$
Crunching numbers...
Crunching numbers...
Loading life stage...
WHICH account you withdraw from first can save $100K-$200K in lifetime taxes. The wrong order costs you a fortune.
You have taxable, tax-deferred, and tax-free accounts. Drawing from them in the wrong order pushes you into higher brackets and triggers Medicare surcharges.
$100-200K
Optimal vs. Naive Drawdown
Lifetime tax savings
+5-10%
Wrong Order Impact
Higher effective tax rate
3-5
Accounts to Coordinate
Different tax treatments
Typical Retiree Account Mix
Taxable Accounts First
Capital gains rate (0-20%) is lower than income tax. Spend these while building Roth.
Tax-Deferred (Traditional IRA/401k)
Once RMDs start, take only required amount. Do Roth conversions in low-income years.
Roth IRA Last
Tax-free growth. No RMDs. Let this grow as long as possible. Ultimate legacy/emergency fund.
This Is a Framework, Not a Rule
Tax-Smart Tactics
| Feature | Strategy | Tax Savings |
|---|---|---|
| Tax-Gain Harvesting (0% bracket) | Sell taxable gains while in 0% CG bracket | $5-15K/year |
| Roth Conversions (fill low bracket) | Convert IRA to Roth at 10-12% | $50-150K lifetime |
| QCD from IRA (age 70½+) | $105K/year direct to charity | Reduces AGI, avoids IRMAA |
| Bunch Charitable Giving | Donor-Advised Fund in high years | $3-10K/year |
| Manage IRMAA Thresholds | Keep income below $103K/$206K | $2-6K/year in Medicare savings |
Project Annual Income
SS + pensions + RMDs + part-time work. What bracket are you in before withdrawals?
Fill Cheap Brackets First
Room in the 12% bracket? Take from traditional IRA (or convert to Roth) up to the ceiling.
Take Remaining Need from Taxable
Preferring lots with lowest gains or losses for tax-loss harvesting.
Roth for Emergencies Only
Don't touch Roth unless a large unexpected expense hits. Let it grow.
Review in November
Adjust before Dec 31. Do last-minute Roth conversion or tax-gain harvesting.
Key Takeaways