Fidelity maps out a retirement paycheck step for steady income

Retirement income planning from Fidelity emphasizes the importance of automating recurring transfers from retirement accounts to a checking account. This step addresses two key issues: unpredictable cash flow and the risk of failing to meet required minimum distributions (RMDs). A 2025 survey found that only 22% of 401(k) participants had thought a lot about how to draw down their retirement accounts.

Fidelity recommends scheduling automatic transfers timed to align with bill due dates to provide predictable income. Nancy Anderson, a wealth planning expert, suggests that having a liquidity bucket and transferring money monthly helps retirees avoid selling during market downturns and stay invested long-term. Custodians like Schwab and Vanguard now offer automated RMD services.

However, starting at age 73, the IRS requires annual distributions from tax-deferred accounts, with a penalty of 25% for missed withdrawals. Fidelity notes that many retirees make no withdrawals in their RMD years, exposing them to significant penalties. The framework also covers expense inventories, withdrawal sequencing, and health costs, which have risen.

Retirees should reassess their plan annually, as tax brackets, account balances, and spending needs change over time.