Order of Withdrawals in Retirement: Strategies for Financial Success

Here is the exact order in which I would withdraw money from my financial accounts if I were to retire at 60 years old. I'm Tyler, a former financial advisor and portfolio manager, and now I create financial content for free to help you make informed retirement decisions.

1. Withdraw from Taxable Brokerage Account

I would start by taking necessary money out of my taxable brokerage account. Long-term capital gains taxes are lower than my ordinary income, and this strategy allows my tax-advantaged accounts to continue to grow tax-free or tax-deferred.

2. Withdraw from Traditional IRA

Next, I would move to withdrawing money from my traditional IRA, but only if I absolutely had to. I’d want to continue deferring those taxes and maximizing growth for as long as possible. Since withdrawals are taxed at my ordinary income tax rate, I'd want to take advantage of withdrawing when I'm in the lowest tax bracket, which is typically before required minimum distributions (RMDs) kick in after I turn 73.

3. Withdraw from Roth IRA

Only after that would I consider withdrawing from my Roth IRA, and I’d treat this as a last resort. Roth IRAs have no required minimum distributions, so all earnings are 100% tax-free after age 59 and a half. This account offers the single best tax legacy you can provide to your heirs, so if you can afford it, let that Roth IRA sit and just grow and grow.

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