---
name: retirement_decumulation
description: Plan how to spend down retirement savings: withdrawal sequencing across taxable, traditional, and Roth accounts, tax coordination, Roth conversions in low-income gap years, RMD calculations, dynamic spending rules (guardrails, ratcheting), and cash buffer design. Use when someone retires, plans retirement income, asks about RMDs, Roth conversions, safe withdrawal rates, or how to draw down a portfolio without running dry or overpaying taxes.
---

# Retirement Decumulation

## Purpose
Turn a retirement portfolio into durable income: draw accounts in the right
order, keep lifetime taxes low, respect RMD law, and flex spending with markets
so the money lasts.

## Workflow

1. **Inventory.** List every account by tax type (taxable, traditional
   tax-deferred, Roth, HSA) plus balances, ages, pension/Social Security
   timing, annual spending need, filing status, and state.
2. **Map the gap years.** Identify years with low taxable income before RMDs
   and benefits start. This is the window for Roth conversions.
3. **Set the account order.** Default: RMDs first (mandatory), then cash,
   taxable, traditional, Roth last. See
   `references/withdrawal-playbook.md` for the reasoning and when to use
   proportional withdrawals instead.
4. **Size any Roth conversion.** Use `bin/rmd.py convert` to find headroom
   inside a chosen bracket. Never guess bracket boundaries.
5. **Size RMDs.** Use `bin/rmd.py rmd --age <age> --balance <prior-Dec-31-balance>`.
   Then plan around the result: reinvest, spend, or route through QCDs.
6. **Choose a spending rule.** Pick one dynamic rule the retiree will actually
   follow (guardrails, ratcheting, or a floor/ceiling). Document the trigger
   conditions in writing.
7. **Size the buffer.** Hold 1-3 years of essential spending in cash or
   short-term instruments; spend from it in down years, refill in up years.
8. **Run the yearly checklist** in `references/withdrawal-playbook.md` each
   review: RMDs, income layers, IRMAA check, guardrail check, QCD plans,
   Dec 31 deadlines.

## Worked example

A married couple, both 64, filing jointly. $1.2M traditional IRA, $400k
taxable brokerage, $100k Roth, spending $90k/yr, delaying Social Security to
70, no pension.

- 2026 bracket top of 12% (MFJ): $100,800 taxable income. Standard deduction:
  $32,200. Say dividends and interest total $20k.
- Roth conversion room inside the 12% bracket:
  $100,800 + $32,200 - $20,000 = ~$113,000 per gap year.
- They convert ~$110k/yr at ages 64-72, filling the 12% bracket, shrinking
  the traditional balance that will drive RMDs at 73.
- Spending comes from taxable first, then the cash buffer in down years.
- At 73: RMD on whatever remains in the traditional account, e.g. a
  $700k balance / 26.5 = ~$26,400. Guardrails govern spending from there.

Verify with `bin/rmd.py`:
```
bin/rmd.py rmd --age 73 --balance 700000
bin/rmd.py convert --filing-status mfj --gross-ordinary-income 20000 --target-bracket 12
```

## Output Contract
- The account order chosen, with a sentence of reasoning per account.
- Conversion amounts with bracket math shown (headroom number, target bracket).
- RMD figures with the divisor cited.
- The dynamic spending rule in plain words, with triggers.
- Buffer size in dollars and months of essentials.
- A short list of what must happen before Dec 31.

## Operating Rules
1. Every figure (bracket, divisor, deduction, penalty) must be verified for
   the actual tax year in question. 2026 figures are embedded; other years
   need fresh IRS numbers. Unverifiable = cut it or say so.
2. This is planning math, not tax advice. Say that out loud before the
   numbers, every time.
3. Never present a bracket boundary or RMD divisor from memory. Use the tool
   or cite IRS Publication 590-B.
4. No em dashes, no marketing-speak, no filler. Plain sentences a person can
   act on.
5. The retiree must agree to the spending rule's cuts before you recommend a
   guardrail plan. A rule nobody follows is decoration.