You spent thirty years being told to save. Nobody spent five minutes telling you how to spend it.
So here you are with a 401(k), maybe an old IRA, a Roth you opened in a burst of optimism, and a regular savings account — and the question nobody prepared you for: which one do you touch first?
It matters more than it sounds like it should. Same total savings, different withdrawal order, and people can land in meaningfully different tax situations over a 25-year retirement. Here's the general framework — and where it stops applying to you.
Your accounts fall into three buckets
Before order, categories. Almost everything you have is one of these:
- Taxable. Savings, checking, brokerage. You already paid tax on this money. Selling investments here typically triggers capital gains tax on the growth only.
- Tax-deferred. Traditional 401(k), 403(b), TSP, traditional IRA. You skipped the tax going in, so withdrawals are generally taxed as ordinary income coming out.
- Tax-free. Roth IRA and Roth 401(k). You already paid the tax. Qualified withdrawals typically come out tax-free, and Roth IRAs have no required minimum distributions in your lifetime.
The conventional order — and why
The default playbook most financial professionals start from goes: taxable first, tax-deferred second, Roth last.
The logic is straightforward. Taxable money is usually the cheapest dollar to access, and spending it first leaves the tax-advantaged accounts alone to keep growing. Roth goes last because it's the only bucket that grows tax-free with no withdrawal clock — so you want it working as long as possible.
That's a starting point, not an answer. Treating it as gospel is how people accidentally hand themselves a much larger tax bill at 73.
The trap in the conventional order: leave a large traditional 401(k) or IRA untouched for a decade and required minimum distributions can force big withdrawals later — potentially pushing you into a higher bracket and affecting how much of your Social Security is taxable. Under current rules, RMDs generally begin at age 73. Many people are better served drawing something from tax-deferred accounts earlier, on purpose.
Four things that change the answer
- The gap years. If you retire before claiming Social Security, your income may be unusually low for a few years. That window is when people often look hardest at partial traditional withdrawals or Roth conversions.
- Health insurance before 65. On a marketplace plan, your reported income can affect premium subsidies. Which account you pull from changes that number.
- What you want to leave behind. Account types pass to heirs under different rules. If legacy matters to you, it belongs in the decision.
- Whether you expect taxes to go up or down for you. Not for the country — for you, in your own bracket, ten years from now.
What to do before you decide anything
You can't answer the order question until you can see everything on one page. Most people can't. Start there:
- Every account: institution, balance, and which of the three buckets it's in.
- Your expected annual spending — the real number, not the aspirational one.
- Your guaranteed income: Social Security, pension, annuity, rental income, and when each starts.
- Anything with a deadline attached — RMD age, pension election windows, Medicare enrollment.
Then bring that one page to a fee-only financial planner or a CPA. This is a run-the-numbers question, not a rule-of-thumb question, and an hour with someone who can model it against your actual brackets is worth more than any article — this one included.
If getting it onto one page is the part you keep putting off, the Retirement Budget Worksheet and the Social Security Delay Strategy Worksheet in our Retirement bundle walk you through it step by step. Take a look at lumeway.co/templates. They're organizational tools to help you prepare — not financial or tax advice.
You don't need the perfect withdrawal order. You need to stop guessing.
This post is for general informational purposes only and is not financial, tax, or legal advice. Withdrawal sequencing depends on your income, tax bracket, account types, state of residence, health coverage, and estate goals — and the rules governing retirement accounts, including required minimum distribution ages, change over time. Please consult a qualified financial professional and a tax advisor before making withdrawal decisions.