Income
Saving for retirement gets most of the attention, but spending it wisely is just as hard. A good withdrawal strategy answers a deceptively simple question: which account do I tap, and when?
Why the order matters so much
Your savings likely sit in accounts that are taxed in very different ways: taxable brokerage, tax-deferred IRAs and 401(k)s, and tax-free Roth accounts. The sequence in which you draw from them changes both your yearly tax bill and how long your money ultimately lasts.
Get the order right and you can keep more of your portfolio working for you; get it wrong and you may hand years of growth to the tax code unnecessarily.
The conventional order, and its limits
A reasonable default is to spend taxable accounts first, then tax-deferred, and leave Roth accounts for last so they can keep growing tax-free. It is a sound starting point — but rarely optimal on its own.
Often you can do better by deliberately filling up lower tax brackets each year with strategic withdrawals or conversions, rather than draining one bucket completely before touching the next.
Building a plan you can live with
A durable strategy blends guaranteed income like Social Security and any pension with thoughtful portfolio withdrawals, keeps a cash buffer for down markets, and stays aware of taxes and IRMAA thresholds along the way.
Just as importantly, it is revisited each year. Your income, tax law, and markets change, and a plan that flexes with them will serve you far better than one set in stone at retirement.
Key takeaways
- The order you withdraw from accounts affects taxes and how long money lasts.
- The taxable-then-tax-deferred-then-Roth default is a start, not the whole answer.
- Blend guaranteed income with flexible, tax-aware withdrawals and revisit yearly.
