How Do I Turn My Savings Into a Paycheck?

Love this one — from someone a couple of years out: "I spent my whole career saving. Now that it's almost here… how do I actually turn that nest egg into a steady paycheck?"

Great question — because saving and spending it down are two completely different skills.

So let's get practical. Here's the actual machinery.

Quick mindset shift first. Your whole career, you were filling the bucket. Retirement flips it — now you're building a paycheck out of that bucket that has to last twenty, thirty years.

Good news: it's not guesswork. It's a process. Four moves.

Move one — build your income floor.

These are the dependable, show-up-every-month sources. Social Security. A pension, if you've got one. And for some people, an annuity — which, used right, can turn a slice of your savings into income for life.

Just know that those annuity payments are only as strong as the insurance company behind them — so the quality of the issuer matters.

Stack those together, and that's your floor: the baseline income you can count on, no matter what the market's doing.

Move two — find the gap.

Add up what your life actually costs each month. Subtract your floor. Whatever's left over — that's the gap. That's the number your savings have to cover.

Most people have never done this subtraction… and it's the whole ballgame.

Move three — fill that gap from your portfolio, in a tax-smart order.

As a general rule, you spend from your taxable accounts first — your regular brokerage and savings. Then your tax-deferred accounts — your traditional 401(k) and IRA. And you save your Roth for last.

Why that order? It lets your tax-advantaged money keep compounding longer, and your Roth grow tax-free as long as possible — often the best dollars to leave to your family.

Now — that's the textbook order, not a personalized one. The right sequence for you can shift with your tax bracket and your required distributions, so it's worth mapping out.

And move four — make it sustainable.

You draw from that portfolio at a pace designed to last decades, with a built-in raise each year to keep up with inflation.

Pair it with a cash buffer — around six months of expenses — so in a down year, you spend from cash instead of selling investments at the worst time.

That exact withdrawal pace? It depends on you — your timeline, your mix, your spending. That's a number we dial in together, not a one-size-fits-all.

So that's the machinery: build your floor, find the gap, fill it tax-smart, and make it last.

No magic number — a paycheck engineered around your life.

And that's exactly what a real plan is for.

Got a retirement question? Drop it in the comments — that's what Ask Jose is all about.