Which Accounts Should Fund Your Retirement Income?

Begin With the Income Your Household Needs

Before choosing an account to draw from, we need to understand the spending the withdrawals will support. Ongoing expenses, occasional larger purchases and family responsibilities may place different demands on the plan.

We then consider income from sources such as Social Security, pensions or continued work, where applicable. The remaining need helps frame the discussion about withdrawals from investments.

I want clients to see how their savings connect with everyday life. A balance on a statement becomes more meaningful when we discuss what it may need to fund and the uncertainties that could affect it.

Understand the Types of Accounts You Own

Account balances alone do not show the tax treatment of future withdrawals. Before comparing options, organize the accounts by type and confirm ownership, beneficiaries and any restrictions with the relevant providers.

Traditional IRAs and Other Pre-Tax Retirement Accounts

Traditional IRA withdrawals are generally taxable to the extent they represent pre-tax amounts; nondeductible contributions can complicate that calculation. Required minimum distributions and early-distribution rules may also affect a decision. Employer plans can have their own rules.

Roth IRAs

Qualified Roth IRA distributions are tax-free, but qualification and ordering rules matter. Do not assume every Roth withdrawal is treated the same. Review the circumstances with your tax professional before relying on a particular tax outcome.

Taxable Investment Accounts

Selling investments in a taxable account can create gains or losses. The amount withdrawn is not necessarily the amount of taxable gain. Cost basis, holding periods and other tax considerations need review.

These are starting distinctions rather than a complete tax guide. The IRS explains IRA distribution requirements in Publication 590-B.

Why a Fixed Withdrawal Order Can Miss the Bigger Picture

It can be tempting to follow a simple rule: spend one type of account first, then move to the next. A rule may be easy to remember, but it may not account for your income changes, future spending or family priorities.

I prefer to examine the circumstances before recommending an approach. We discuss what different choices could mean for current cash flow and future flexibility, with the tax professional evaluating the relevant tax consequences.

A decision that appears attractive for one year may have tradeoffs over a longer period. The purpose is to understand those tradeoffs rather than assume there is a universally best sequence.

Keep Allocation and Withdrawals in the Same Conversation

A recurring blind spot in my work is the gap between how clients think they are invested and what their statements show. That matters when accounts are expected to provide income.

We review the allocation across accounts and connect it with the plan’s demands. If a household needs withdrawals while markets are unsettled, the discussion should include what resources are available, what risks remain and whether spending assumptions need review.

The answer is not automatically to take more or less risk. Investment risk, retirement timing, spending and other income sources all deserve consideration. No allocation eliminates market risk or guarantees that savings will last.

A Hypothetical Withdrawal Review

Imagine a recently retired household with a traditional IRA, a Roth IRA and a taxable account. They have been drawing from whichever account seems easiest to access without reviewing the combined effect.

We would first organize expected spending and other income, then compare potential withdrawal choices with the household’s allocation and tax picture. The CPA would help assess tax consequences. This example describes a review process, not a recommended withdrawal order or a promised result.

Where Do Roth Conversions Fit?

A Roth conversion is a separate decision from withdrawing money to pay expenses. A conversion may create taxable income, so it should be evaluated alongside other income and the resources available to meet any resulting tax obligation.

Some clients ask whether a conversion should happen before retirement or after they stop working. My approach is to evaluate the circumstances rather than assume the earlier date is always better. Learn more about Roth conversion considerations.

Make Professional Coordination Practical

My goal is to keep the client, CPA and other professionals aligned around the same priorities. A useful conversation connects the proposed withdrawal approach with the client’s income needs and makes clear who is responsible for evaluating each part.

We also need to revisit assumptions as income, spending and circumstances change. A retirement withdrawal strategy should remain connected to the financial plan rather than become a one-time instruction.

What to Gather for a Planning Review

• Recent statements showing account types and current holdings.
• An outline of expected spending and larger upcoming expenses.
• Information about Social Security, pensions and other income.
• Questions about required distributions, beneficiaries or account ownership.
• Tax information your CPA identifies as relevant, shared through appropriate channels.

You do not need all of this organized before a discovery conversation. Start with your concerns. Explore retirement planning and tax-aware financial planning to see how these decisions fit together.

Start With a Conversation

I work with individuals, families and business owners in Schererville and throughout Northwest Indiana. Phone and video meetings are available, and in-person meetings in Crown Point, Indiana are by appointment only. Services are subject to applicable registration requirements.

Your first discovery meeting is free and lasts approximately 30–60 minutes. We discuss your situation, goals and priorities; no recommendations are made at that first meeting. Request a free discovery meeting or call (219) 400-0485. I respond to conversation requests within one business day.

Important Disclosures

This material is for general educational purposes and is not individualized investment, tax or legal advice. Investing involves risk, including possible loss of principal. Asset allocation and diversification do not guarantee a profit or protect against loss. Hypothetical examples are illustrative only and do not represent actual clients or results. Consult qualified tax and legal professionals regarding your circumstances.

Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Private Advisor Group, a registered investment advisor. Private Advisor Group and Mehok Wealth Management are separate entities from LPL Financial. Services are subject to the agreed scope of the relationship and applicable registration requirements.