Written by Alex Seleznev, MBA, CFP®, CFA and Alyssa Neece | Nov 12, 2025
You did it.
You successfully navigated the decades-long journey of saving, investing and growing your retirement nest egg.
But as you step into retirement, you face a new and often surprising challenge: the transition from the accumulation to the spending stage of your life.
I can tell you that for many, this is more than just a change in investment strategy.
It’s also an emotional and mental shift.
In this newsletter, I wanted to talk about some of the main differences between these two stages of your life.
The Mental and Emotional Shift
One of my clients, I’ll call her Betty, spent 44 years as a government employee.
She diligently saved and invested since she was 23!
When she finally retired at 67, she was financially ready but emotionally frozen.
Her first year in retirement, Betty barely touched her savings.
Betty worked hard for every dollar in that account and withdrawing it can trigger an intense feeling of “spending the principal” or “eventually running out of money.”
Her daily habit was to check the account balance, watch it grow a tiny bit and feel a momentary rush of relief.
Instead of taking advantage of her “go-go” years by taking a cross-country road trip, which is something she always wanted, she panicked.
This decades-long saver in her saw every withdrawal as a failure.
Finally, she decided to reach out to a financial planner and, among many other things, we talked about the non-financial reasons why she felt so stuck and indecisive.
Spending Strategy
The biggest challenge in the spending stage of your life is making sure your money lasts for a potentially long retirement.
And you want to make sure that your lifestyle is comfortable!
There are several strategies out there to help you with this decision. I will discuss two options in this newsletter.
The most important part is to make sure that you actually have one!
But first, how much income do you need?
A key number to determine is how much money you need over the next 7 years.
This is my preferred approach and represents a “full business cycle” in the U.S.
This is how long it takes for the markets to go from the top to the bottom and then back to the top.
There are more nuances here, but it’s a good starting point.
Start with your income needs for the next year and multiply that by 7.
Then add in any additional funds needed for large travel plans, home or medical expenses or gifts you’d like to make.
This 7-year amount is what you need to hold in liquid and/or easily accessible funds.
These funds are where you will pull your income needs from throughout the year.
Structuring Your Portfolio
The Traditional Approach
This is a simpler approach that focuses on overall asset allocation.
The 7-year figure you calculated earlier will be your fixed income or bond allocation.
The remaining funds go into growth-oriented securities or stocks.
For example, let's say you have $1,000,000.
If you determine you need $300,000 to get you through the next seven years, that would mean 30% of your portfolio is allocated toward fixed income.
So you would maintain a 70% equities / 30% fixed income portfolio.
This allocation would then be periodically rebalanced and adjusted based on market conditions and your personal preferences and circumstances.
Fortress Financial Plan Approach
This income-based approach is our signature strategy at CSF.
The execution of this plan is more involved but, if properly implemented, it can result in a safer withdrawal strategy when compared to the traditional approach.
The idea is to structure your portfolio in a way where most of your expenses are covered by the income it generates.
This lowers your need to access the principal even in down years and gives you extra peace of mind.
As an example, if you need $100,000 per year to maintain your lifestyle, we would want 70% to 80% of your cash needs to be covered by the income generated by your portfolio.
If you’d like to read more about it, check out “Fortress Financial Plan: What It Is and Why You Need One.”
Location, Location, Location
Keep in mind that asset location matters just as much as asset allocation!
Not all retirement money is taxed equally.
Tax-free funds, like in a Roth IRA or Roth 401(k), should be used strategically since these accounts usually represent a relatively small amount of your total portfolio.
These are best used as a safety valve or saved for longer to maximize tax-free growth.
Your taxable or brokerage account are there for flexibility.
You might owe capital gains tax once you liquidate which is often a lower rate than ordinary income.
Your tax-deferred funds in accounts like a Traditional IRA or 401(k), has never been taxed and will be hit with the highest tax which if your ordinary income tax rate.
Determining when to pull from these accounts depends greatly on your circumstances and your other income sources.
So, you need to have a clear plan for how you will actually draw from your accounts!
Other Important Considerations
This newsletter is already somewhat long, but it wouldn’t be complete without at least mentioning the other important considerations that are part of the spending stage of your life.
Taxes will likely be the largest expense in the early years of your retirement. You need to have a plan to keep as much of your hard-earned dollars as possible.
You need to have a plan to cover your long-term care expenses. If your goal is to self-insure, your plan needs to reflect that.
Finally, if you managed to accumulate significant wealth, you need to have a clear plan to preserve and transfer it to the next generation.
I will certainly talk about these important topics in our next newsletters.
What Does This Mean for You?
The accumulation phase was about discipline and growth.
The distribution phase is about strategy and execution.
By replacing anxiety with a structured plan, you can confidently pivot from being a dedicated saver to a joyful spender.
Your money has fulfilled its purpose.
You worked hard your whole life, and you need a plan to enjoy your golden years, worry and stress free!