Retirement Income Strategy – What’s the Best Order to Withdraw Assets? Method #3

This last method of spending down different accounts is probably the most popular.  Method #3 I’ll call the Pro-Rata System.  Simply put, you take a proportionate percentage out of each type of account every year. For example, say you have 50% of assets in tax-deferred accounts, 25% in taxable accounts, and 25% in Roth accounts,…

Retirement Income Strategy – What’s the Best Order to Withdraw Assets? Method #2

Last week, we talked about spending down retirement money starting with already-taxed assets, then tax-deferred accounts, and ending with Roth IRAs. This week, we look at spend down Method #2:  Tax-deferred (Traditional IRAs, 401(k)s)  first, taxable (non-retirement) accounts second, Roth IRAs last. Pros: Spreads the taxes owed on tax-deferred accounts out over a longer period…

Retirement Income Strategy – What’s the Best Order to Withdraw Assets? Method #1

A question that I am asked to address in many financial plans for pre-retirees is, “in what order should I take out my assets?”  In other words, does it make sense to tap tax-deferred plans first or last?  When should I start taking Roth money out?  How about my taxable (non-retirement account) investments? First, the…