What is a Withdrawal Strategy?

Many retirees aren’t sure how to generate income from their retirement savings. Too often, retirees simply take money from the most easily accessible accounts without considering strategy or tax efficiency. In doing so, they are likely giving up a chunk of their hard-earned savings to taxes.

As you withdraw money from your accounts to generate income in retirement, when and from where you take such withdrawals matters. Choosing the wrong withdrawal strategy may mean your portfolio won’t last as long and that you will pay more in taxes.

A withdrawal strategy is a personalized plan to spend your retirement assets that includes all of your resources thoughtfully integrated into recommendations on how to most efficiently generate income. A smart withdrawal strategy includes the following elements:

  • Income needs and expense management– Your expenses won’t be consistent from year to year. Some years you’ll need more, in others you’ll need less. A withdrawal strategy guides you in determining your likely expenses at every stage of retirement.
  • Sequence of tapping accounts – Most people have multiple retirement resources like a 401(k) plan, an IRA, a pension, and others. Knowing which account to spend from and when is critical in maximizing the longevity of your assets and minimizing taxes. An Income Strategy™ Plan analyzes different strategies to be tax-efficient, which may help your resources last longer.
  • Optimal Social Security claiming – If you’re close to retirement, you already know that Social Security is complicated. An Income Strategy™ Plan can help you determine how and when to claim your benefits, and it’s coordinated with all of your other assets to make your resources stretch longer.


Finally, a withdrawal strategy helps you evaluate two sets of scenarios: 1) those depicting likely life events you’ll experience in retirement, and 2) those comparing how your resources will fare using specific assumptions. Income Strategy™ will show you strategy options and tradeoffs that are possible. Then you select what you believe best represents your best course of action. Based on your choices, your Income Strategy™ Plan will be delivered with explanations and visuals to help you-or your financial professional-manage your resources.


Let Us Help

Our full service registered investment advisory firm is available to answer questions about your withdrawal strategy. For a nominal fee, we can help you feel more comfortable with your selected strategy and make sure it’s suitable for your situation given your preferences.