I’ve been a CPA since 1981, and the retirement question I hear most isn’t “Do I have enough?” It’s “What will my savings actually pay me every month?”
A 401(k) statement shows a balance, not a paycheck. And the difference between a careful answer and a rough guess is real money: on $500,000, a withdrawal rate just half a percentage point too high or too low is $2,500 a year, or $75,000 over a 30-year retirement.
Draw too much and you risk running short in your 80s. Draw too little and you live smaller than you need to for decades.
Your monthly number comes down to three things: how much you withdraw, how much of it you keep after taxes, and when Social Security starts. Here’s how to work out each one.
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Number 1: Your withdrawal rate
The famous “4% rule” comes from financial planner William Bengen’s 1994 research: withdraw 4% of your savings in year one, then adjust that dollar amount for inflation each year.
Morningstar updates this research annually. Its December 2025 report, The State of Retirement Income, put the highest sustainable starting withdrawal for a 30-year retirement at 3.9% for 2026.
Here’s what 3.9% means in monthly income, before taxes:
- $250,000 saved: about $813 a month
- $500,000 saved: about $1,625 a month
- $750,000 saved: about $2,438 a month
- $1,000,000 saved: about $3,250 a month
Those are starting points, not promises. The right rate for you depends on your age, your mix of stocks and bonds, how long you expect retirement to last, and whether you’re willing to spend less after a bad year in the market.
Retirees who can trim spending in down years can often start higher; those who need a fixed amount every month usually need to start lower.
Your number is personal. A fiduciary advisor can model your actual accounts, your expected retirement length and your spending flexibility, instead of a rule of thumb. If there was ever a time to bring in a set of expert eyes, this is it.
To find one, use this free tool to match you with up to three fiduciary advisors. They can help with tax savings, investment advice, Social Security strategies, and all kinds of planning gaps you’d never see alone.
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Number 2: The tax bite
The $1,625 above, reflecting the monthly income from $500,000, probably isn’t tax-free. Withdrawals from a traditional 401(k) or IRA are taxed as ordinary income. If that money is taxed at 12%, about $195 a month goes to taxes. At 22%, it’s about $358.
Three tax rules shape your real paycheck:
- Social Security can be taxable too. Depending on your combined income, up to 85% of your benefits can be subject to federal income tax.
- Required minimum distributions start at 73. After that, the IRS sets a minimum you must withdraw from traditional accounts each year, whether you need the money or not.
- Order matters. Which accounts you draw from first (taxable, tax-deferred or Roth) changes how much tax you pay over your lifetime. Vanguard’s Advisor’s Alpha research lists withdrawal ordering as one of the ways a good advisor adds value.
A fiduciary can map out a withdrawal order for your accounts: find one free in about 10 minutes.
Number 3: When Social Security starts
Social Security is the floor under your retirement paycheck. The Social Security Administration estimated the average retired worker’s benefit at about $2,071 a month after the 2.8% cost-of-living increase for 2026.
When you claim changes that floor for life. If your full retirement age is 67, claiming at 62 cuts your monthly benefit by about 30%. Waiting past full retirement age adds 8% for each year you delay, up to age 70. For a married couple, the higher earner’s claiming age also sets the survivor benefit.
Put the three numbers together for a single retiree with $500,000 in a traditional IRA and an average benefit: about $1,625 from savings plus $2,071 from Social Security is $3,696 a month before taxes.
Change the withdrawal rate, the tax bracket or the claiming age, and that number moves by hundreds of dollars a month, every month. For life.
What confident retirees have in common
The retirees I’ve seen do best don’t guess. They write down an estimated monthly retirement income before they stop working. They check it against more than one scenario, including a bad market in the first few years.
They revisit it every year. And many of them have a professional double-check the math, someone who is legally required to put their interests first.
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The Bottom Line
On $500,000, the gap between a careful withdrawal plan and a guess can be $75,000 or more over retirement, before you count taxes and Social Security timing. The people who retire with confidence pin down their monthly number before they retire, not after.
The decisions with deadlines, your claiming age and your first required distribution don’t wait.
Know your number before you retire. A free match takes about 10 minutes and connects you with up to three fiduciary advisors, with no obligation, and a free first appointment. Get matched free with fiduciary advisors
This article is general information, not individualized tax, legal or investment advice. Withdrawal-rate research reflects historical and modeled returns and does not guarantee future results.
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