One of the questions we hear most often from clients in Beavercreek, Centerville, and across the Miami Valley is some version of: “I have saved all this money — now how do I actually use it?” Accumulating retirement savings and drawing them down efficiently are two completely different skills. Most people spend decades learning the first one without thinking much about the second.
Here is a practical framework for building retirement income in the Dayton area.
The Biggest Risk in Retirement
The most common financial risk retirees face is not a market crash — it is running out of money before running out of time. With life expectancies extending into the mid-to-late 80s, a 65-year-old retiree may need their savings to last 25 to 30 years. A related risk is sequence of returns: a significant market downturn early in retirement can force you to sell assets at depressed prices to cover living expenses, permanently reducing your portfolio in a way that average returns cannot fix.
Your Income Sources in Retirement
Most Dayton-area retirees draw from some combination of Social Security benefits, pension income (especially common among those who worked at Wright-Patterson Air Force Base, Kettering Health, state or local government, or area manufacturers), withdrawals from pre-tax retirement accounts like traditional IRAs and 401(k)s, withdrawals from after-tax accounts like Roth IRAs or taxable brokerage accounts, and in some cases part-time work, rental income, or other passive sources. The mix varies enormously by individual. Someone with a substantial pension and Social Security faces a very different planning challenge than someone relying primarily on a 401(k) balance.
Withdrawal Sequencing: Which Accounts to Tap First
Conventional wisdom says: spend taxable brokerage accounts first, then pre-tax accounts (IRA, 401(k)), then Roth accounts last to let them grow tax-free as long as possible. That rule is a reasonable starting point but frequently wrong for specific situations.
In many cases, the better approach involves drawing partially from pre-tax accounts in years when you are in a low bracket, to avoid larger forced withdrawals later when Required Minimum Distributions begin. If you have a window of lower income in your early retirement years — perhaps before Social Security starts — strategically taking IRA withdrawals at a modest rate can reduce your lifetime tax burden significantly. This connects directly to Roth conversion strategy: the years between retirement and age 73 are often the best window for converting some pre-tax money to Roth at favorable rates.
Required Minimum Distributions
Starting at age 73, the IRS requires you to withdraw a minimum amount from traditional IRAs and most employer retirement accounts each year. The amount is calculated by dividing your prior year-end account balance by a life expectancy factor from IRS tables. For retirees with large pre-tax balances, RMDs can push them into higher tax brackets, trigger Medicare premium surcharges (IRMAA), and cause a portion of Social Security benefits to become taxable. Managing the size of pre-tax accounts during early retirement — through withdrawals and Roth conversions — is one of the most valuable moves available in the years before 73.
Managing Taxes on Withdrawals
Every withdrawal from a traditional IRA or 401(k) is taxed as ordinary income in the year you take it. Investment gains in a taxable brokerage account are taxed as capital gains (long-term rates apply if the investment was held over a year). Qualified Roth distributions are completely tax-free. Coordinating withdrawals strategically across these account types — pulling from each in a way that keeps you within favorable tax brackets — can meaningfully extend how long your money lasts and reduce what you leave to the IRS over a 20- or 30-year retirement.
Ohio State Tax Considerations
Ohio taxes traditional IRA withdrawals and most pension income as ordinary income at the state level. Ohio’s income tax rates have been reduced substantially in recent years. For tax year 2025, the top rate on nonbusiness income above $100,000 was cut to 3.125%, and further reductions have been enacted since (Ohio Department of Taxation). Confirm the rate for your filing year before running any projection. Ohio does not tax Social Security benefits, which is a meaningful advantage. Ohio’s income tax rates are modest by national standards, so for most Dayton-area retirees, federal tax planning dominates. Still, on large pre-tax account balances drawn over many years, even Ohio’s moderate rates add up to a real number.
The 4% Rule — and Its Limits
You have probably heard of the 4% rule: withdraw no more than 4% of your portfolio in the first year of retirement, adjust for inflation annually, and your money is likely to last 30 years. The underlying research is legitimate, but the rule has significant limits. It was developed for a 30-year retirement — if you retire at 60, you may need 35 years of income. It assumes a specific stock-to-bond allocation. It does not account for large one-time expenses like long-term care or a major home repair. And it says nothing about taxes, which reduce your actual spendable income from each withdrawal. Use the 4% rule as a rough sanity check, not a retirement plan.
Building Your Retirement Paycheck
The goal of retirement income planning is to create a reliable, tax-efficient income stream from all your sources combined — something that functions like a paycheck, month after month, for as long as you need it. For most people, that means deciding when to start each income source (especially Social Security), structuring withdrawals to minimize taxes, planning for healthcare costs including Medicare premiums, and having a strategy for large irregular expenses.
Many Dayton-area retirees we work with have done an excellent job saving. The planning work that remains is making sure those savings deliver the income they actually need, for as long as they need it, without paying more in taxes than necessary. If you would like help building a retirement income plan tailored to your situation, contact our Beavercreek team to start the conversation.