Most Retirees Rely On Irregular Savings Withdrawals, per Vanguard

Studies have repeatedly found that many retirees lack plans for decumulation, but a recently published Vanguard research paper demonstrated how most retirees treat their accounts as a reserve fund, rather than a source for steady income.

According to a December 2025 survey of 1,486 mass-affluent Vanguard clients between the ages of 60 and 80 and with between $100,000 and $1 million in retirement savings, only 8% took regular withdrawals from their retirement accounts to cover everyday spending needs. More than half (53%) made irregular withdrawals for specific purposes, and 39% avoided withdrawals until they reached the age when they had to take required minimum distributions under federal law.

Among retirees making sporadic withdrawals, 31% cited debt obligations as the primary driver for drawing funds from their retirement accounts, while 23% cited large unforeseen expenses such as medical bills and home repairs. Only 22% reported making withdrawals for discretionary spending such as vacations, and just 9% reported withdrawing funds primarily for ongoing living expenses.

Of the 567 surveyed retirees who had not withdrawn from their retirement accounts, nearly half (47%) were relying solely on Social Security to cover their overhead costs. About half (52%) of those relying primarily on Social Security said they were maintaining their lifestyle, and 44% said they were either intentionally frugal or doing so to cut spending.

Vanguard also found reliance on RMDs as an unofficial spending strategy, even though RMD rules were designed to trigger federal tax payments. Among 176 survey respondents who planned to take only RMDs from their retirement accounts, 44% showed misunderstanding of the distributions’ purpose. Common misconceptions included 38% who thought they would not need more than minimum distributions, 29% who thought RMDs were government recommendations for safe withdrawals, and 15% who did not realize they could withdraw more than the minimum.

At the same time, many retirees who took RMDs did not spend the money. Roughly six out of 10 respondents said they reinvested some or all of their distributions into taxable accounts, and about three out of 10 reported cutting spending or being intentionally frugal while reinvesting their RMDs.

Vanguard’s report argued that retirees delaying withdrawals can have tax consequences, as it could lead to higher lifetime tax bills than taking more consistent distributions throughout retirement. Using a hypothetical 63-year-old retiree with approximately $360,000 in a traditional 401(k) and receiving about $34,000 in annual Social Security benefits, Vanguard compared the approach of relying on Social Security and RMDs against several “paycheck” options that would disperse the money at regular intervals, mimicking income.

In a scenario of spending only Social Security followed by RMDs, annual spending would average about $48,000 throughout retirement, although spending would remain relatively low until RMDs began, leaving approximately $398,000 in residual wealth.

By comparison, Vanguard’s “real paycheck” approach used systematic withdrawals to generate approximately $17,000 of annual income from retirement savings, creating roughly $51,000 in total annual income. According to the report, the strategy preserved about $204,000 in remaining assets in a typical scenario, while producing lower lifetime taxes than the RMD-focused approach.

A “partial annuity paycheck” approach would provide slightly higher annual income ($52,000), but would reduce remaining assets to $160,000.

Finally, Social Security bridge paychecks, which rely heavily on savings early in retirement to delay Social Security claiming, would provide the highest average annual income ($56,000), but leave the smallest amount of assets remaining ($44,000).

The report concluded that, to avoid defaulting to only withdrawing from retirement accounts to meet RMDs, plan participants “need guidance and support through well-designed choice architecture” to select a decumulation strategy that matches their income needs. Advisers and other financial professionals can help retirees decide if they prefer guaranteed income or greater remaining assets.

“The American retirement system has succeeded in helping workers build wealth,” the report stated in its conclusion. “The next frontier is helping retirees use it.”