Retirement Spending Made Simple - Adviser Investments

Retirement Spending Made Simple

When it comes to retirement, it’s not just about tapping your savings, it’s about the order in which you do it. Here’s the order we recommend for most clients:



Your first source for everyday spending should be the cash savings you’ve accumulated. Tapping into cash accounts initially allows your investments to continue to compound as long as possible. One caveat: Keep your emergency fund intact—don’t touch that safety net unless it is absolutely necessary.

Second, turn to your traditional individual retirement accounts (IRAs) and tax-deferred accounts. You’ll be obligated to make withdrawals from these accounts in the form of required minimum distributions (RMDs) once you turn 73. That said, if you don’t need to use your RMDs for income because you’re still using cash reserves, reinvesting those required distributions is something to consider.

Next, for expenses that can’t be covered by your cash and RMDs, turn to your taxable brokerage accounts. But be sure to pay close attention to what you’re selling when you tap these funds: Selling highly appreciated stocks can result in a hefty tax bill. (If you need some assistance with this, give us a call—we’re here to help.)

Last but not least, turn to your Roth accounts. Funds held in a Roth grow tax-free forever. Heirs don’t pay taxes on a Roth when they inherit it, either. This makes them a wonderful estate planning tool—and the least favored option for everyday spending. The longer you leave Roth money untouched, the greater your potential gains down the road.  

And that’s how the “retirement tap” works. Unfortunately, the beer is not included.

This material is distributed for informational purposes only. The investment ideas and opinions contained herein should not be viewed as recommendations or personal investment advice or considered an offer to buy or sell specific securities. Data and statistics contained in this report are obtained from what we believe to be reliable sources; however, their accuracy, completeness or reliability cannot be guaranteed.

Our statements and opinions are subject to change without notice and should be considered only as part of a diversified portfolio. You may request a free copy of the firm’s Form ADV Part 2, which describes, among other items, risk factors, strategies, affiliations, services offered and fees charged.

Past performance is not an indication of future returns. Tax, legal and insurance information contained herein is general in nature, is provided for informational purposes only, and should not be construed as legal or tax advice, or as advice on whether to buy or surrender any insurance products. Personalized tax advice and tax return preparation is available through a separate, written engagement agreement with Adviser Investments Tax Solutions. We do not provide legal advice, nor sell insurance products. Always consult a licensed attorney, tax professional or licensed insurance professional regarding your specific legal or tax situation, or insurance needs.

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