A couple, both 65 and recently retired, has saved $1.3 million across retirement and taxable accounts. They expect about $6,000 a month in steady retirement income from Social Security and a small pension. Their mortgage is paid off, and they carry no consumer debt.
Monthly expenses are covered without aggressive assumptions, and the portfolio is not being asked to do anything extraordinary. They are not counting on unusually high returns or drawing down assets at an unsustainable pace.
Yet, their plan does not feel settled. The reason is a decision they have not finalized—when to claim Social Security.
Claiming now would reduce the amount they need to withdraw from their portfolio in the early years. Delaying would increase lifetime benefits, but only if they are willing to rely more heavily on investments at the outset. The choice determines how exposed the plan is during the first few years, when market conditions can matter more than long-term averages.
That tradeoff is difficult to price intuitively. It is also one of the most consequential decisions retirees face, because it changes the structure of income, withdrawals, and risk at the exact point when portfolios are most vulnerable.
If benefits are delayed, more spending must be covered by withdrawals in the early years. In a volatile market, it can materially change outcomes. Withdrawals taken during downturns reduce the number of shares left to recover when markets rebound, which can permanently impair a plan even if long-term average returns look reasonable.
This is the mechanics of sequence risk. It is about poor timing at the beginning, when withdrawals are highest and the portfolio has the least room to absorb losses. Two retirees with the same assets and the same average returns can end up with very different outcomes depending on what happens in the first few years.
That is why this decision feels unsettled even when the numbers appear solid. The risk is not obvious on a spreadsheet, but it shows up over time.
The key distinction is between expenses that must be paid regardless of market conditions and expenses that can be adjusted if necessary. Housing, insurance, utilities, healthcare, and basic living costs form the spending floor. Travel, entertainment, and discretionary purchases sit above it.
A household with a high spending floor is more exposed to early withdrawals, even with a sizable portfolio. A household with flexibility can delay benefits or absorb volatility without locking in losses. The difference is not the portfolio size. It is how much of the monthly budget is non-negotiable.
Seeing that clearly often changes the conversation. Consolidating retirement accounts, taxable savings, and monthly cash flow can make it easier to separate fixed obligations from discretionary spending, which is why some retirees use SoFi to view IRAs, rollovers, and cash flow together in one place before committing to a withdrawal or claiming strategy.
This is not a question that can be answered with rules of thumb. The interaction between Social Security timing, portfolio withdrawals, taxes, and market conditions is complex, particularly over a multi-decade retirement. Small changes in assumptions can have outsized effects, especially early on.
A fiduciary financial advisor can model how different scenarios play out, including market downturns early in retirement, higher healthcare costs, or inflation that forces larger withdrawals than planned. These stress tests show whether it holds up under pressure. If you want to evaluate those scenarios rather than guess, you can use SmartAsset to get matched with a financial advisor and model the tradeoffs for free.
Even when a plan passes stress tests, the early years can still feel like the weakest point. That is where some retirees look for ways to reduce reliance on portfolio withdrawals without fundamentally changing their investment strategy.
One approach is to add income sources that are not directly tied to daily market movements, so the portfolio is not the sole source of cash flow during downturns. This is about reducing forced selling at inopportune times.
That is where options like Arrived can play a role for some households, who offer income-oriented diversification without requiring large capital commitments by providing access to fractional real estate investments with minimums starting as low as $100.
With $1.3 million saved and $6,000 a month in retirement income, the issue is whether the structure of income and withdrawals leaves the plan exposed when it matters most.
When one decision shifts more pressure onto the portfolio early, retirement stops being an average-return problem and becomes a timing problem. That is why confidence often comes not from hitting a number, but from understanding how the plan behaves under stress.
The right next step is not another rule of thumb. It is a clear view of spending, a realistic stress test, and a decision based on resilience rather than comfort.