Where Should You Pull Funds from First in Retirement?

What a great video with what many retirees are facing. The detail was fantastic so thank you so much!

Everyone needs to understand this. Deferred comp and roth accounts are tax benefit accounts on the front and back end. In draw you would use a calculated combination of taxable and tax exempt to retain the lowest possible tax rate.

Out of touch.

Hi James, can you please clarify / address taking money from a taxable / individual account which requires selling a stock and incurring a long-term capital gain (on a long held ETF like the S&P index) which may keep ones effective tax bracket lower than taking money from a pre-tax retirement account, but increases taxes over taking money from a Roth. How does one weigh the choice of realizing a capital gain in a taxable account vs the value of maximizing a Roth both for ones own lifetime vs for their heir's benefit?

You never mention RMD’s which have to be taken.

My income in retirement is gonna be double of what I’m making just before I retire. Dividend paying stocks is the way to continue to get income in retirement.

James - excellent video! Your senario was exactly what Im dealing with today in retirement. Im three years into retirement and now focusing on the taxes im paying and where do I pull for my income streams. Between social secuirity and pension, Im already in the 22% tax bracket. Any additional funds Im paying 22% and 24%. I keep looking at all three buckets and playing around with the numbers. As you said, there are multiple ways to get the amount I need to get to every year. I will reach out to you on your website and see what your consultation fees will be. Joe

Great video 🎉 Very informative. Thank you for the hard work ❤

You didn’t include RMD

Fast forward to 2023 with massive layoffs -if unemployed but of retirement age (not ready to retire yet) with a modest retirement savings, is it better in a down market to live off traditional IRA and hold off getting SSN since it has 8% bump every year and COLA? I pay more for medicare than I did paying an individual PPO policy which was better.

You explain things very clearly. Thanks for the videos. Lots of helpful info.

Why are IRA contribution limits kept so LOW ($6K/$7K)? They should be made the SAME as 401k limits so that folks without a 401K can be on equal footing! Somehow this video has helped shed light on some things but I'm aiming to create a portfolio worth not less than $1M before I turn 60.

Can’t believe he didn’t comment on fed standard or itemized deduction when considering amounts to withdraw from tax deferred funds to fill out the bracket

super helpful, curious how this strategy changes for individuals looking to retire early

Between social security and 401k and investment accounts I'll have over $100k easily. I'm thinking i should start hitting up the 401k account first while delaying SS to 70 to help later tax wise with RMDs. Currently 66 yr old. Thoughts?

Am a recent widow-world is upside down.Always filly married filing jointly.Any suggestions because tax will go through roof.I am lost without my loved one.

This is my fifth year after retirement. I’ve been following the 4% rule thing, but this isn’t really how hard I expected things to be. I still have about $460k outside funds in my IRA to invest in stocks. Pls how do I take advantage of the market turnaround?

Great video. Next, you should do a video on what investments to pull from for the actual RMDs. During bad years, do we pull from bonds or income mutual funds or growth funds, etc to meet the demands of the RMD. I assume you would want to pull from your better performing funds or stocks for your RMD income.

What about qualified charitable distributions? What about calculating provisional income to see how much income tax you'll have to pay on your social security?

I am getting $107,000 at 12% taxable. $80,000 plus the $27,000 standard deduction?

Very thoughtfully presented. As of now, September 2023, IRA minimum distributions have to begin by April of the year after you turn 73. For example, I was born in 1951, so I turn 73 in 2024 and have to start taking distributions by April 2025, and I will have to keep up with how much I take to make sure I take at least the minimum amount.

Hello, this retirement prep is causing me so much anxiety, but it should be easy—I will be pulling from my 401k, it is my only account! I really wish someone would talk about that!!!!

In my case I can take up to 12K a year from my pretax IRA and pay zero taxes, I will be doing this and as I don’t need the money right now I will be rolling it over to a Roth

No offense but it just seems weird for someone in there 20’s giving financial advice to us in our 60’s

Very nice video. Definitely helps in getting to the full picture.
Thanks

Can Universal Life insurance reduce income taxes in retirement?

This is depressing to me. If it's normal for people to have 100k a year, I'm waaaaay off. I'll have SS and maybe a small 401k and roth

some really good info

All of these details remind me of the minutia to consider when doing annual income tax returns. Just like tax software which makes doing tax returns somewhat easy, is there an easy to use online app that makes specific recommendations based on individual inputs to optimize retirement income?

I think its unfair that the feds have taken
35 years worth of my income, to spend or invest, and then have the balls to tax my income from social security. I call bullshit!!!

Thank you, James. I hope to work until I am 70 and then collect Social Security, so what you said about income coming from non-retirement accounts was meaningful to me. Keep up the excellent work.

Great advice!

It's worth noting that this withdrawal sequence is a general guideline, and there may be exceptions or variations depending on your unique financial situation.

Best explanation ever!

Ridiculous how they over complicate this stuff for elderly

> When you read articles about financial freedom, you may hear people talk over and over again about how they spend next to nothing to be able to retire at a younger age like 30. Instead, they may have already achieved financial freedom and boast about how frugal they were in order to retire well before the typical retirement age.<>

Comprehensive video that pulls together all the aspects of income, taxes, provisional income, Roth conversions and Medicare surcharges that I am concerned about. Many financial planners are focused on growth of portfolio and seem to be less concerned with these things, which can end up being very costly to the portfolio.

The only income I will have as of now is my savings account ( I saved 150k ) and had to switch to part time due to health issues. I started savings 50% of my income and live way ways below my means due to health problems 15-20yrs ago. I knew 15yrs ago I won't make it working full time till retirement age. As long as work part time till retirement and have 150K in savings as a back up . I'm 55yrs old with a lot of health problems so I'll have to wing it and will move out of Chicago because it's too expensive here and I'm really not a city person trashed with crime. Doing almost cash deal on a small home in MI or IN , so no or minimal mortgage payment. Start saving early as possible and live below your means is best advice I can give.

You're assuming there is growth on money.

Thus is great information. Thanks. I was just about to make the mistake of withdrawing from my one Roth account

Great info , thanks

I loved this video.. you explained it excellently

Great Video! Very helpful & educational. Thank you for doing this.

If you do not have 100k then go back to work you free loadef.

How about TSP? Still working 67 yo and is considering drawing from tsp and put in IRA traditional since Roth IRA requires 5 year. It is taxable by how much? Ordinary income, regardless where I put it right?

What about cash in money market or checking accounts being used first to supplement social security before withdrawal of IRA accounts? This allows tax deferred money to continue to accumulate.

Cliffs Notes: Don't draw on anything that's going to push you up up into the next tax bracket.