Turning savings into income: What new retirees are doing

Saving for retirement has never been easier for most workers, but spending those savings wisely is a different challenge. Automatic enrollment and target-date funds have pushed 401(k) balances to record highs. Once the paychecks stop, though, retirees are largely on their own when deciding how to draw down their savings. Vanguard’s second annual How America Retires report, released Oct. 29, 2026, shows that retirees handle that transition in very different ways. Many leave their savings untouched at first, and only a small share cash out entirely.

How much to withdraw each year is just as important as how to withdraw it. Morningstar’s latest research puts the safe starting withdrawal rate for new retirees at 3.9%, just below the traditional 4% guideline. As Medical Economics has reported, even the 4% rule doesn’t guarantee you won’t go broke in retirement, and flexible spending strategies can support higher withdrawals when markets cooperate.

Social Security is the other piece of the income puzzle. Benefits will rise 3.6% in 2027, the largest increase since 2023, and how and when physicians claim can make a significant difference over a long retirement. Medical Economics has covered Social Security benefit strategies for physicians that can help maximize lifetime income.

But your approach to your withdrawals can be the difference between a happy retirement and one full of worry.