Angle: Provide actionable, non-prescriptive principles for sequencing withdrawals and managing tax exposure as a household, while emphasizing the need to model outcomes.
Know Your Account Types and Their Tax Implications
Summarize the common account types (taxable brokerage, traditional tax-deferred, Roth/tax-free) and how withdrawals from each are generally taxed. Emphasize that the mix of accounts influences tax strategy and that couples should inventory all household accounts before deciding on a sequence.
Sequencing Withdrawals from a Household Perspective
Discuss common sequencing principles: using taxable accounts for flexibility, tax-deferred accounts when it’s tax-efficient, and Roth accounts for tax-free longevity. Emphasize testing different sequences to manage marginal tax brackets, Medicare premiums, and required minimum distributions in later years.
Practical Steps to Reduce Tax Surprises
Recommend regular tax projections, accounting for Social Security and RMDs, considering partial conversions in advance of RMDs (as a general concept), and coordination between spouses to smooth taxable income across years. Advise consulting a tax professional for detailed tax planning.
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This article is part of a broader educational content package on Household Retirement Income Planning for Couples.