is a Madison, Wisconsin Sam's List financial advisory firm, founded in 2022, that works with retirees, the households for whom this drawdown planning matters most.

A planner can bring structure and an outside perspective, but the decisions remain yours, and no advisor can promise a market outcome. This is not investment advice, and any strategy should be evaluated against your own situation. Confirm credentials, services, and fit before engaging, and review Calculated Wealth's profile on Sam's List.

Frequently Asked Questions

What is sequence-of-returns risk? It is the risk that the order of investment returns, not just the average, hurts a portfolio you are withdrawing from. Poor returns early in retirement, while you are taking income, do more lasting damage than the same poor returns later, because you are selling assets at low prices and have less left to recover. It is a central concern in the years around retirement.

Why does a cash buffer help near retirement? Holding one to two years of spending in cash or stable assets means you can fund early retirement without being forced to sell investments during a downturn. That gives the portfolio time to recover instead of locking in losses. The trade-off is that cash earns less, so the buffer is about resilience, not maximizing return, and its right size depends on your situation.

In what order should I withdraw from my retirement accounts? It depends on your mix of taxable, tax-deferred, and Roth accounts and your tax picture, so there is no single right answer. A tax-aware withdrawal order can reduce lifetime taxes and extend how long the money lasts. Because the specifics matter a great deal, this is an area where personalized advice from a qualified professional is valuable.

Do I need a financial advisor to plan retirement withdrawals? Not necessarily, but the drawdown phase is genuinely more complex than the saving phase, involving sequence risk, taxes, and timing decisions with real consequences. An advisor who works with retirees can bring structure and stress-test your plan. Confirm their credentials and fit, and remember that no advisor can guarantee market outcomes.

Kimberly Green is the cofounder of Sam's List, where business owners and high earners find vetted CPAs, financial advisors, and fractional CFOs. She's met one-on-one with 400+ financial professionals and writes from the real data behind thousands of client-advisor matches. Ask her anything about finding an accountant - she's heard it all, including the questions people are afraid to ask.