How Tolleson Wealth Management explains how much you can withdraw in retirement

What monthly paycheck does $1M give me at 4 percent?

A $1M portfolio produces a $40K first-year withdrawal at 4 percent, or about $3,333 monthly before tax, and that is a starting draw rather than a permanent paycheck. The math is simple: $1M × 4 percent = $40K annually; $40K ÷ 12 = $3,333 monthly. After year one, spending may rise with inflation or move within a pre-agreed band.

Four percent came from studies of historical 30-year retirements. It is not a promised investment return, and it does not say that your account will earn 4 percent each year. During a bad market stretch, an account can drop below the amount you invested, so the paycheck has to respond.

For someone still 10 to 15 years away, the starting balance is only part of the picture. A $600K balance at 55, assuming 5 percent a year for illustration and no new deposits, grows to about $977K at 65: $600K × 1.05^10, or about $600K × 1.63. The IRS limit for 2026 allows $24,500 in 401(k) employee deferrals plus an $8,000 catch-up at 50+, for $32,500 total; ages 60 through 63 can use an $11,250 higher catch-up. Those catch-up years can close a gap faster than trying to squeeze a higher draw from the same account.

About five years before retirement, the question becomes specific enough to build around your Social Security estimate and a real spending total. Before then, treat $3,333 as a direction, not a monthly commitment.

Should I take a fixed amount, a set percentage or a guardrail band?

A fixed dollar payment feels steadiest, a fixed percentage prevents an account from being fully spent but makes income swing, and a guardrail band adjusts pay in smaller steps when a withdrawal rate crosses set bounds. Tolleson Wealth Management favors the band because a planned 10 percent trim is usually easier to live with than a sudden 20 percent pay cut after a 20 percent market decline.

A fixed amount carries the greatest chance of running short if poor markets arrive in the first few retirement years. A set percentage avoids that problem, but a $40K payment becomes $32K after a 20 percent decline. Under a band, the payment stays put until the account or withdrawal rate reaches a limit, then changes by about 10 percent. The guardrails withdrawal strategy article explains the mechanics in more detail.

How much do Social Security, taxes and Medicare add or take away?

A $3,333 monthly draw plus a hypothetical $2,500 Social Security payment leaves about $4,930 monthly after an illustrative 12 percent blended tax rate and one Medicare Part B premium. Social Security adds more to this example than tax and Part B take away, but the payment from savings is still a gross number, not money available for groceries or travel.

The table assumes a $1M balance, a 4 percent first-year draw, and a 12 percent blended federal and state tax rate. Use the effective rate on your last Form 1040 as a starting point, then adjust it with a tax professional if retirement changes your income. Traditional 401(k) and IRA withdrawals are ordinary income, and part of Social Security can be taxable. The 2026 Medicare Part B standard premium is $202.90 monthly per person and is often deducted from the Social Security payment; higher income can raise it. Medicare IRMAA planning covers that separate surcharge.

For illustration, Glenn, 66, and Monique, 64, have no pension and own a paid-off home. Their $1.4M sits across two 401(k)s, an IRA and a brokerage account. They want about $7,500 monthly and initially decide to pull all of it from savings: $7,500 × 12 = $90K annually. Then $90K ÷ $1.4M = 6.4 percent, a demanding draw for a household in its mid-60s.

Once they include assumed combined Social Security of $4,200 monthly after both claim, their desired $7,500 spending amount leaves a $3,300 monthly take-home gap. At about 15 percent tax, they gross that up: $3,300 ÷ 0.85 = about $3,900 monthly. That is $3,900 × 12 = $46,800 annually; $46,800 ÷ $1.4M = 3.3 percent, roughly half the 6.4 percent they started with.

Tolleson Wealth Management would gross up the client’s take-home need before naming a monthly number, then put the raise and trim points in the client’s playbook. In Glenn and Monique’s case, a trim starts if the balance falls below $1.17M, because $46,800 ÷ 4 percent = $1.17M. The next payment drops 10 percent, about $390 monthly, before the gap grows larger.

Which timing slips make my monthly number wrong?

Setting the monthly withdrawal before working out tax gets the steps out of order. A couple pulling $7,500 from a traditional IRA at about 15 percent tax has roughly $6,375 to spend, leaving them $1,125 short each month and $13,500 short annually.

Asking for a 401(k) payment sent to you can create another surprise. Eligible rollover distributions generally have mandatory 20 percent federal withholding, so a $10K request arrives as $8K. IRA withdrawals generally default to 10 percent withholding, which you can change or waive. Retiring before 59½ adds a further timing issue: a $30K withdrawal generally brings an extra $3K in additional federal tax unless an exception applies.

Waiting until required minimum distributions begin can also crowd more taxable income into later years. The IRS says RMDs begin at 73, or 75 for people born in 1960 or later; the required minimum distributions and Roth conversion strategy pages explain why earlier withdrawals sometimes deserve a closer look.

In what order do I set the number, and what paperwork do I pull?

Start with twelve months of actual spending, subtract dependable income, then gross up the remaining gap for tax before choosing a withdrawal rate. Tolleson Wealth Management uses that order because the account balance alone cannot tell you what a monthly payment will support.

1. Download twelve months of checking and credit card activity, and sort must-pay bills apart from flexible spending. 2. Pull your Social Security estimate from your my Social Security account at ssa.gov and any pension benefit letter. 3. Take those dependable monthly payments off your spending total; what remains is the amount savings has to cover.

4. Gross up that gap using the effective rate on your last Form 1040. 5. Divide the annual gross gap by your total balances shown on the 401(k) plan website and IRA and brokerage custodian statements. 6. Set the band, the monthly payment date and withholding with the custodian.

The paperwork can be gathered in an afternoon: downloadable bank statements, the plan website, custodian logins, ssa.gov and your tax return. Quick test: divide the annual draw from savings by the total balance. Above 5 percent in your mid-60s, expect trims early and recheck spending. Under 4 percent, a guardrail band usually leaves room for a raise when markets cooperate.

The 4 percent starting point may be too high for someone retiring in their 50s or carrying large fixed costs. It also does not decide which account pays first; the withdrawal-order page addresses that separate choice.

Who usually raises the spending number at home?

The spouse who pays the bills often raises the spending number two or three months after the last paycheck, when the savings balance starts shrinking on a statement. Put two columns on the kitchen table, must-pay and flexible, then agree what gets trimmed first if the band trips. Travel might wait; groceries should not. Tolleson Wealth Management sees this conversation work better when the couple chooses the cut before a market drop makes it urgent.

Which question do I bring to Tolleson Wealth Management?

Ask Tolleson Wealth Management, “If our savings dropped 20 percent next year, what would our monthly paycheck become, and which line of our budget would we trim first?” Bring your 12-month spending total and Social Security estimate so the answer uses your numbers, not a market rule.

Tolleson Wealth Management serves people nationwide, often through screen-share calls or by phone, and has a $500K investable-assets minimum. You receive a written explanation of how the firm is paid before any money is transferred.