Vanguard Just Revealed How Many Retirees Never Touch Their Savings In The First 5 Years of Retirement

One in four retirees takes no withdrawals from their retirement savings during the first five years after leaving their employer, according to Vanguard's How America Retires research. That's a surprising finding at a time when millions of Americans are trying to figure out how to turn a nest egg into income.

Keeping savings invested might look like an easy way to avoid money mistakes. But going five years without touching the money could also mean retirees aren't enjoying the retirement they worked to fund. Here's what Vanguard's findings could mean for your own withdrawal strategy.

Vanguard found three very different approaches

Vanguard studied 70,000 people age 60 or older over the five years after they left an employer. The research included the bulk of their Vanguard-held assets across 401(k)s, IRAs, and taxable accounts.

Half took withdrawals, although not on a regular schedule. About one-quarter left their savings untouched, while the remaining quarter cashed out entirely within their first year.

Non-withdrawers didn't look much wealthier

It would be easy to assume the retirees who left their money alone were simply better off. However, Vanguard found that non-withdrawers had financial profiles similar to those who took money out.

The two groups had comparable incomes, retirement wealth, investment horizons, and stock allocations. The main difference was age: People who didn't withdraw were two years younger on average, suggesting some may not have felt ready to begin spending.

A working spouse may cover the bills

Not every person who leaves an employer needs to replace a paycheck immediately. Some retirees may have spouses who are still working and covering most household expenses.

In that situation, leaving retirement savings invested could be perfectly reasonable. The household may be able to delay withdrawals, give the portfolio more time to grow, and reserve the money for later years when earned income stops.

Some retirees want to leave an inheritance

Vanguard also noted that some retirees may avoid withdrawals to pass assets to their children or grandchildren. That's a legitimate financial goal, but it doesn't necessarily require leaving the entire account untouched.

A retirement plan could account for both personal spending and a future inheritance. Without running the numbers, retirees may sacrifice experiences or comforts unnecessarily because they're treating every saved dollar as untouchable.

The saving mindset can be hard to switch off

For decades, workers have been told to contribute more, leave the account alone, and keep their eyes on the future. Then retirement arrives, and the instructions suddenly change: Start spending.

That mental shift doesn't come naturally to everyone. Some retirees worry that any withdrawal puts them one step closer to running out of money. Others may simply have no idea what their savings could reasonably provide each month.

Leaving money untouched has pros and cons

Keeping savings invested may help preserve principal, provide a cushion for health care or long-term care, and support future goals. It could be especially useful when other income sources comfortably cover current expenses.

But extreme caution has a cost, too. Retirees who consistently spend far less than their finances support may postpone travel, home improvements, or family experiences until health or mobility makes those plans harder to enjoy.

Irregular withdrawals create a different risk

Doing nothing isn't the only concern. Vanguard found that withdrawal amounts varied widely among retirees who did take money out. Some skipped entire years and then took much larger sums later.

The company cautioned that larger, irregular withdrawals, particularly during market downturns, could weaken a portfolio's long-term sustainability. Selling more investments after prices fall may leave less money invested for a potential recovery.

A "retirement paycheck" may make spending easier

Vanguard suggested that small, consistent withdrawals generally serve retirees better when possible. One practical approach is to create a monthly transfer from a retirement account to a checking account.

That transfer could function like the paycheck that stopped when employment ended. The right amount depends on spending needs, taxes, portfolio size, market conditions, and other income, so it should be personalized instead of copied from a universal rule of thumb.

Build a plan before choosing either extreme

A withdrawal plan should consider Social Security, pensions, part-time earnings, cash reserves, required minimum distributions, taxes, and anticipated expenses. Retirees might also separate essential bills from flexible spending so they know what their portfolio actually needs to provide.

The plan shouldn't be set once and forgotten. Reviewing withdrawals at least annually could help retirees respond to market performance, tax changes, health needs, and shifting priorities without making abrupt decisions.

Bottom line

Vanguard's findings suggest that many retirees struggle to find a comfortable middle ground between preserving every dollar and making large, unpredictable withdrawals. A deliberate spending plan could help retirement savings provide a dependable income without losing sight of long-term needs.

One practical step is to total irregular costs, such as insurance premiums, home repairs, and holiday spending, and divide them into a monthly amount. Building those expenses into the budget could reduce surprise withdrawals and make it easier to save money in retirement.

You May Also Like

Almost 80% of Americans Fear a Retirement Age Increase — Here’s the Real Reason Why

By FinanceBuzz Editors

10 Smart Money Moves to Retire

By FinanceBuzz Editors

The Easiest Way to Diversify Your Investment Portfolio With Fine Art

By FinanceBuzz Editors

7 Brilliant Ways to Build Wealth After 40

By FinanceBuzz Editors

5 Ways Seniors Are Throwing Away Money

By FinanceBuzz Editors

Best High-Yield Savings Accounts of August 2026

By FinanceBuzz Editors

Save Money and Get Huge Discounts on Everyday Purchases

AARP Benefits

• Huge discounts on travel, groceries, prescriptions and more
• Access to financial planning resources and health tools
• Join AARP and get 25% off with automatic renewal

Become a member now!

---

Subscribe Today

Unlock the Best Banking Deals and Bonuses

From high-yield savings accounts to cashback checking and sign-up bonuses, we bring you the best banking offers to grow your money smarter.

or

SEE TOP BANKING OFFERS →

By submitting this form you agree to receive emails from FinanceBuzz and to the privacy policy and terms

Author Details

Kristin Hitchcock

Kristin Hitchcock has contributed nearly 200 articles to FinanceBuzz with a specialized focus on retirement planning and the decisions that define long-term financial security. Her writing helps readers benchmark their 401(k) and net worth by age, develop top-notch Social Security strategies, and make smarter everyday money decisions.