- Claiming age is the biggest single lever in a US drawdown plan — the worked example spans $31,900 of lifetime tax between claiming at 62 and at 70.
- Required minimum distributions start at 73 and are forced income whether you need the cash or not, so a large untouched traditional balance is a tax bill in waiting.
- Roth accounts are spent last on purpose: tax-free growth, tax-free withdrawals, and no lifetime distribution requirement.
- State income tax changes the answer, not just the total — the same plan in a no-income-tax state keeps a visibly different amount.
How the decumulation planner works
Decumulation is the half of retirement planning nobody rehearses: turning a 401(k), an IRA, a Roth and a brokerage account into steady after-tax spending without handing more than necessary to the IRS. When you claim Social Security, and how required minimum distributions land on top of it, are worth tens of thousands of dollars over a retirement.
Enter your balances, your spending target and your state, for one person or a couple, and the planner projects every year to life expectancy. Withdrawals follow the conventional sequence — brokerage first, then traditional balances, then the Roth — while the search runs over Social Security claiming ages from 62 to 70, scored against whichever goal you pick: the lowest lifetime tax, the largest estate, or the best chance the money lasts.
What comes back is a claiming strategy, a lifetime tax figure, an after-tax estate and the year-by-year table behind them. The mandatory-distribution schedule further down is the constraint the whole exercise works around.
The math
The projection is annual and in nominal dollars. Balances grow at the return you set, the spending target rises with inflation, and each year mandatory income lands first — Social Security, adjusted for claiming early or late, and required minimum distributions from traditional balances at 73. Whatever is still needed is withdrawn gross, solved so the after-tax remainder matches the shortfall.
Tax is federal brackets with the standard deduction, long-term capital gains on the realized portion of brokerage sales, the provisional-income test that decides how much of the benefit is taxable, and an estimated flat rate for your state — which is why a plan in a state with no wage income tax looks different from the same plan elsewhere. Roth withdrawals are tax-free and carry no lifetime distribution requirement, which is exactly why the engine spends them last.
The search is a grid over claiming ages, not a full strategy optimizer: the withdrawal sequence itself is fixed. Bracket and deduction thresholds are indexed forward from a frozen base year rather than the current published tables, surtaxes and Medicare premium surcharges are not modelled, and one deterministic return a year ignores sequence risk entirely.
Worked example
Take $600,000 in a traditional 401(k), $150,000 in a Roth and $150,000 in a brokerage account with a $100,000 cost basis, filing single in Florida, spending $75,000 a year and planning to 92 at a 6% return. Claiming Social Security at 67 — a $2,200 monthly benefit at full retirement age — the plan pays about $137,700 of lifetime tax and runs out in its eighteenth year.
Ask it to minimize lifetime tax and it tests every claiming age from 62 to 70 and picks 70. Lifetime tax falls to about $118,700, roughly $19,000 saved, because eight more years of taxable withdrawals are replaced by a benefit that is only partly taxable and permanently larger. Claiming at 62 goes the other way: about $150,600, nearly $31,900 worse than waiting.
Key terms
- Decumulation
- The drawdown phase of retirement — converting savings into after-tax spending. The mirror image of accumulation, and the part with far more tax decisions in it.
- Required minimum distribution (RMD)
- From age 73 a set share of your prior year-end traditional balance must be withdrawn annually and taxed as ordinary income, whether you need it or not. The schedule is tabulated below.
- Full retirement age (FRA)
- The age your Social Security benefit is quoted at — 67 for anyone reaching it today. Claiming earlier permanently reduces it; each year of delay past it adds roughly 8% until 70.
- Provisional income
- Other income plus half your Social Security benefit — the measure that decides how much of the benefit is taxable. Above its thresholds, up to 85% of the benefit joins your taxable income.