How to Decumulate Without Regret: Lessons From Helping First-Gen MMs

I still remember working with a client — an engineer who built a $4.2M portfolio through smart investing and 20+ years of disciplined saving.

You’d think someone like that would feel secure in retirement.

But he was stuck.

Despite being financially independent, he wouldn’t let himself spend more than $3,000 a month. He was afraid of “messing up” the nest egg he’d worked so hard to build.

He wasn’t alone.

At The Wealth Elevator, I’ve worked with dozens of first-generation millionaires in their 50s and early 60s who face this exact psychological roadblock. They’re not worried about running out of money — they’re worried about spending it wrong.

Decumulation Is More Than Math — It’s Behavior

Most people spend decades focused on accumulation.

Maxing out 401(k)s. Optimizing taxes. Buying rentals. Living below their means.

But then… what?

When you finally cross that “freedom number,” you enter a new phase of wealth: decumulation. And most investors are completely unprepared.

The Big Framework: The “Retirement Smile”

I always start with the Retirement Smile Curve.

Spending typically follows a 3-phase pattern:

• Early retirement (60s–early 70s): High spending (travel, hobbies, family)

• Mid-retirement (70s–80s): Lower discretionary spending

• Late retirement (80s+): Healthcare and long-term care spike costs again

Insight: You should spend more in your 60s, not less. That’s your peak freedom decade.

How I Help Clients Spend Without Guilt

To help clients feel comfortable spending, we use a few strategies:

1. Bucket Planning

We separate assets into 3 “buckets”:

• Bucket 1: Cash (0–3 years)

• Bucket 2: Intermediate income (bonds, preferred equity)

• Bucket 3: Growth (real estate syndications, equities)

This gives visibility, reduces anxiety, and keeps long-term assets untouched in down years.

2. Dynamic Guardrail Withdrawals

Instead of sticking to a fixed 4%, we flex based on market performance.

In bull markets (like 2024), we take a little more.
In bear years (like 2022), we scale back slightly.

This flexibility can support 4.7%–5.2% withdrawal rates, especially if spending declines over time.

3. Gifting and Legacy Planning

We often encourage clients to write “Giving Goals” — just like income goals.

Giving in your 50s or 60s is more impactful than waiting until your heirs are already financially secure. It’s also more joyful.

What Most Investors Miss

Mistake #1: Waiting Too Long to Enjoy Life
Health is not guaranteed. Spend while you can.

Mistake #2: Not Planning for Sequence Risk
A bad market early in retirement can derail portfolios. Use conservative drawdowns early, then glide up.

Mistake #3: Avoiding Help
Most professionals don’t have a decumulation plan — just a portfolio. That’s not enough.