However, only about one-quarter of respondents reported using a systematic approach, drawing down their savings based on a fixed annual percentage. Nearly half (49%) of retirees forego a formal withdrawal strategy, opting to take what they need as they go: 22% draw down their savings using a systematic process based on a fixed annual percentage, while 17% spend only dividends and interest. Over half (53%) adjust their withdrawal strategies based only on changes in their personal lives or don’t make any adjustments at all.
 

“This approach runs counter to a process that emphasizes sustainable withdrawal rates, spreading savings out over the long term to extend them throughout retirement,” said Peter J. de Silva, CEO of IRAlogix. “It points to a more instinctive, in-the-moment decision-making style, which could have significant long-term financial consequences. Optimally, retirees should have a more balanced approach, one that allows for some leeway but also safeguards long-term financial security by placing limitations around monthly savings withdrawals.”
 
This lack of a decumulation strategy is not surprising considering that 46% say their 401(k) provider offered minimal or no resources on decumulation strategies as they approached retirement.

"The findings show that while flexibility is valuable, there’s a clear need for guidance to help retirees navigate the complexities of decumulation," said de Silva. "For many, the challenge isn’t just about deciding how much to withdraw, but also understanding the impact of taxes, health care costs, inflation, and unanticipated expenses on retirement savings. By making informed choices, retirees can feel more secure in managing both the expected and unexpected in retirement.”

While the 4% rule has been the accepted starting retirement withdrawal rate, the survey found that 28% of retirees withdraw less than 3% annually to support their lifestyle, 13% withdraw 4-5% and 11% tap 5-6%.

For example, 44% of retirees say inflation has minimal to no impact on their savings withdrawals – 31% note that inflation has some impact, but they haven’t made any major adjustments. 24% say inflation has a significant impact on their withdrawal strategies and they make adjustments based on it. Also, 39% say health care costs don’t play a significant role in their withdrawal strategies.

Related: Ditch the 4% rule: 37% is the new magic number for retirement withdrawals, says Morningstar

While the 4% rule has been the accepted starting retirement withdrawal rate, the survey found that 28% of retirees withdraw less than 3% annually to support their lifestyle, 13% withdraw 4-5% and 11% tap 5-6%.

“A strong decumulation strategy should consider the following six factors,” according to de Silva:

• Setting retirement lifestyle goals;
• Considering what you want to accomplish in retirement;
• Estimating current health care and possible long-term care needs;
• Estimating taxes;
• Settling on a risk tolerance level; and
• Having an estate plan where the remaining assets should go when you pass.

• Clear communication of employee benefits
• Regular distribution of balance and future projections through statements and digital properties
• Education on retirement planning and income
• Access to retirement planning tools and resources