This is a repost from Forbes.

A reader contacted me this week having just finished How to Retire with Enough Money. He is proud of saving a nice nest egg, gleeful tax rates are low, but worried about the stock market. How should he spend down is money?

So, you’ve done everything right. You saved enough money for retirement – at age 65 that is about eight times the amount you want to live on annually. What can go wrong? Under our do-it-yourself retirement system, many Americans worry about the same things. Many worry about the small things – like how to spend down the money to avoid taxes – when the significant ways to maximize your income are ignored.

Also, you are likely wondering how to make your money last until you die. Money puzzles involving death are complicated and personal. Having your money managed by Vanguard will supply you with a financial advisor. They won’t be independent, but you will be in good funds with low costs.

Or, you can go to a truly independent advisor, but watch for the fees and the advisor’s incentives. I agree with Professor Zvi Bodie of Boston University, an advisor who is a fiduciary; a fiduciary is the only kind of advisor you should have. A fiduciary must disclose how the advisor is compensated along with any related conflicts of interest. You can find an advisor that upholds fiduciary standards at NAPFA, the National Association of Personal Financial Advisors.

Planning how to spend down your retirement funds is easy under our crazy system! All you have to do is know when you and your partner are going to die, what Congress will do with tax rates, and what will happen to the financial markets here and abroad. Sarcasm aside, these general rules of thumb about deaccumulation will help you:

  1. Tax rates are low, so withdraw tax-deferred 401(k)s first. But rebalance your entire portfolio of taxed and tax-deferred assets and don’t forget about your debts.
  2. Delay claiming Social Security. People want to have their money last. We are less likely to be depressed and anxious if we have guaranteed income for life, like from a traditional pension or defined benefit (DB) plan. Those of us without a DB plan still have Social Security and the present value of delaying claims is much higher than you think.
  3. Don’t worry about taxes. I know you are worried about taxes reducing the income coming out of your 401(k) or IRA. Did you know that 13 states do not tax retirement income? My big picture advice is that you can’t game the tax thing very well. You got a big break on taxes when you contributed to your retirement account and you built up assets free of tax. And, as you know, the tax rate was much higher when you were getting the tax break than it is now. Assets spent outside of your tax qualified accounts only are charged the now historically-low capital gains taxes.
  4. Use indexed funds to get a diverse overall portfolio. Instead of worrying about the “IRS monster,” worry about the next economic downturn. Diversify! You may have only stocks in your account. Instead, your account should be rebalanced to about 60 percent stocks, the other 40 in safer assets, and all should be in index funds.
  5. Do your best to smooth out your consumption over your life. The best website I can refer to you are the calculators on Dinkytown. Spend down assets in your 401(k) or taxed accounts so that you can delay claiming Social Security.
  6. Reconsider early retirement. My reader told me he was only 60 and his wife is 50. If you have normal health and longevity, you should plan to live to 90. If you are a young wife, maximize your survival benefits. Consider staying in the workforce longer. I worry about aging women. Older women’s risk of poverty skyrockets after age 80.

Here is the bottom line: ignore the taxes game and the gyrating stock market. Instead, focus on a diversified portfolio, avoiding high management fees, your long life and the very good deal you have in Social Security.