How Retirees Can Strategically Draw Down Accounts to Cut Taxes
Financial advisor Ash Toumayants outlines retirement income strategies, focusing on which accounts retirees should tap first to manage taxes.
Deciding which retirement accounts to draw from first can have lasting consequences for taxes and long-term financial security, according to financial advisor Ash Toumayants of Strong Tower Associates in State College, Pa. His guidance, featured in HelloNation, addresses a question many retirees face but rarely plan for systematically.
The sequence in which retirees withdraw funds — whether from taxable brokerage accounts, tax-deferred vehicles such as traditional IRAs and 401(k)s, or tax-free Roth accounts — can significantly affect how much of a retiree's income is ultimately lost to federal and state taxes. Strategic ordering of withdrawals is a recognized planning tool, though its application varies based on individual circumstances.
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Toumayants's framework, as presented in HelloNation, encourages retirees to think beyond simply covering monthly expenses and instead consider how each dollar withdrawn affects their current and future tax brackets. Allowing tax-advantaged accounts to grow longer while drawing from taxable accounts first is a common approach, though Roth conversions and required minimum distributions can complicate the calculus.
Retirement income planning has gained renewed attention as more Americans enter retirement holding a mix of account types accumulated over decades of employment. Coordinating withdrawals across these accounts requires ongoing assessment, particularly as tax laws, personal income needs, and portfolio values shift over time.
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