Retirement Planning
How to Build a Tax-Efficient Withdrawal Plan
Withdrawal planning is about which account to pull from and when. A tax-efficient sequence can keep more money working for you over a long retirement horizon.
Why sequence matters
- Different account types are taxed differently.
- Large single-year withdrawals can push you into higher brackets.
- Withdrawal order affects Medicare premiums and Social Security taxation.
A practical framework
- Use taxable assets first when it helps bracket control.
- Blend pre-tax and Roth withdrawals for tax smoothing.
- Review annually instead of using a fixed one-time formula.
Practical move: Model withdrawals over multiple years, not one year at a time, to avoid accidental tax spikes.
Implementation checklist
- Estimate annual spending need and guaranteed income.
- Map account-by-account withdrawal ranges by tax bracket.
- Set annual review triggers tied to market and tax-law changes.
Model Retirement Withdrawal Scenarios