Most Retirees Are Draining Accounts in the Wrong Order
How you sequence retirement withdrawals affects your tax bill and your lifestyle. Most retirees get it wrong.
You saved for decades. Now you're making a costly mistake by not thinking about *which* account you tap first. The order you pull money from your retirement savings isn't just a bookkeeping detail — it directly hits your tax bill and your quality of life in retirement.
Ninety percent of retirees are miscalculating this, according to new research flagged by MarketWatch. That's not a rounding error. That's almost everyone walking into a completely avoidable financial hole just because they grabbed from the wrong bucket at the wrong time.
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Here's the tradeable insight: different accounts carry different tax treatments. Traditional IRAs and 401(k)s hit you with ordinary income tax on every dollar out. Roth accounts come out tax-free. Taxable brokerage accounts get preferential capital gains rates. Pull in the wrong sequence and you could be bumping yourself into a higher tax bracket, triggering Medicare surcharges, or leaving tax-free Roth dollars sitting untouched while you unnecessarily hand money to the IRS.
The sequence also shapes how much you actually enjoy retirement. Spend your flexible, tax-free money early while you're healthy and active. Wait too long and that Roth balance becomes an inheritance you never got to use. This isn't just math — it's a lifestyle decision hiding inside a spreadsheet.
Most financial plans treat withdrawal order as an afterthought. It shouldn't be. A smarter sequence can extend your portfolio's life, reduce lifetime taxes, and let you actually live on your savings instead of just protecting them. Continue reading at MarketWatch.com
