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…

Saving to spending

Helping Transition Workers From Savers to Spenders

Let’s take a moment of silence to remember the pension.  We dearly miss that well-loved, but ultimately unstainable stream of lifetime income that employers used to supply loyal workers in retirement. Now what?  Employers have punted the responsibility of lifetime income and medical care to their employees.  They feel really good about providing a 401(k)…