Which Accounts Should You Withdraw From First in Retirement?
There isn't one retirement withdrawal order that's right for everyone. The best place to take money from depends on your taxes today, future RMDs, Roth assets, investment gains, and what you're trying to accomplish over your lifetime.
There Isn't One Right Withdrawal Order
You've spent 30 or 40 years putting money into retirement accounts. Then you retire and discover something nobody spent much time teaching you: How do you get it back out?
If you have money in a checking or savings account, a taxable investment account, an IRA, a 401(k), and a Roth IRA, which one are you supposed to spend first?
The conventional answer has historically been pretty simple: spend taxable money first, then tax-deferred retirement accounts, and leave the Roth IRA for last.
I think that's way too simplistic.
In fact, in some cases I'm going to go almost completely opposite the standard advice. I think one of the biggest mistakes retirees make is waiting too long to take money out of their traditional IRAs.
Retirement withdrawals aren't about emptying Account A, then Account B, then Account C. They're about creating the income you need while managing investments, taxes, required distributions and market risk over what could be a 25- or 30-year retirement.
I want to look at the whole thing.
Start With the Income You Actually Need
Before deciding which investment account to use, we need to know how much income you actually need from the portfolio.
Let's say you want to spend $120,000 a year. Maybe Social Security provides $60,000. Maybe there's another $20,000 from a pension. Now the portfolio doesn't need to produce $120,000. It needs to produce $40,000.
That's a very different problem.
I like to start with the spending need, subtract the reliable income that's already coming in, and then figure out how the portfolio fills the gap.
But I don't necessarily want the entire $40,000 coming from whichever account happens to be the most tax-efficient this year.
We're trying to manage the next 25 or 30 years, not just this year's tax return.
I Like a Five-Year Runway
For many of the retirees we work with, I like having roughly five years of anticipated portfolio withdrawals outside of equities.
That doesn't mean five years of spending sitting in a checking account earning nothing. It means building a more stable portion of the portfolio that can help provide several years of distributions without requiring us to sell stocks during a major decline.
If you need $60,000 a year from your investments, for example, we might think about roughly $300,000 as the five-year runway and invest the remainder for longer-term growth.
Then if the stock market falls 25% or 30%, we aren't sitting there wondering which stock to sell to pay you next month.
We already know where the money is coming from.
And when markets are strong, we can rebalance and replenish that runway.
To me, that's retirement-income planning. Different parts of the portfolio have different jobs.
Cash Isn't Just Sitting There Doing Nothing
People sometimes look at cash or short-term investments and say, "Why do I have this? Stocks have historically earned more."
Of course they have. That's not the point.
If the stock market is down 30%, I don't want to be forced to sell stocks that month to make the mortgage payment, buy groceries or take a trip.
The more stable part of the portfolio has a job. Its job isn't necessarily to outperform the stock market. Its job is to fund your lifestyle and give the growth portion of the portfolio time to recover.
That flexibility becomes extremely valuable once the paycheck stops.
Your Taxable Account Can Be Extremely Useful
Taxable investment accounts can be a great source of retirement income because withdrawing $50,000 doesn't necessarily mean you have $50,000 of taxable income.
Part of that withdrawal may simply be your own cost basis coming back to you. When appreciated investments are sold, generally it's the gain—not the entire sale proceeds—that potentially creates capital-gains tax.
That can make taxable accounts extremely useful in retirement.
But I don't automatically want to drain the taxable account just because the old rule of thumb says it should go first.
That money may be part of our five-year runway. It may provide flexibility later. It may contain investments we don't want to sell right now. And there may be a much bigger tax problem developing somewhere else.
Like your IRA.
I Think Waiting Too Long to Touch the IRA Can Be a Huge Mistake
This is where I probably disagree with some of the traditional retirement advice.
People hate paying taxes on IRA distributions. I get it.
If I tell somebody we could take $75,000 from their taxable account without generating $75,000 of ordinary income, or we could take $75,000 from their traditional IRA and pay income tax on it, the first option can feel obviously better.
But what happens to the IRA? It keeps growing.
We've seen exactly why that matters over the last several years. Stocks have performed very well, and retirees who stayed invested have watched already-large IRA balances get even larger.
That's wonderful from an investment standpoint. But eventually the IRS wants its share.
Now you may be entering your required minimum distribution years with a much larger IRA than you had when you retired. Suddenly the government is forcing out more money each year, whether you need it or not.
That's why I think blindly waiting as long as possible to touch an IRA can be one of the biggest mistakes retirees make.
Tax deferral is valuable. But deferring taxes for as long as humanly possible isn't automatically a tax strategy.
Taxes Are Low Historically. That Matters.
There's another reason I'm comfortable intentionally taking taxable distributions today: federal individual income-tax rates remain relatively low compared with many periods in modern U.S. history.
For 2026, the federal individual brackets remain 10%, 12%, 22%, 24%, 32%, 35% and 37%. The legislation enacted in 2025 made the current rate structure permanent rather than allowing the prior Tax Cuts and Jobs Act rates to expire.
Of course, "permanent" in Washington means permanent until Congress changes its mind.
Nobody can tell me what tax rates will be 10, 20 or 30 years from now.
And that's exactly the point.
If I have an opportunity to intentionally take money out of a traditional IRA at what I consider a reasonable tax rate today, I'm not automatically going to turn it down just so we can defer the tax another year.
Sometimes paying tax now is the strategy.
I'm Trying to Minimize Taxes Over Your Lifetime
This is the part I think gets missed most often.
I don't care about getting you the absolute lowest possible tax bill this April if doing so creates a much bigger tax problem later.
I want to model your tax situation over your entire retirement.
What does your income look like today? What happens when Social Security begins? What happens when RMDs start? How large could the IRA become if we don't touch it? What could those required distributions look like? What happens when one spouse dies and the survivor is eventually filing as a single taxpayer?
Those are the questions that matter.
Sometimes paying a little more tax in your 60s can help reduce taxes later.
That can feel wrong because we've all been trained to think paying less tax today is always better. It isn't necessarily.
If saving $5,000 in taxes this year contributes to paying $15,000 more later, what exactly did we accomplish?
I don't want to win the tax game this year. I want to win it over your lifetime.
Required Minimum Distributions Can Take Away Your Flexibility
A growing IRA is obviously a good problem to have. I'd rather have too much money than too little.
But large IRA balances eventually can create large required minimum distributions.
Once RMDs begin, part of your withdrawal strategy is no longer optional. The government tells you a minimum amount that has to come out of the account.
Maybe you need all of it. Maybe you don't.
If the RMD is $100,000 and you only need $50,000 to support your lifestyle, you still have to take the required amount.
That's why I'd rather start thinking about this years before RMDs begin, while we have more control.
The IRS doesn't care whether you need the money. I do.
The Roth IRA Is Usually a Completely Different Story
For most of my clients, the Roth IRA is probably the last account I want to spend.
In fact, for many of them, I don't expect them to spend it at all. It may ultimately become legacy money.
That's one reason I generally like to see Roth IRAs invested more aggressively than other retirement accounts, unless there's a unique circumstance that gives us a reason not to.
Think about the time horizon.
If you're 65, have plenty of income and assets elsewhere, and there's a good chance you'll never need the Roth IRA, that money isn't necessarily being invested for a 65-year-old anymore.
Some or all of it may ultimately be invested for the next generation.
Meanwhile, we're intentionally taking distributions from other accounts and managing assets that can create taxable income during your lifetime.
That doesn't mean every Roth IRA should automatically be 100% stocks. Nothing in financial planning should be that automatic.
But I don't think it makes sense to invest every account identically when the accounts have completely different jobs and potentially completely different time horizons.
Sometimes the Best Answer Is More Than One Account
This is the part that gets lost when people ask, "Which account should I spend first?"
Maybe there shouldn't be a first.
You might take part of your income from cash, sell investments in a taxable account, and intentionally take an IRA distribution during the same year.
Why? Because each source of money has a different job and potentially a different tax consequence.
Maybe the taxable account is funding part of your five-year runway. Maybe we're intentionally taking enough from the IRA to use a tax bracket we believe is attractive. Maybe the Roth stays untouched because we think that's the last money you'll ever need.
We're not trying to win a contest for emptying one account before touching another.
We're trying to coordinate the entire retirement.
Market Conditions Matter Too
This is another reason I don't like rigid withdrawal rules.
Imagine the stock market is down 30%. Do I really want to sell equities simply because a spreadsheet says taxable account first? Probably not.
If we've built the retirement portfolio correctly, hopefully we have more stable assets available to fund distributions while giving stocks time to recover.
Now flip it around.
Suppose the market has had a fantastic year. That may be an excellent opportunity to rebalance, take some gains and refill the more conservative part of the portfolio we'll use for future distributions.
Your withdrawal strategy should be able to adapt.
Retirement lasts too long for a rule that says Account A first, Account B second and Account C third regardless of what happens.
Don't Let the Tax Tail Wag the Dog
I care a lot about taxes in retirement.
But I've also watched people become so obsessed with avoiding taxes that they start making bad financial decisions.
The objective isn't to die having paid the least possible amount of tax while sitting on the largest possible traditional IRA.
The objective is to use your money efficiently to support your life.
If taking money from an IRA makes sense, take it and pay the tax. If selling a taxable investment makes sense, sell it. If the Roth IRA is likely to be legacy money, maybe we leave it alone and let it grow.
Taxes matter enormously. But the tax strategy has to serve the retirement plan—not the other way around.
The Goal Is to Build a Retirement Paycheck
Most people don't want to wake up every month and decide which investment to sell so they can pay the electric bill.
They spent their entire careers receiving a paycheck. Then retirement happens and the paycheck stops. The portfolio has to replace it.
I want retirement distributions to feel boring. Money should show up where you need it, when you need it, without you having to watch the market every day or wonder whether this is a good week to sell something.
Behind that boring paycheck can be a lot of planning: cash reserves, bonds, equities, IRA distributions, taxable-account sales, rebalancing and multi-year tax planning.
But the retiree shouldn't have to manage all of those moving parts every month.
That's our job.
So Which Account Should You Withdraw From First?
My answer is probably going to disappoint anyone looking for a simple chart.
It depends.
But I can tell you what I generally don't like.
I don't like blindly spending taxable assets first while allowing a giant traditional IRA to grow untouched simply because that's what conventional wisdom says to do.
In some cases, I'm going to intentionally go in the opposite direction.
I may want IRA distributions earlier than required. I may want to preserve some taxable assets for flexibility and our five-year runway. And in many cases, I may want the Roth IRA sitting at the very back of the line, invested more aggressively because there's a decent chance you never spend it.
The real question isn't, "Which account comes first?"
It's, "How do we get this money out while paying the least reasonable amount of tax over your entire lifetime?"
That's the plan I want to build.
Because after spending 40 years figuring out how to put money into these accounts, you deserve a better strategy than simply waiting until the IRS tells you to start taking it back out.
