‘I’m worried about cash flow’: I’m 71 with a $2.7 million IRA and $470K in stocks. Why can’t I relax?

Core Insights - The transition from accumulation to distribution phase in retirement can be psychologically and financially challenging for individuals, leading to concerns about cash flow and spending their savings [1][4]. Financial Planning - Individuals nearing retirement often have significant savings, such as a $2.7 million balance in a traditional IRA, with a diversified investment strategy of 60% equities and 40% bonds [3]. - Required Minimum Distributions (RMDs) begin at age 73, with initial withdrawals projected at $100,000 annually, increasing over time [3][6]. Spending Behavior - Research indicates that many retirees are hesitant to spend their savings, with some not touching a significant portion of their nest eggs due to uncertainty about sustainable withdrawal rates and future expenses [4]. - Spending patterns typically decline in later retirement years, often due to reduced travel and increased healthcare costs [4]. Tax Considerations - RMDs can impact tax brackets and may lead to Medicare surcharges, suggesting the importance of strategic withdrawal timing and potential Roth conversions [7]. Emergency Preparedness - Individuals may not have long-term care insurance but can rely on Medicare and home equity to cover unforeseen medical expenses, alongside liquid assets for emergencies [8].