Retirement Withdrawal Strategy May Need a New Twist!

Jim Lorenzen, CFP®, AIF®

The right retirement withdrawal strategy shouldn’t follow conventional wisdom blindly.  What’s right for you might be very different.

Conventional wisdom says retirees should withdraw funds from taxable accounts first, tax-deferred accounts (IRAs, 401(k)s, etc.) second, and tax-free money (Roth IRAs for example) last.

But, should you do it that way?

The current tax laws aren’t permanent.  These current low rates some taxpayers enjoy may not last forever.  Maybe it might make sense to withdraw money from tax-deferred accounts during years when you can take full advantage of these low marginal rates.

Another idea:  Convert funds from tax-deferred accounts to a Roth IRA to take full advantage of the 15% tax bracket (be sure to pay the taxes from other taxable money); or, you may want to reserve funds in a tax-deferred account to accommodate the possibility of large tax-deductible expenses, such as medical costs which can occur later in life.

These are  ideas only.  Your situation is unique.  Don’t do anything without talking to your team:  You financial, legal, and tax advisors can help you craft the strategy that’s right for you.


Jim Lorenzen, CFP®, AIF®

Jim Lorenzen is a CERTIFIED FINANCIAL PLANNER® professional and an ACCREDITED INVESTMENT FIDUCIARY® serving private clients since 1991.   Jim is Founding Principal of The Independent Financial Group, a  registered investment advisor with clients located across the U.S.. He is also licensed for insurance as an independent agent under California license 0C00742. The Independent Financial Group does not provide legal or tax advice and nothing contained herein should be construed as securities or investment advice, nor an opinion regarding the appropriateness of any investment to the individual reader. The general information provided should not be acted upon without obtaining specific legal, tax, and investment advice from an appropriate licensed professional.