One thing that surprised me is that annual spending can fluctuate so much in retirement. When we first retired, we spent most of our annual income. Travel and home improvement projects took bug chunks. But in recent years, we are finding that our spending has dropped significantly and we wind up saving 10 to 15% of our after tax income in CD's. We don't travel as much, we have the house fixed the way we want it, we don't go out to eat as often, and aging pets tend to keep us home. I strongly suspect that our pattern of spending could change that in a heartbeat if one of us got seriously ill, so staying on safe side brings me a level of comfort. In this day and age, I feel safer putting these funds into CD instead of stocks and bonds, but at some point ultra low returns may change that.
When I do my taxes (Turbo Tax), the IRS always asks what we did with our IRA/401K withdrawals. I always check that we spent it since they have the idea that we should all be flat broke when we leave the planet. I find this to be a bit invasive and reason that yes we did spend the MRD, …. but we saved some Social Security.