Introduction: Coming down the backside of the mountain of savings Most people spend decades climbing the hill of retirement savings: working hard, saving consistently, and investing with discipline. But when they finally reach the top, they discover something surprising: coming back down safely takes just as much planning as going up. Turning a nest egg into steady retirement income is one of the most important and emotionally complex parts of retirement. You’re no longer adding money to your account; now you’re taking withdrawals, and every decision feels like it carries more weight. Some people spend too freely and worry later. Others spend so cautiously that they deny themselves the lifestyle they worked so hard to build. That’s where a quant mindset can help. Think of it like having a calm, thoughtful trail guide by your side, someone who uses data instead of guesses and rules instead of impulses. You don’t need advanced math or complicated software. You simply need a structured way to make decisions, so your withdrawal plan feels less like guesswork and more like confidence. It allows you to prepare for multiple outcomes rather than betting everything on one. What It Means to Apply a Quant Mindset to Decumulation A “quant” approach is simply using facts, patterns, and probabilities to guide your decisions, especially when emotions run high. Let’s imagine two retirees: Michael wakes up wondering, “Is this a safe month to take money out?” When the stock market drops, he panics and withdraws less. When the market rises, he spends more; his spending swings with the headlines. Lisa, on the other hand, uses a simple spreadsheet and a few rules. She has a predetermined withdrawal rate, knows how much she can safely withdraw from her retirement account, and reviews her plan annually. She doesn’t let fear or excitement set her course. Both have the same portfolio. But Lisa has the mindset that keeps her steady. A quant perspective doesn’t try to predict the future. It simply helps you make good, consistent choices regardless of what the market conditions look like. Designing Systematic Withdrawal Rules Just as a disciplined investor uses a rules-based system to buy and sell securities, retirees can use systematic withdrawal strategies to generate income while preserving their retirement funds. You have probably heard of at least three data-based strategies. Each one has trade-offs: Constant withdrawal: Take out the same withdrawal amount (adjusted for inflation) each year. It’s predictable and straightforward, but can strain a portfolio during a bear market. Fixed-percentage withdrawals: Withdraw a set percentage (say 4%) of the current account balance each year. When the market is strong, you can spend more. When it’s weak, you tighten spending. This method can be helpful when your investment performance does not vary significantly, but it is not a viable solution during extended bear markets. Guardrail strategies: Withdraw within a specified range and make adjustments only if your portfolio value exceeds or falls below certain thresholds. It’s like driving with lane markers. You have freedom to move, but with limits that keep you from straying too far off course. A Hybrid system may use one of these broader strategies above, but within it incorporates a steady income floor. This may include interest and dividends, bond funds, or annuities for a more stable monthly income with variable withdrawals from growth assets. These approaches create a balance between security and flexibility. Regardless of the approach, a quant mindset turns these into repeatable rules rather than reactive decisions. It helps you resist the temptation to increase spending in bull markets or panic during downturns. Using Data and Probabilities to Test Your Withdrawal Plan Most people think testing a withdrawal rule means trying to pick the correct number. But the truth is more practical: the goal is to understand your range of outcomes. Using specialized retirement software, or Monte Carlo simulation tools, you can see: What happens if inflation runs higher? What if the first three years of retirement include a bear market? How long will your funds last at your chosen withdrawal rate? Does your retirement plan still work if the next decade is slower than expected? These exercises aren’t about predicting the future. They’re about preparing for it by testing how your withdrawal plan performs under different market conditions. What happens if inflation runs higher than expected? What if the next decade looks like the 1970s or the 2000s? These “what-if” exercises don’t tell you what will happen. They help you see the range of what could happen. A quant doesn’t seek certainty; they seek probabilities. For example, suppose your model indicates that 20% of the scenarios your retirement portfolios may produce are unfavorable and unsustainable, based on your life expectancy. In that case, consider reducing your withdrawal amount or taking steps to increase your probability of favorable outcomes. Quantifying Risk: Sequence of Returns, Volatility, and Drawdowns The sequence of returns can be a problem depending on when you start taking withdrawals. The order in which you experience gains and losses matters more in retirement than it did during your working career. A 20% drop early on can be far more damaging than the same drop 15 years later. Here are a few practical, quant-style ways to manage that risk: Hold 1–3 years of cash or short-term bondsSo you’re not forced to sell investments at the wrong moment. Use guardrailsIf your retirement portfolios decline, consider temporarily reducing withdrawal amounts. Rebalance automaticallyLet rules, not emotions, determine when to shift between stock and bond holdings. Consider structured approachesThese approaches, such as the safe withdrawal rate, should be viewed as a starting point, rather than a rigid command. These steps turn an unpredictable market into something you can navigate with calmer expectations. Adding Tax Efficiency to a Quant-Style Withdrawal System Tax planning is where many withdrawal strategies can fall short. A quant-minded investor treats taxes as another variable in the equation. Modeling your distribution order among your taxable, tax-deferred, and Roth retirement accounts can extend your portfolio’s life by years.

When you think of your retirement planning, what do you think of? Having enough money to build a big nest egg? Replacing your paycheck over the rest of your life? Your retirement planning should not be just about those things. Your retirement planning should also be about preparing for uncertainty. Those “what ifs” of your life that no spreadsheet can fully predict. A retirement plan that looks solid on paper can still crack under the pressure of real-world surprises. How would a market crash or downturn affect your plan? What if you experienced higher inflation than you previously thought? What if you had unexpected medical bills? That’s where the idea of a stress test comes in. Just as banks test their balance sheets against crises, you can test your portfolio against the kinds of risks that don’t show up in smooth, average return projections. A stress test takes your retirement portfolio and asks questions. What happens if the market downturns in year 4, or say in year 10? What if inflation spikes to over 4% for 10 years during the plan? What if I live ten years longer than expected, or my spouse dies earlier, and I lose part of their social security? The purpose isn’t to scare you. It’s to build your confidence. Confidence that comes from knowing ahead of time how your plan, your savings, and your retirement income strategy can adapt, before the pressure from an unexpected event occurs. In this guide, we’ll walk through how to stress test your retirement plan, the tools and strategies available, and practical adjustments you can make to safeguard your financial future. What Does It Mean to Stress Test Your Retirement Portfolio? At its core, a stress test is a financial “what if” exercise. In retirement planning, it’s the process of testing your investment portfolio against negative scenarios that could derail your income and savings. Unlike a standard risk assessment, which might tell you how “conservative” or “aggressive” your mix of stocks and bonds is, a stress test digs deeper. It asks: What if there’s another financial crisis, like 2008? What if inflation stays above 5% for a decade? What if medical costs double your expected spending? What if your spouse lives to 100, stretching your funds further than you planned? By running these kinds of tests, you uncover vulnerabilities hidden behind optimistic averages. A retirement portfolio that looks fine in a normal forecast might fail under stress. Knowing that risk now allows you to know how you will be able to adjust when life forces the issue. Here is another important point. A lot of plans have a “probability of success”. However, they do not go a step further and let you know beforehand what short-term adjustments or tweaks you could easily make to get back on track. Let’s say your projections had a “probability of success” of 100%. You might feel pretty good. But what if a good portion of those simulations ended with less than $2,000 in the bank. Would you really feel that confident? It is never just a simple “pass/fail”. Key Risks That Can Derail Retirement Savings The strength of your retirement plan isn’t measured by how it performs in good times, but by how it holds up when things go wrong. Here are the big risks stress testing can reveal: 1. Market Volatility and Market DownturnsThe stock market has always moved in cycles with booms, followed by downturns. We cannot expect the “Magnificent Seven” stocks or AI stocks to keep the market running upward forever. Retirees who need to withdraw income during a market crash face what’s called “sequence of returns risk.” A sharp drop early in retirement can permanently reduce the size of your nest egg, even if the market soon recovers. The reason for this is because, given the same dollar withdrawal each month, those withdrawals will be a greater percentage of your account when the account is lower in value. This means you are digging into the principal at a greater percentage, thereby reducing the amount it can recover when markets resume going up. 2. Higher average Inflation and or periods of High InflationInflation quietly erodes the purchasing power of your money. Over decades, even a modest inflation increase reduces how much your income covers. A period of high inflation, like the 1970s, can devastate retirees who rely on fixed income streams. Many retirement income tools cannot plan for inflation “spikes”. This occurs when inflation spikes up for five or six years, above some assumed average. The “average” inflation rate you assume over the life of your plan may be right, but that does not matter since you will need income every year; not just years of average inflation. 3. Longevity RiskLiving a long life is a blessing. This also means your savings must last longer. Outliving your funds is one of the greatest fears a retiree faces. With longer life expectancy, even well-designed financial plans can result in stress. 4. Health Care and Long-Term Care CostsHealth costs are unpredictable. A sudden illness, long-term care needs, or gaps in Medicare coverage can add six figures of extra expenses. Without planning, this can turn a solid retirement into a financial crisis. 5. Interest Rate ShiftsLow or rising rates impact bond values, mortgage costs, and cash flow. If rates rise quickly, the bond portion of your portfolio can lose value. If they stay low, retirees may not earn enough interest income. While it is important to diversify your sources of income, accurate predictions of future interest rates have never been repeatable. 6. Sequence of Returns RiskThis subtle (yet dangerous) risk happens when poor returns occur at the same time you’re withdrawing funds. It’s less about average returns and more about timing. Two portfolios, with identical average returns, can produce wildly different results if withdrawals start during a downturn. We witnessed this with retirees starting retirement in 1999 and 2007. 7. Unexpected Support for ChildrenIn the last 15 years, we have seen many retirees

Rethinking Retirement Withdrawal Rates When we first talk with pre-retirees about what keeps them up at night, one answer comes up more than most: “How much can I safely spend from my portfolio each year?” After all, what we are really seeking is paycheck replacement. We want to be able to shift from having our employer pay us an amount each month to having our combined investments start paying us a comparable amount, and do that for many years, through life’s ups and downs. For decades, the 4% rule offered a comforting answer. It was simple, catchy, and backed by research. But like many “rules of thumb,” it works best on paper and much less so in real life. In the real world, retirement spending isn’t a steady line, it’s a series of hills and valleys. Social Security starts can be later for some, medical costs spike for others, and spending in your 60s rarely looks the same as in your 80s.We have always felt that one of our responsibilities is to help people better navigate reality. Sometimes that requires a fresh approach. When it comes to retirement income planning, a more real-world approach is one that blends behavioral insights, flexible math, and real-world variability. Instead of anchoring to a static withdrawal rate, we build plans for you that adjust dynamically over time, much like a baseball coach who tweaks a game strategy inning by inning based on the conditions on the field. This blog post explores the key takeaways we learned over the years. We’ll cover why the 4% rule is both brilliant and flawed, how real retirees actually do spend money (hint: it’s not flat), and how tools can use risk-based “guardrails” to keep spending on track without overreacting to every market hiccup. If you are getting close to or in retirement, then understanding these evolving strategies might just change how you think about financial freedom. Why the 4 % Rule Became a Household Name All retirement income planning starts with the same question: How much can you safely withdraw from your retirement portfolio each year without running out of money? In 1994, financial planner William Bengen, tackled this problem with a thoughtful analysis. He looked at historical market returns going back to 1926 and tested hundreds of retirement scenarios. His answer, and later echoed by the Trinity Study, was simple and powerful: If you withdraw 4% of your portfolio in your first year of retirement and adjust that amount each year for inflation, you should be able to make your money last 30 years, even during bad markets. For many people, this became gospel. The “4% Rule” spread throughout our industry. It was easy to articulate and easy to remember, even if you didn’t know all the variables behind it. Not only was it reassuring, but it also felt scientific. Additionally, it gave retirees a clear number to plan around in a world filled with financial uncertainty. But like most things in life, the devil is in the details. The 4% rule was designed for a very specific set of assumptions—no other income sources, constant inflation-adjusted spending, and a 30-year retirement. Real life rarely follows that script. Most people have pensions, Social Security, changing expenses, and retirement timelines that don’t match the textbook. Specific behavior tendencies were also never addressed. Yet the 4% rule is still seen in many articles and advisor meetings today as if it were a universal law. There is an old saying in our business that “All models are wrong, but some are useful”. The 4% rule is useful—but only if you treat it as a starting point, not a final answer. Pros: It’s simple and easy to understand. It highlights the danger of sequence-of-return risk, especially big losses early in retirement. It can help you understand the need for restraint in withdrawal planning. Cons: It assumes level spending for 30 years, something few retirees do. It ignores taxes, Social Security timing, and personal spending patterns. It creates a false sense of security or fear depending on market conditions. Rethinking Retirement Income: The Uneven Shape of Spending Retirement income doesn’t arrive in one tidy stream. It’s more like a series of waves, some stronger than others. Early on, many retirees rely heavily on their investment portfolios to fund spending. That’s because key income sources like Social Security or pensions may not kick in until several years after retirement begins. For those who delay Social Security to age 70—a strategy that boosts benefits by about 8% per year—they’re essentially building a stronger income stream later in exchange for needing to draw more from their portfolio in the early years. If you were to chart this visually, your portfolio withdrawals start out larger, covering most of your expenses, then shrink as Social Security and other income layers begin to kick in. It would look like a door stop wedge: higher on one side and then gradually getting smaller to a certain point. By the time you reach your mid-70s or beyond, many retirees may be leaning more on guaranteed income and drawing much less from their portfolios. The Retirement Smile: Go-Go, Slow-Go, No-Go Retirement isn’t just one long phase—it’s made up of seasons. This idea is often described as the “Go-Go, Slow-Go, No-Go” years. In the early years, most retirees are active, healthy, and eager to enjoy the freedom they’ve spent decades working toward. Travel, hobbies, and new experiences tend to dominate this period. Because of this, spending tends to be at its peak. This is the “Go-Go” phase, and it often lasts through a person’s 60s and into their mid to late 70s.As time goes on, the energy to travel and explore naturally fades. Health concerns may begin to arise, and people tend to settle into more routine lifestyles. Dining out less, traveling less, and spending more time at home often means a gradual reduction in discretionary expenses. This middle stage is the “Slow-Go” phase, when spending eases off—not because of financial constraints,

Why Social Security Is Such a Big Deal Social Security isn’t just a line item in your retirement plan. It’s a deeply emotional, widely misunderstood, and highly consequential decision that touches nearly every American. Whether someone has $5,000 in savings or $5 million, they want to get this one right. Google searches for Social Security far outpace searches for tax strategies, estate planning, or even investment allocation. That tells you something. Why? Because the stakes are high, and the questions feel personal: “When should I claim? Will Social Security still be around? What if I wait and die too soon?” This isn’t just about optimizing income – it’s also about uncertainty, regret, and reassurance. And that’s what this blog is about: how to help you make better Social Security decisions that are technically sound but also human. Key Takeaways: There’s no one-size-fits-all answer. Claiming Social Security is as much about lifestyle, health, and peace of mind as it is about maximizing lifetime income. Timing your claim impacts more than just benefits. The age you claim can affect your portfolio withdrawal strategy, tax bracket, Medicare costs, and overall financial flexibility. Behavioral and emotional factors matter. People often fear dying early more than outliving their money—so regret, flexibility, and how you value money today should shape your decision. You have options, even after retirement. Flexibility is built into the system between delayed claiming, retroactive benefits, and the ability to reassess annually—if you know how to use it. The Basics of Claiming Most articles and retirement calculators simplify Social Security to one question: Should I take it early or wait? The answer lies in understanding what’s being offered. You can start claiming Social Security as early as 62 and as late as 70. The longer you wait, the higher your monthly benefit. In fact, the difference between claiming at 62 versus 70 is about a 75% increase in benefits received. That sounds like a slam dunk for waiting. But life isn’t always lived in spreadsheets. Social Security uses the term Full Retirement Age (FRA). It is 67 for those born in 1960 or later. If you claim before FRA, your benefits are reduced. If you delay beyond FRA, you get delayed retirement credits (about 8% per year) up until age 70. But all this rests on a deeper truth: claiming early means more years with money in hand. Claiming later means a larger check, but for fewer years. Which one is “right” depends on a dozen interlocking factors such as life expectancy, health, portfolio size, employment plans, and emotional peace of mind. The Three Core Types of Benefits (And Why They Matter) To make a smart claiming decision, you need to understand which type of Social Security benefit you’re eligible for. This isn’t just a bureaucratic detail.  It can significantly change your strategy. Own Benefit This is based on your work history and the amount you’ve paid into the system. Your Primary Insurance Amount (PIA) is the amount you’d receive at your Full Retirement Age. If you claim before FRA, you get less. If you wait, you get more. Spousal Benefit If you’re married (or were married), you may qualify for up to 50% of your spouse’s PIA. Importantly, this benefit is also reduced if you claim before FRA. However, it does not increase if you wait beyond FRA. That’s a critical difference. Also worth noting is that you can’t choose to claim only your spousal benefit while letting your own benefit grow anymore. That loophole is closed. Survivor Benefit This kicks in if your spouse dies. You may be eligible to receive their benefit instead of your own, whichever is higher. Survivor benefits have a different reduction schedule and include specific protection, so they aren’t overly reduced just because the deceased spouse claimed early. Each benefit type interacts differently with claiming age, marital status, and timing. And these interactions are where planning opportunities (or costly mistakes) lie. Why It’s Not Just About Math If you Google “When should I claim Social Security?”, you may find articles that sound like investment pitches: “Where else can you get an 8% guaranteed return?” That’s a catchy headline that ignores something bigger, and that is the human side of the decision. For many retirees, this isn’t just about maximizing dollars. It’s about managing regret, and uncertainty. People don’t live by actuarial averages. They live unique lives filled with unknowns, and they make choices accordingly. Sure, delaying benefits gives you a higher monthly check. But claiming early offers: Peace of mind during a market downturn Flexibility when you’re healthy enough to travel Reduced stress when you’ve just left your job and don’t want to draw from investments Conversely, delaying benefits may offer: Higher lifetime income (if you live long) Greater survivor benefits for your spouse Inflation protection in late retirement years Here’s the catch: every pro comes with a con. The “right” decision is the one that fits the life someone wants to live, not just the spreadsheet they print out. Different Viewpoints: Real-World Claiming Philosophies The truth is that claiming Social Security is a deeply personal decision. Even the experts don’t agree on a single “best” strategy because every person, while maybe similar, is still different. How We Can Help You Clarify the Trade-Offs Most financial plans give you a table: “If you claim at 62, here’s your benefit. At 67, it’s higher. At 70, highest.” What they don’t show you is how that decision affects the rest of your retirement plan. We take you beyond the standard approach and instead test how different claiming ages impact: Portfolio longevity Income flexibility Sequence of return risk Survivor benefits Real-life utility of income Visualizing Real World Life Expectancy Scenarios We can create a heat map that shows thousands of combinations between claiming dates (e.g., husband at 67, wife at 65). We can then adjust life expectancy assumptions, apply “fudge factors” to mortality, or simulate benefit cuts. You can even add opportunity cost – discounting future dollars to

Imagine this: You’re finally retired. You’ve run the numbers, talked to your advisor, and felt confident about your ability to withdraw $10,000 per month from your retirement savings. The plan says it’s enough. You’ll be fine for 35 years – as long as inflation stays at 3%, the historical average over the past 100 years. So, you settle into your new rhythm, take the occasional trip, help the kids when needed, and enjoy the freedom you worked so hard for. But then something unexpected happens, and inflation doesn’t stay at 3%. It surges to 6%. Then drops. Then, it spikes again. Groceries are more expensive. Gas prices sting. Healthcare premiums climb. Suddenly, that $10,000 doesn’t stretch as far—and the cushion you thought you had starts to shrink. The plan didn’t break in one big moment. It slowly wore thin. That’s the hidden danger of planning with a fixed inflation assumption: it makes retirement look smoother than it really is. Here’s the reality—retirement is lived in real time, and inflation shows up in unpredictable ways. Sometimes, it’s early, sometimes late, and sometimes not at all, until it hits hard. And when it does, it’s not just a number on a spreadsheet. It’s a budget cut, a lifestyle shift, a postponed dream, or a tough conversation with a loved one. Too many financial plans still assume inflation is calm, consistent, and linear. But that’s not what history shows. And it’s not what real retirees experience. In this post, we’ll unpack why fixed inflation assumptions are failing today’s retirees—and what a more innovative, more flexible planning approach looks like in a world where inflation won’t remain consistent. The Problem with Fixed Inflation in Financial Planning Many retirement plans use a fixed inflation rate, usually 2% or 3%, year after year. It makes the projections look neat, clean, and easy to follow. Some plans allow for different inflation levels for specific categories (such as core CPI assumptions and health care inflation assumptions). But they still tend to be fixed over the life of the plan. If your advisor has made a retirement plan for you, then look at the inflation rate in the assumption section. If there is no mention of standard deviation, then it is probably fixed. But here’s the issue: real-life inflation doesn’t behave that way. And pretending it does can quietly lead retirees into trouble. Take a look at the chart below from the Bureau of Labor Statistics. If you removed the title and the legend on the chart above, you might think it showed the 12-month percentage change in a stock. There is nothing fixed about the change of inflation from one year to the next. What’s the problem with using fixed inflation? It assumes predictability in a world that’s anything but predictable. It creates a false sense of security, suggesting your dollars will always lose value slowly and steadily. It hides real risk, especially early in retirement, when spending is typically highest. It ignores history, where inflation has varied wildly—even within short time frames. Take the last few years, for example. We’ve seen inflation dip near zero, then spike above 8%. That’s not a gentle 3% slope. It goes up and down like a rollercoaster. Why does this matter for retirees? Retirees often live on fixed or semi-fixed income. Spending power is most vulnerable in the early years of retirement. Early inflation shocks can permanently reduce long-term financial stability. It’s like building your retirement plan on the assumption that every day will be sunny. You may be fine for a while—until the storm hits. And by the time it does, the damage can be hard to reverse. Fixed inflation models may lead to: Overconfidence in early retirement spending Plans that don’t adapt to real-world price changes Unexpected shortfalls later in life   In short, using a fixed rate might make the math easier – but it doesn’t make the plan better. If we want to build plans that hold up in real life, we need to start treating inflation like the unpredictable force it truly is. Inflation Behaves Like Market Returns—Uncertain and Variable Think about how you experience returns in the stock market. You know that returns won’t be the same every year. What matters is the long-term trend. That’s baked into every good investment plan. We look at hundreds of possible economic outcomes using Monte Carlo simulations, we look at the variability of returns in different scenarios, and we fully expect there to be ups and downs.  But here’s the irony – we don’t give inflation the same respect. Inflation is every bit as unpredictable as market returns—sometimes even more so. One year it’s under control, the next it’s climbing at a rate no one saw coming. Just like the market, inflation moves based on forces outside our control: geopolitics, supply chains, energy prices, monetary policy, consumer behavior—you name it. And just like the market, inflation is never linear. Yet, too often, we still treat it like it is. In less-advanced planning software, inflation is typically entered as a single, fixed number. That number might differ across spending categories—say, 3% for general expenses, 5% for healthcare—but it’s still locked in, year after year. There is no variance, no sequence risk, and no acknowledgment that retirees will feel those price changes differently depending on when they happen. But just as there’s a sequence of returns risk – where bad market years early in retirement can derail a portfolio – there’s a sequence of inflation risk, too. And it’s just as dangerous. If inflation is high early on, especially when spending is at its peak, it can permanently shrink a retiree’s future purchasing power. The problem is that even if average inflation is 3%, the order in which it happens matters. That’s why two retirees can both face 3% average inflation, but one ends up fine while the other struggles—simply because the timing was different. So, if we’re willing to model market risk with flexibility and nuance, shouldn’t we