How Does Your Contribution Compare to Other Retirees?

You’ve spent decades building your retirement savings. Now comes the part where you make it last. In your 70s, the questions change. It’s no longer about how much you can save—it’s about how much you can safely spend without running out of money.

The average American in their 70s has $250,000 saved, but half have less than $107,000. Whether you’re above or below that line, the real question is the same: Is it enough? The answer depends on more than just your account balance. It’s about coordinating what you’ve saved with Social Security, managing RMDs, and timing everything so your money outlasts you—not the other way around.

How Big Should My Nest Egg Be Now?

There’s no single “right” number for your nest egg. The right number is whatever leaves you with enough total resources—savings plus Social Security plus any pensions or other income and assets—to fund your lifestyle. A retiree with a paid-off home, $200,000 saved, and full Social Security benefits, may be in better shape than a renter with $500,000 and less from Social Security.

The average 401(k) balance among Americans in their 70s is $250,000 but the median is $106,654. That means half of retirees in their 70s have saved less than $107,000. For someone with the median balance following the classic 4% rule, that would mean safely withdrawing only about $4,280 per year.

Compare that to the average 70-year-old Social Security recipient’s annual benefit: $26,120.

How Much Should You Withdraw from Retirement Savings?

Your focus should be on creating an income stream that lasts. And many experts suggest that your assets and income in retirement should replace 75% to 85% of your after-tax working income.

The classic “4% rule” for safe withdrawal rates is still widely used, but its creator, Bill Bengen, has since revised it to 4.7% (with annual inflation adjustments). Following this rule, someone with a $500,000 portfolio would start with $23,500 in the first year.

Prefer flexibility? The “guardrails” strategy adjusts withdrawals up or down based on market performance and supports higher starting rates (closer to about 5%) for many portfolios, while dialing back in down years to protect longevity.

But remember, traditional IRAs and 401(k)s are tax-deferred accounts, not tax-exempt (like Roth IRAs). That means you’ll still have to pay income tax on what you take out (including mandatory RMDs), but the presumption is that your tax rate will be lower in your retirement than in your working years.

Tax-Smart Withdrawal Sequencing

How you withdraw from your accounts is almost as important as how much. Fidelity has found that withdrawing proportionally from taxable, tax-deferred, and Roth accounts (rather than emptying one “bucket” first) can smooth taxes and potentially extend portfolio life.

A common strategy is to first “fill up your tax bracket” with traditional IRA/401(k) withdrawals, then meet any remaining income needs from taxable and Roth accounts. Drawing from Roth dollars (when qualified) avoids increasing adjusted gross income (AGI)—and may help you keep more of your Social Security untaxed.

Social Security taxation: up to 85% of Social Security benefits can be taxable based on “provisional income” (AGI plus tax-exempt interest plus half of Social Security). Coordinating IRA withdrawals according to this formula can help reduce the portion of your benefit that is subject to tax.

If you built up Roth accounts while working, they serve as your pressure valve. When you have unexpected expenses—major home repair, medical bills—pull from Roth rather than increasing your AGI and potentially your Social Security income taxation.

Working in Your 70s Changes Things

If you’re still working, it changes your withdrawal strategy. If you’re in your current employer’s 401(k), you can delay RMDs from that account until the year you retire. You must still take RMDs from IRAs and prior employers’ plans.

Working also changes your overall tax picture. Earned income plus RMDs plus Social Security can push you into higher brackets. But if you’re still working, you can continue making 401(k) or IRA contributions, using those contributions to offset some of your taxable income. An employer match, if offered, is essentially free money, even in your 70s.