Planning Retirement Withdrawals for Couples with Unequal Savings

Overview

Couples often reach retirement with very different account balances. Unequal savings can come from career breaks, differing incomes, student loans, caregiving, or simply different saving habits. The goal of planning retirement withdrawals for couples with unequal savings is to create a coordinated plan that covers necessary expenses, manages taxes, addresses longevity risk, and treats both partners’ needs fairly.

In my 15 years advising households, I’ve found that a clear, step-by-step framework — not a one-size-fits-all rule — produces better outcomes. Below I explain practical strategies, trade-offs, and examples you can use to start a conversation with your partner or financial planner.

Why unequal savings matter

• Household exposure: Unequal balances change how sequence-of-returns risk and taxes affect the household as a whole.
• Social Security and pensions: These guaranteed income sources may partially offset unequal account balances.
• Survivor financial security: The partner with smaller savings is generally more vulnerable if the higher-asset partner dies first.

Federal guidance and planning rules to watch: required minimum distributions (RMDs) generally begin at age 73 for most retirement plans as of SECURE Act 2.0 (see IRS.gov for RMD rules), and Social Security claiming rules and spousal benefits materially change lifetime income outcomes (see SSA.gov). For tax tools and consumer guidance, the Consumer Financial Protection Bureau offers resources on retirement income decisions (https://www.consumerfinance.gov).

Core principles for couples with unequal savings

1. Treat the household as the planning unit. Evaluate combined cash flows, taxes, and guaranteed income first, then allocate withdrawals between accounts. This prevents over-withdrawing from one spouse’s account while leaving the household exposed.

2. Sequence withdrawals tax‑sensitively. Typical order: taxable accounts → tax-deferred accounts (traditional IRAs/401(k)s) → tax-free accounts (Roth IRAs). But this order should change when: a) a spouse needs to manage tax brackets; b) RMDs begin; or c) you want to enable a Roth conversion strategy. Consult IRS guidance on distributions and QCDs when needed (irs.gov).

3. Protect the more vulnerable partner. Consider survivor needs: joint life expectancy, health status, and Social Security survivor benefits when choosing who funds early-year withdrawals.

4. Use guaranteed income intentionally. Delaying Social Security for the higher earner or buying a partial annuity can stabilize household cash flow and reduce pressure on drawn-down accounts. See our piece on Social Security optimization for timing strategies: “Maximizing Social Security Benefits” (https://finhelp.io/glossary/maximizing-social-security-benefits/).

5. Manage sequence‑of‑returns risk. When markets fall near retirement, redraw withdrawals to rely more on guaranteed income or cash reserves rather than selling equities at a loss. See our resource on sequence-of-returns risk.

6. Revisit annually. Life, markets, and rules change. Re-evaluate withdrawal rates and tax plans at least once a year.

Practical withdrawal strategies

Below are several practical approaches. Pick the one that matches your household priorities: equality of outcome, preservation of one spouse’s legacy, tax efficiency, or simplicity.

A. Proportional withdrawals (household smoothing)

• How it works: Each year the couple withdraws a fixed percentage of the combined portfolio and spends it from a joint account. Each spouse’s accounts contribute proportionally to their balances.
• Pros: Simple, fair in proportion to assets, reduces intra-household friction.
• Cons: May leave a lower-saved spouse with less lifetime income relative to need.

B. Needs-based withdrawal split

• How it works: Start with household budget and guaranteed income (Social Security, pensions). Any gap is filled first from taxable accounts and then from the partner with higher balances if needed.
• Pros: Prioritizes living standards and one partner’s shortfall. Protects the partner with lower savings.
• Cons: Requires trust and ongoing communication.

C. Bridging and staging (timing advantage)

• How it works: If one partner retires earlier or has a larger balance, use that partner’s accounts to ‘bridge’ the early-retirement years while the lower-balance partner’s assets continue to grow tax-deferred.
• Example: Jane has $800k, John has $400k. Jane takes slightly higher withdrawals early; John’s account remains invested longer to benefit from compounding. This is a common practical fix (illustrated in the user example above).

D. Tax-aware sequencing with Roth conversions

• How it works: Convert some traditional account assets to Roth during low-income years to reduce future RMDs and tax drag. Use the spouse with the lighter tax profile to absorb conversions first.
• Pros: Lowers future taxable RMDs and may increase flexibility.
• Cons: Requires tax capacity today and careful simulation.

E. Partial annuitization

• How it works: Purchase an immediate or deferred single-premium annuity for a portion of savings to cover core expenses (housing, health, minimum leisure budget). Keep other funds invested for discretionary spending.
• Pros: Reduces longevity risk and provides peace of mind.
• Cons: Irreversible trade-offs and potential loss of liquidity; shop for fees and credit quality.

Social Security coordination

Choosing when to claim Social Security can materially change household income. For unequal savers, consider:

• Having the lower-earning spouse claim early to cover near-term needs while the higher earner delays to maximize survivor benefit.
• Calculating survivor benefit outcomes: delaying the primary earner increases the surviving spouse’s lifetime benefit.
  For tactical guidance, see our Social Security coordination guide: “How to Coordinate Social Security and Retirement Account Withdrawals” (https://finhelp.io/glossary/how-to-coordinate-social-security-and-retirement-account-withdrawals/).

Tax and rules to watch (authoritative sources)

• RMDs: The SECURE 2.0 Act changed RMD timing; as of 2023 RMDs generally begin at age 73 for many taxpayers — check current IRS guidance for your situation (https://www.irs.gov/retirement-plans/required-minimum-distributions-rmds).
• Social Security: Claiming rules, spousal benefits, and survivor protections are detailed at SSA.gov (https://www.ssa.gov).
• QCDs and charitable giving: Qualified charitable distributions (QCDs) from IRAs remain a tax-aware option for those who are eligible; consult IRS guidance before executing (https://www.irs.gov).
• Consumer protections and retirement decisions: The Consumer Financial Protection Bureau provides consumer-oriented material about retirement decisions and distributions (https://www.consumerfinance.gov).

Example plan (illustrative only)

Couple: ages 65 and 63. Assets: Spouse A $800k (mostly traditional), Spouse B $300k (mix of Roth and taxable). Guaranteed income: Social Security combined $30k/year starting at 66.

Step 1: Build a baseline spending plan so guaranteed income covers essential expenses.
Step 2: Create a 5-year bridge reserve (cash or short-term bonds) equal to near-term withdrawals to avoid selling equities during a downturn.
Step 3: Use Spouse A’s larger traditional account for most early withdrawals while Spouse B’s assets stay invested; at the same time evaluate Roth conversions for Spouse B in low-income years.
Step 4: Reassess at age 73 when RMDs begin — shift withdrawal sequencing to account for RMD tax effects.

This preserves household stability, gives time for the smaller account to compound, and aligns taxes over both lifetimes.

Common mistakes to avoid

• Treating accounts as ‘mine’ vs ‘yours’ rather than household resources.
• Ignoring taxes and RMD timing — small differences in timing can increase lifetime taxes.
• Failing to model survivor scenarios. If one spouse has much lower savings, plan for how the survivor maintains expenses.
• Blindly following a fixed rule like the 4% rule without testing against individual cash flow and market scenarios. See our explainer: “The 4% Rule of Retirement Withdrawal” (https://finhelp.io/glossary/the-4-rule-of-retirement-withdrawal/).

How to start (action checklist)

1. Document all accounts, balances, pension rules, and projected Social Security benefits.
2. Build a realistic retirement budget: essentials vs discretionary.
3. Model combined withdrawals and tax projections for the first 10–15 years.
4. Consider a Roth conversion plan and QCDs where appropriate.
5. Establish a cash buffer (3–7 years of essential spending) to reduce sequence-of-returns risk.
6. Review beneficiary designations, spousal consent rules for IRAs/401(k)s, and estate documents.
7. Revisit your plan annually and after major life events.

When to get professional help

If your portfolio mix, tax situation, or health/longevity outlook is complex, consult a fee‑only certified financial planner or tax advisor who can run Monte Carlo or deterministic cash‑flow models and provide a written plan. In my practice, couples benefit most from scenario modeling that tests market downturns and longevity shocks.

Limitations and professional disclaimer

This article is educational and not personalized financial or tax advice. Rules and tax laws change; verify current RMD ages, Social Security rules, and tax rates with the IRS, SSA, or a qualified tax advisor before taking action (https://www.irs.gov, https://www.ssa.gov, https://www.consumerfinance.gov).

Further reading and internal resources

• The 4% Rule of Retirement Withdrawal: https://finhelp.io/glossary/the-4-rule-of-retirement-withdrawal/
• How to Coordinate Social Security and Retirement Account Withdrawals: https://finhelp.io/glossary/how-to-coordinate-social-security-and-retirement-account-withdrawals/
• Required Minimum Distribution (RMD): https://finhelp.io/glossary/required-minimum-distribution-rmd/

Author note: I’ve helped dozens of couples with unequal savings reframe the conversation from blame to planning. The most successful households combine transparent budgeting, tax-aware sequencing, and periodic plan updates to maintain both partners’ financial security.