The 4% rule can be a useful reference point. It is not a retirement plan.

If you retire with a $2 million portfolio, does the 4% rule mean you can withdraw $80,000 in the first year, increase that amount with inflation, and feel confident you will not run out of money?

It sounds reassuring. It is simple. And it may be one of the most consequential shortcuts in retirement planning.

So, does the 4% rule work?

It can be a useful reference point. But it is not a retirement plan.

The rule does not know whether your dream is to spend summers with your grandchildren, travel internationally while you are healthy, join a club, buy a boat, remodel a home, help a child through a difficult period, or leave a meaningful legacy. It does not know whether you will retire at 60 or 72, whether you have a pension, how your accounts will be taxed, or what life may look like if one spouse eventually lives alone.

It also does not understand how a withdrawal may affect the taxation of Social Security, the income used to determine Medicare’s income-related monthly adjustment amount— better known as IRMAA—or the state income taxes that may apply based on where you are legally domiciled.

Most important, the 4% rule assumes your retirement can be reduced to one percentage.

It cannot.

For more than three decades, I have helped hundreds of families prepare for retirement. My team and I have also had the privilege of walking beside many of them throughout the retirement journey—adjusting their plans as markets and tax laws changed, health needs evolved, grandchildren arrived, adult children needed help, and one spouse eventually became responsible for continuing the plan alone.

Some of those changes could be anticipated. Others could not. The lesson is that retirement planning is not about choosing one number and living with it forever. It is about making thoughtful decisions around what you can control—and building the ability to respond to what you cannot.

Retirement is not one long, unchanging season. What you want from your money at 67 may be very different from what you need from it at 82. A good retirement plan helps you make the most of the years in front of you, prepare for the transitions that may come later, and adjust as life unfolds.

Do Not Save Your Entire Bucket List for Someday

For many people, the first eight to twelve years of retirement offer something unusually valuable: time, health, freedom, and the ability to choose.

These are often the years for the trips you have postponed, the family experiences you want to create, and the things that are easier to do at 68 than at 83. You may want to see more of the world, spend a month somewhere you love, play more golf, take the grandchildren on a memorable vacation, renovate the house, or finally pursue an interest that work never left enough time for.

There is a practical reason to give these goals priority. Money is not the only resource that can become limited. So can energy, mobility, health, and the willingness to take a twelve-hour flight.

As the saying goes, get while the getting is good.

That does not mean spending recklessly or trying to fit 30 years of retirement into the first five. It means recognizing that postponing everything has a cost of its own. A retirement plan should not be designed only to protect the oldest version of you. It should also create room for the healthy, active person you are today.

The right question is not, “What is the smallest amount I can withdraw?”

It is, “How can I use my resources thoughtfully across all the different stages of the life ahead?”

Your Retirement Will Not Look Exactly Like Anyone Else’s

People often describe retirement in three broad stages: the active years, the slower years, and the later years when health or support needs may become more important.

That framework can be helpful, but life rarely follows a neat diagram.

Some people travel well into their eighties. Others decide after a few years that airports have lost their appeal. One couple may spend more in the early years and naturally slow down later. Another may face healthcare costs sooner than expected. Some people downsize. Others remain in the family home and bring in help. Some want to give money to their children while they can enjoy seeing the difference it makes. Others may suddenly need to help an adult child through a divorce, illness, business setback,

or other difficult period. Still others place a higher priority on preserving assets for a surviving spouse or future generations.

There is no standard retirement life—and there should not be a standard retirement spending plan.

Two couples can retire with the same size portfolio and need completely different plans. One may have two Social Security benefits, a pension, one home, and flexible travel spending. The other may support two homes, belong to a club, make significant family gifts, and rely almost entirely on investments for income.

Their account statements may look similar. The work assigned to their portfolios is entirely different.

Begin With the Life, Not the Portfolio

Before deciding what a portfolio should provide, first describe the life it is meant to support.

What do you want the first decade of retirement to look like? Which experiences matter enough that you would regret continually postponing them? What will your normal life cost, and which expenses may arrive only once or twice a year?

For a Naples household, the answer may include more than ordinary monthly spending. It may include:

• One or two homes
• Travel and extended family visits
• Club dues, dining, boating, golf, or cultural activities
• Insurance, property taxes, association fees, maintenance, and possible assessments
• Cars, home renovations, or other major purchases
• Gifts to children, grandchildren, charities, or educational institutions
• Healthcare costs and additional help later in life

Some of those expenses are essential. Some make retirement meaningful. Others are flexible and could be delayed or reduced if circumstances required it.

That distinction matters. It allows you to enjoy more when conditions are favorable without pretending every dollar of spending must continue forever.

Determine What Your Portfolio Needs to Provide

Once you understand what the life may cost, map the income that does not require selling investments. That may include:

1. Social Security 2. Pension income 3. Rental income after realistic expenses and vacancies 4. Business income or distributions that can reasonably be expected to continue

The difference between your planned spending and these income sources is what your portfolio needs to provide.

That amount—not a percentage taken from last year’s statement—is the starting point for a useful retirement-income plan.

What your portfolio needs to provide will also change over time. Social Security may begin several years after retirement. A pension may have different survivor terms. A mortgage may be paid off. Travel may decline. Healthcare or household support may increase. An adult child may unexpectedly need help. Required minimum distributions may eventually create more taxable income than you need for spending.

A good plan anticipates these transitions rather than assuming the first-year withdrawal simply rises with inflation forever.

Why the 4% Rule Is a Reference—Not Your Answer

The withdrawal-rate research behind the 4% rule helped illustrate an important risk: poor investment returns early in retirement can be especially damaging when withdrawals are leaving the portfolio at the same time.

That is valuable insight. But the research was not designed around your household, your taxes, your income sources, your goals, or the length and shape of your retirement.

It does not know whether your early spending is temporarily higher because you are completing the bucket list. It does not know whether one spouse may eventually lose a Social Security benefit, whether a pension continues after death, or whether a major home expense and a weak market could occur in the same year.

It also looks at withdrawals before understanding what you can actually spend. A distribution from a traditional retirement account can add to taxable income. Other income can affect how much of your Social Security is taxable. Higher modified adjusted gross income can increase Medicare Part B and Part D premiums through IRMAA. And the state where you are legally domiciled may impose an income tax that another state does not.

The same gross withdrawal can therefore leave two retirees with very different amounts to spend.

A historical withdrawal rate can help test a plan. It should not replace one.

The word “safe” can also create a false sense of certainty. No percentage can promise that markets, inflation, tax laws, health, and family circumstances will cooperate for the next 30 years.

The better objective is not to find a perfect number today. It is to establish a reasonable spending range, identify what could cause it to change, and review it regularly.

Build Flexibility Before You Need It

Planning does not mean predicting every event. It means deciding in advance how you could respond.

Suppose markets decline during the same year that you face a large insurance increase or property assessment. Or an adult child suddenly needs meaningful financial help. Could a major trip move to the following year? Could a renovation be delayed? Is there cash available for near-term needs? Which account should fund the expense, and what tax effects could follow?

These are spending guardrails—not rigid restrictions, but informed choices.

They can be as simple as agreeing that:

• Core living expenses should be supported in a wide range of conditions.
• Meaningful lifestyle spending should be planned for, not treated as an afterthought.
• Large discretionary purchases may depend on portfolio results and other expenses that year.
• An unusually difficult market may call for a temporary adjustment rather than a permanent reduction in lifestyle.
• An unusually strong period should not automatically become a permanent increase in spending.

Flexibility is not a sign that the plan failed. It is one of the things that can help the plan succeed.

Plan for the Possibility That One Day There May Be One of You

This is one of the most important retirement conversations—and one of the easiest to postpone.

At some point, one spouse may have to continue the plan alone.

When that happens, household expenses often do not fall by half. The home still needs to be maintained. Property taxes, insurance, utilities, and many everyday costs continue. Yet one Social Security benefit generally ends, and pension income may decline depending on the survivor election.

Taxes can change as well. A surviving spouse may eventually file as a single taxpayer, with different tax brackets and thresholds applying to one person. Required distributions, the taxation of Social Security, and Medicare income-related premiums may place more pressure on the survivor’s cash flow.

There is also a human issue beyond the numbers: the spouse who handled the investments, bills, taxes, or relationships with advisers may be the one who is no longer there.

A retirement plan should answer more than, “Will we be okay together?” It should also ask:

Will each of us be okay if one day we have to do this alone?

That means understanding survivor income, organizing accounts and estate documents, introducing both spouses to the advisory team, and making the financial life as clear and manageable as possible.

This is not pessimistic planning. It is an act of care.

Taxes Can Change How Much of the Withdrawal Reaches You

The same portfolio value can produce very different spendable income depending on where the money is held and how it is withdrawn.

Distributions from traditional IRAs and 401(k)s are generally taxed as ordinary income. Sales in taxable accounts may create capital gains or losses. Qualified Roth withdrawals may not add to taxable income. Required minimum distributions can increase taxable income even when you do not need the full distribution for spending.

Those income decisions may also affect how much of your Social Security is taxable and whether you pay IRMAA surcharges on Medicare Part B and Part D premiums. The effects can arrive in different years, which is why retirement-income and tax planning strategies should be coordinated year by year.

There may be years when realizing capital gains, harvesting losses, making charitable gifts, or evaluating a Roth conversion deserves attention. A Roth conversion is not automatically the right answer; it may reduce future taxable income, but it also creates taxable income in the year of conversion. Each decision should be considered in the context of the entire retirement plan.

Your legal domicile matters, too. Florida does not impose an individual state income tax, while many other states do. If you divide your time between states or are considering a move, your tax home should be established deliberately. A change of mailing address alone may not settle the question.

Please review the Important Disclosures at the end of this article.

A Retirement Plan Is a Living Decision, Not a One-Time Calculation

The goal is not to create a 30-year forecast and pretend life will follow it precisely.

The goal is to create a path.

That path should help you enjoy the active years while you are in them. It should provide a framework for income, investing, taxes, and major purchases. It should prepare both spouses for the possibility of living alone. And it should be reviewed as markets, tax laws, health, family priorities, and the cost of living change.

Some years will invite more spending. Some may call for restraint. Some decisions will be financial; others will be about time, health, family, and what matters most.

The plan should change because your life will change.

Finding the Right Path Together

At Edwards Asset Management, our CFP® retirement-planning professionals begin with the retirement you want to live—not a generic percentage.

We help you estimate what that life may cost, identify dependable income sources, determine what your portfolio needs to provide, consider how different withdrawal choices may affect taxes, and establish guidelines for adjusting the plan when conditions change.

We also help couples think through the questions that are easy to avoid: What happens if one of us needs care? What if our housing needs change? What income continues for the surviving spouse? Who will understand and oversee the plan when one of us no longer can?

There is no single right retirement for everyone. There is only the retirement that is right for you—and a thoughtful path for adapting it as life unfolds.

Bring us the life you want to live and what it actually costs. Together, we can turn that vision into a plan for today, a range for tomorrow, and a process for making good decisions along the way.

To begin the conversation, request a complimentary consultation about retirement- income planning at our Naples office.

Edwards Asset Management 5811 Pelican Bay Blvd., Suite 600 Naples, Florida 34108 239-264-1000 EdwardsAsset.com