The Optimal Retirement Withdrawal Strategy 🔥

The order in which you withdraw your funds during retirement can greatly impact the taxes you owe and the longevity of your savings. In this video, we'll explore a unique approach to taking withdrawals, which is often overlooked. If you're considering retirement or have recently retired, watching this video will provide valuable insights to help you make the most of your savings.
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🎤 If you're preparing for retirement or already enjoying it, you'll definitely want to catch my podcast, Big Picture Retirement. Your retirement's success hinges on seeing the "big picture" and tying together your legal, tax, and financial strategies. On the show, we dive deep to offer insights on effective planning, and I'm joined by my co-hosts - attorney John Ross and yours truly, financial planner Devin Carroll. www.bigpictureretirement.com/
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Don’t miss my free online workshop, “How to Choose the RIGHT Age to File for Social Security.” In this workshop you’ll learn:
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✔Why This Is The Biggest Decision of Your Retirement
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📜 HEAR YE HEAR YE: Some of my videos contain links to third party products, apps, and services. If you click through, I may receive a small referral fee to my media company (Carroll Media Properties) through their referral program. Rest assured, I only recommend products or services that I believe will be helpful and informative to my audience.
⭐⚠️⭐Please read this⭐⚠️⭐
⚠️I am not an attorney, SSDI advocate, or affiliated with the Social Security Administration or any other entity of the US Federal Government. I am a practicing financial planner, but I’m not YOUR financial planner and since I don’t really know you, I can’t give you advice. So please don’t take this video as specific advice for your specific situation. Consult your own tax, legal and financial advisors. 🙇🙇🙇🙇🙇
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[@DevinCarroll]

Get a plan that optimizes your retirement income. Start here www.devincarroll.com/roadmap

[@toddperry2270]

I recently had Devin and his team look at my retirement income streams and provide me a plan. All of my questions were answered. I am extremely happy with their service and highly recommend Devin and his team.

[@DevinCarroll]

Thanks Todd!

[@davidbenner2289]

I've been in state retirement for 15 years. The survivor insurance removed since my wife died a few months ago: about a third of my retirement now back! Wow! In a few weeks my Social Security starts, I turn 70 in two days. I have no other retirement except an IRA SEP account I'll inherit from a deceased in-law. Soon I'll have my house mortgage paid off and maybe enough to build another one, smaller. My present house needs to come down. I am expecting to live to 100+ years, genetically from my mother and father's families. Im continuing my inherited SEP account, contributing to it. And starting a new IRA for later. I'm living like I have little increase (the native pastors I've supported for years and getting "pay raises" as well). Everything is designed to pass on to my children after I die, at 105 to 115 years of age! Lol! My life revolved around my wife and I in our retirement years. But, she went and died on me. My best, friend, confidant and my lover (maybe too much "love": nine kids! And all home educated). Plan for the long run. Being a firefighter from the old school, pre safety gear and less knowledge of hazmat contamination, the average life expectancy was and still is 53 years of age. Well, for me, that was 17 years ago. My doctor told me breaking my back (twice) and being forced to retire at age 55 probably saved my life. So, now wifeless, expecting to live for several more decades (it's in the family), I have to prepare for leaner times and not spend my newly earned wealth in Las Vegas! Plan like you'll live as old as Methuselah but have some joy along the way.

[@runwader]

@@kbbkbbkbbkbbkbb true he was just bragging but good for him lol

[@mjones9088]

Maybe you should enjoy and spend some of your money. Don’t think your kids would begrudge you some fun..,

[@davidbenner2289]

@@mjones9088 actually, I really don't care what my children feel. I've disowned six of the 9.

[@MrGoodaches]

Wow,,, I hadn’t realized it was so common for pros to miss this one. From your channel and a few others I had heard a couple years ago that tax planning is supposed to be a big part of our retirement income planning. So as I continued to build and refine the functions in my DIY Excel model I created simple features to permit me to alter withdrawal strategies in order to find the optimal tax scenario. It seemed like straightforward advice and it was plainly logical for an amateur (me) to evaluate scenarios. Every time I think again about buying pro software I find yet another surprise example of how much I’ve benefited from building my own. For my learning style I would still be woefully ignorant if I was merely imputing figures and waiting for magic to provide an output.

[@gerrysanterre6317]

Great video. I am retiring later this year and I have been trying to come up with a plan on when and from what accounts to take money out.Taxes really can are a big factor. 😢

[@jdgolf499]

I just retired last month at 62.5 years old. I will be using a combination of taxable and tax deferred, to control income for Obamacare. I will be spending around $70,000 a year, but at about $45,000 the Obamacare subsidies and deductables really fall off, so that's target. To achieve this, I'll use some money from an inheritence, with no tax, some from the taxable, and the rest will be a small roth conversion. We can do this until I get SS, then we'll spend tax deferred, and then do a roth conversion up to the 12% tax limit. Of course, this will be revisited if the Trump tax cuts expire, and tax rates change.

[@richardthorne2804]

Thank God I rely on dividends to live my lifestyle i don’t sell shares to pay my bills and i also sell options income to pay for the big ticket items. No 4% rule and taxes are a part of life i do a nice job of reducing my tax liability 🎉❤

[@soniaferrer-ponce]

In other words, still withdraw taxable dollars first but at the same time convert the most pre-tax dollars to Roth until you fill up the lower tax brackets. Then withdraw pre-tax dollars (if any left), and then Roth dollars. Correct? Doesn't this software have the capability to project the results of this strategy as well?

[@johnhaller5851]

There are lots of complications, such as if one lives in a state which taxes retirement income, but plan to move to a state which doesn't, or vice versa. The target tax rate to fill depends on how much money one starts with. Also, if your spending indicates you will not run out of money before you die, and your kids don't need the money, there are other approaches such as charitable donations to reduce the money going to the government. And one can't plan for when a spouse will die or if one remarries or what the new spouse brings in assets, and all the careful planning on tax rates go out the window.

[@davidpowell3347]

The bulk of my working years were before the Roth IRA became available and also the 401/457 type accounts became available to me later on,the Roth version of those only was being introduced as I was about to retire. I would have (and would have been better off having done so) more Roth and less tax bomb had it been available the whole time. Did some limited Roth conversion activity but that has been somewhat curtailed because I feel the need to have a lot of cash for a coveted home purchase that hasn't been able to happen because of family obligations. But I have been lucky to have a pension so I guess that more than compensates for the lack of Roth. I understand that as of now,Roth 401 and 457 accounts are now free of Required Distributions during the lifetime of the original owner(s)?

[@Crimson_Hawk_01]

You might connect better if you used examples with figures more in line with average Americans.

[@jn8559]

In a 60/40 portfolio, how does one decide which retirement account (Roth, 401K and post tax) to put the bond portion? Set up a 60/40 allocation in each retirement account?

[@sharky6128]

For Canadians Taxable = Savings Account , IRA = RRSP and Roth = TFSA :)

[@katsadventures7027]

Thank you I’ve been wondering this 😂

[@davidpowell3347]

Psychologically I want to save the best for last (not touch the Roth IRA for as long as practical)regardless of logical or accounting considerations

[@brianferris1]

What if you plan early? Let's say you plan on retire at 49 years old or 10 year before the no penalty on tax deferred?

[@chrisp3913]

I’m waiting to hear about the contents within each bucket. If I have 10 items in a bucket a day some are winners and some are losers the. Do you take equal amounts of each item?

[@davidpowell3347]

I guess of some limited importance is that dividend income from Taxable (mix of stocks,bonds,cash,whatever perhaps mostly as mutual funds) can be partly of "qualified dividends" depending on your own mix and allocation,the qualified dividends aren't taxed quite as hard as withdrawals taken from "tax deferred" IRA or 401/457-- -- aren't all of the dividends that flow into your tax deferred eventually subject to the full non-qualified taxation? not to recommend either dividend avoidance or dividend seeking (as in broad market or "total" stock mutual funds might be considered "dividend neutral") perhaps both dividend avoidance and dividend favoring investment strategies decrease diversification and increase risk? (although I would tend to favor dividend favoring if forced to make the choice)

[@bobwait3629]

Unclear if time value of money was taken into account in this analysis. When the presenter says, "Your tax savings over a lifetime are X," it appears he may have been adding 2023 dollars , 2024 dollars, 2025 dollars, ... , 2052 dollars together as if they were all the same thing. If so, that makes the ending difference look substantially larger than it really is in today's dollars.

[@tomtheplummer7322]

Minimum Requirement Withdrawals. Put it an CD

[@tomtheplummer7322]

Wow, they got a lot

[@PH-dm8ew]

why not leave the taxable account til the end? It will be left to your beneficiaries at the increased basis tax free. Live of Traditional first and then roth, or a combination that yields the lowest tax rate?

[@KatsDad]

So I have been on SSDI. I’m at full retirement age. I will have social security, a pension, and a 401k that has been changed to an IRA. I also have a Roth. I’m planning on living off SS and pension. My wife is 64 and doesn’t get a lot of social security. Should we delay her SS until full retirement?

[@sct4040]

Well, I needed a fix amount from my 403b regardless. 😢 i also took my SS at age 63. Anything left goes into my emergency fund at the bank.

[@resterAnonyme]

If you need the income ok, buy why go after an effective tax rate of 12% instead of maxing out the marginal 12% tax bracket? That means some of the income would be taxed at the 22% tax rate to obtain a 12% effective or "average" tax rate.

[@Anthony-zw1qb]

I’m 100% Roth 💯

[@ron9665]

0:47 'Delay SS as long as possible....' Probably the worst idea ever put forth for certain people. A person turning 62 in 2029 would get about 67% of their FRA amount; whereas by waiting another 5 years, SS starts paying 20% (to 30%) less for a person at FRA. After 23 years the early bird collects a total of about 5% more than the FRA senior after 18 years and ending on the same time. There may be more when you consider that the FRA was still paying income tax for the 5 years of delay.

[@markb1697]

I wonder why you did not include a Roth in your example. I also wonder how the tax torpedo from SS income factors into this? I suspect it increases the need to do more Roth conversions early on. I realized recently that withdrawals from our tax deferred IRAs will cause more of our SS to be taxed. It increases up to around 70k per year at which point 85% is already taxed. So that income raises our effective rate well above 12% pretty quickly.

[@DevinCarroll]

That alternate scenario did have conversions. Whatever was left to fill up the 12% average (after income needs were met) got converted to a Roth.

[@davidpowell3347]

I think he mentioned Roth conversions from the tax bomb (tax deferred) up to the point of not pushing tax rate too high in the early years of retirement--perhaps also before starting Social Security?

[@jerrylabat550]

@@DevinCarroll So why didn't you funnel the entire year's worth of funding through the Roth, including the extra Roth conversions. Since you know the total target amount to achieve the 12%. Also why wouldn't you target 15-17% before age 67 to offset the decrease in conversions or tax increase when they start collecting SS.

[@davidpowell3347]

Also the Social Security tax torpedo can push you into or raise your "IRMAA" penalty and also can affect your tax calculation on your Capital Gains and Qualified Dividends such that a possible 0% taxed piece of that income is bumped up to I think 15% taxation and possibly some of that income could be taxed even higher (I think only for people with quite high incomes)

[@johnhaller5851]

There's also the increase in Medicare Part B premiums above some income levels. It's not as drastic of a contribution, but there. But, deferring Social Security can make income just from Social Security be enough to make 85% of Social Security taxable.

[@kevingervais7678]

Were RMD's factored in? I expected to see a bump in taxes at age 72 for that couple.

[@Satjr35031]

FYI RMD now start at 73

[@kevingervais7678]

@@Satjr35031 good to know info thanks.

[@johnhaller5851]

And 75 if born after 1/1/1960

[@jean-marcfiliatrault266]

Ok, but… You did not factor the concept of: “The time value of money“. Companies always postpone income taxes as a deliberate strategy. We should ask ourselves if that strategy shouldn’t apply as well for individuals… That being said, using an NPV calculation on the aftertax cash flows for each option should easily answer that question. BTW, a good Retire Income Planning software should automatically do that, assuming that software has an optimization functionality.

[@davidpowell3347]

Roth is the Best! (keeper) Get that tax bomb down as much as possible via Roth conversion and consumption in preference to taxable before Social Security kicks in? (Take the tax hit early even by withdrawing more than the Required Minimum Distributions?)

[@davidpowell3347]

@@kbbkbbkbbkbbkbb I guess it could still be advantageous in some cases to draw more heavily for living expenses from the "tax deferred" accounts rather than from taxable accounts as opposed to drawing from the taxable before tapping the deferred (except of course for the Required Minimum Distributions when the age for it is reached)

[@jeffb.2469]

If you do a Roth conversion, is there a 5-year rule before being allowed to withdraw that money?

[@johnhaller5851]

​@@kbbkbbkbbkbbkbbIf your RMD + SS will not put you into a 32+% bracket, it's probably not going to be favorable to convert. And even then, unless it's going to children who will also be in at 33% tax bracket while withdrawing the regular IRA in 5 years, it still may not be advantageous. Still, lots can happen, like the death of a spouse, to put one into a less favorable tax situation. Chances of both spouses living to about the same time is low.

[@johnhaller5851]

​@@jeffb.2469On the converted money, yes. I have separate segregated accounts for different 5 year buckets to keep track of that. And, you can still take it out early, there are some tax consequences on the earnings post conversation.

[@jeffb.2469]

@@johnhaller5851 Thanks for letting me know that John. I don't know if I'll need that money before that 5-year rule. I think I might just take out just enough to keep me in the 12% tax bracket. The money we don't use for daily living can go into my Brokerage account. It may not be the best plan, but I think this will work for us.

[@Raymondjohn2]

We experienced the peak of our era, and now it is gone. Recession is tanking everything including 401K. My retirement equities portfolio of $750K is in the reds. I keep losing because of inflation. This world will fall to the corrupt rulers in the same way that Rome did. I'm sorry if you're thinking about retiring and you're worried that your pension won't be enough to meet the rising cost of living. Horrible foreign policies everywhere, bad regulatory policy, bad fiscal policy, and bad energy policy.

[@hermanramos7092]

For retirees and those close to retirement, I believe it's particularly challenging. All those years of labor only to lose it all to a problem you weren't responsible for, my regrets to everyone retiring during this time.

[@martingiavarini]

I'm very worried about the future and where we're all heading, especially in terms of money and how to get by. I'm considering making my first investment in the stock market, but how can I do so given that the market has been in a mess for the majority of the year?

[@bob.weaver72]

After the pandemic, things became extremely difficult, which is precisely when I sought a consultant's counsel. I've been investing on my own for nearly 3 years and have built up a stagnant reserve of $280K to $570K in just over 24 months.

[@hermanramos7092]

I’m in dire need of guidance so i can salvage my portfolio due to the massive dips and come up with better strategies. How can I reach this advisor?

[@bob.weaver72]

‘’Natalie Lynn Fisk’’ is my adviser and she is highly qualified and experienced in the financial market. She has extensive knowledge of portfolio diversity and is considered an expert in the field. I recommend researching her credentials further. She has many years of experience and is a valuable resource for anyone looking to navigate the financial market.

[@boricuamike2538]

Hi what's going on with next year cola.. for 2024..are any numbers in yet.. did you know that a carton of eggs is already $10.99 here in Florida 😢

[@jamesingwersen4240]

Devin said there may not be any cola next year. Cola for 2024 the interest rate has to be above last year. Its not that high.

[@jamesingwersen4240]

@from topeka im probably saying it wring. But devin did a video talking about the finicky nature of colas. And the possibilities it may be zero next year. Please see devin's video.

[@paulstein916]

The SS annual COLA is calculated based on the 3rd quarter CPI-W numbers (July-Sept). Until then, it’s just an educated guess by looking at the current month 2023 to same month of 2022 to see the change.

[@jamesingwersen4240]

@paul stein I stand corrected i just saw cola might be a little under 3%

[@jamesingwersen4240]

@@kbbkbbkbbkbbkbb please read my comments I admitted my mistake. Take a chill pill

[@daviddavis6876]

If you have a brokerage account you can make $44K without paying taxes

[@tubertime]

Wow

[@cindifitzgerald9693]

I’m smart about many things but this stuff confuses the crap out of me. For the life of me, what he said about the 12% tax level made no sense to me at all. None.

[@bernie9728]

Simple: Calculate the date of your death and work backwards.

[@runwader]

I dont understand the 12%. how is that figured out?

[@Satjr35031]

A couple say 65 with income of $110,000 from SS and 401K or IRA would fall into that bracket

[@johngill2853]

Good information but this is basic withdrawal strategy, it's scary to think any professional would think differently

[@thepepperking3075]

My taxable account has divided paying stocks. I will live off dividends and never sell shares.

[@fredmiller7554]

I too take dividends, and never touch the base. Next year, I will be required to take RMD's, and the dividends will easily satisfy whatever the amount comes to.

[@glenncantley5898]

Time value of money?

[@jamescollier3]

are you referring to SS? I'm taking it early, it takes years to catch up.

[@lisar901]

No I'm just going to have my 401k Roth from work,my IRA Roth from my bank and my CD and my savings account.

[@gregwhite9820]

This analysis appears to ignore the time value of money (delaying payment of taxes to pay with cheaper dollars)

[@johnhaller5851]

I've done a similar calculation, and the money left over at age 92 is bigger by following this strategy, but it also depends on assumptions on what happens to the money on your death. It's primarily trying to avoid large required minimum distributions (RMD) at age 72 and having a big taxable amount left at death. Everyone's circumstances are different. Do you live in a state with high income taxes on retirement income? Do you have low income children who will inherit and take the money out over the maximum time? Do you have high earning children? Are you planning on giving your RMD to charity and avoiding taxes altogether? On top of that are the unknowables about how Social Security and Medicare will change when the trust funds run out. I'm sure Roth holdings or distributions will have some changes related to that, but no one can predict what those changes may be.

[@alessandrasmota]

"you take the income you need and if there is still room, you do Roth Conversions to get you to the 12% average tax rate" You didn't specify which account to take from. So at 63 they are taking from Social Security, Tax-Deferred AND taxable accounts? Not sure how that's better than just doing large Roth Conversions with taxable money.

[@alessandrasmota]

If the balance is not that different, why just run away from paying taxes so bad? As if paying taxes to government is the worse thing we can do with our money, when at end, what u get, is virtually the same. Also u are comparing your plan to a plan where they aren't retiring early and doing large sums of Roth conversions to avoid the rmds from the tax deferred account.

[@edwardsmcintyre9014]

Devin for president

[@sobhitakhatun1059]

💕💕🙏💕💕

[@beverlycopes]

What about us single unmarried folks who don't have these large sums .... talk about that

[@michaelbrooks133]

Finally Got Around To Viewing Video. Trying To Envision How The Alternate Could Benefit Me. Over The Last 3 Years (My Retirement) I Have An Effective Tax Rate 6-7%. Because Of My Low Effective Tax Rate (And After Ridding Myself Of The Headache Trying To Understand Concept), I Just Don't See Benefit In My Situation. I Currently Use My SS And IRA Dividends (Monthly And Quarterly) To Fund My Budget. I Make A Withdrawal At End Of Each Year To Help With Budget For New Year, And Also To (Hopefully) Put Extra Into Savings/Cash (And To Pay Least Amount Of Taxes On IRA Distributions). The Large End-Of-Year Withdrawal Is Determined By My Probable Tax Bill-I Try Different Amounts With The Goal Of Protecting Taxable Amount On My SS As Much As Possible. So Far, Be It By Luck Or Actually A Legitimate Plan, I Have Been Happy With Results.

[@beerbrewer7372]

What I read sounds interesting however I found it somewhat difficult to read your post, You don't have to capitalize every word.

[@butopiatoo]

Very disappointing you never talk about single unmarried people.

[@johnhaller5851]

Even worse, it assumes the married couple both live to when the money runs out

[@iluvmoney6767]

So? Get married then. Problem solved!

[@ericreinhardt6429]

Good point

[@stevenbates388]

if your single, you don't need any help you're doing great

[@f430ferrari5]

I don’t believe the buckets are fully correct especially if one has quite a bit of tax deferred monies such as the example given. 1 million tax deferred 400k taxable with 50k capital gain. One can pull in 83k of taxable income or so and not pay any capital gain. MFJ The tax infested account has to be reduced as much as possible between retirement and prior to taking SS or else SS may be taxed too. And RMD will come into play also. They need 7k per month to live on which seems a bit high. Currently, there is standard deduction of 27k or so. Free money. RMD for a 500k tax deferred balance is 18.9k. Well below standard deduction. A better portfolio would be as follows at the time of retirement and ideal age around 62-63: 1. Tax deferred 800k 2. HSA 50-100k 3. Taxable or after tax 300k 4. Roth 100k Perform some Roth conversions between 62-67. Take SS 67 if souse get half. Stay in 12% bracket or less.

[@cynthiaanderson9908]

I tried to get get devin and his team to look at mine. Filled out the form and was told i did not qualify for their services, although I would be getting three streams of income from retirement. I felt discriminated against. I guess they only want to deal with people whom have very large amounts of money coming in. Disappointing

[@t-rocket6381]

That was a horrible infomercial

[@johnhenshaw5603]

I'm not sure I buy this approach because it ignores inflation effects. A dollar now is worth FAR more than a dollar later, say at age 79 where the two lines cross. This would be a lot more compelling if the amounts paid were inflation-adjusted. As it stands here, they're not, so I don't believe in the argument that is being forwarded.