Where Should You Take Money From First In Retirement

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Be careful of scammers. In the comments section, I will NEVER ask you to contact me, offer any investment products, recommend a stock broker, or anything similar. Some scam bot commenters 'ask' for investment help, and later, other comment bots reply with "how great X idea/investment/person is" in the replies. These are scam threads. Do not fall for them.

🚨 Azul's VIDEOS ARE NOT FINANCIAL ADVICE (Disclaimer) 🚨

The decisions on how to invest, when to retire, and other financial planning topics are some of the most important financial decisions you will make in your life. I urge you to seek professional financial advice as you make this decision. Ideally, from a financial adviser, AND a CPA AND an attorney. Having the perspective of all three professions will help you make the right decision for you and your family.

This information is being presented without consideration of the investment objectives, risk tolerance, or financial circumstances of any specific investor and may NOT be suitable for all investors.

This information is NOT intended to, and should NOT, form a primary basis for any investment decision that you may make. Always consult your own legal, tax, and/or investment advisor before making any investment/tax/estate/financial planning considerations or decisions.

Spoiler Alert: There are no "get rich" programs. Rather, just basic blocking & tackling and putting in time and care. Do your homework, choose wisely and (IMHO) work with experienced professionals who are fiduciary to you 100% of the time.

[LesterHess-tx]

I'm a forty-three-year-old parent living in Hamburg who is unmarried. I plan on retiring at age 50 if all goes according to plan. I recently purchased my first home last month, and I couldn't be happier right now. I'm overjoyed that I made sensible decisions that permanently changed my life.

[Peterl]

I'm a single, 43-year-old father who resides in Hamburg. If everything continues to go well for me, I intend to retire at age 50. I couldn't be happier right now than I am that I just bought my first house last month. I'm so happy that I made wise choices that altered my life forever.

[PJBHolden]

Many people think if their income exceeds the upper threshold of say, the 12% tax bracket that all of their income will be taxed at 22%. Not true, just the income over 94k (married jointly) will be taxed at 22%. The tax bracket’s are progressive

[rozaliapapp]

At minute 4, the senior additional standard deduction is age 65 not 60

[npglife]

I’m learning a lot from your videos. What I most like is that you combine life advice with financial advice. Additionally, your videos are very easy to understand. Great stuff brother.

[joearceneaux]

Azul…thanks for this information. I’ve been a fan of your channel for 2+ yrs, and retired from fed service in Dec’23.

I’ve shared your channel with 2 other colleagues who’re 5-7yrs away from their fed retirement.

[randolphh]

There are criteria for IRMAA not widely understood. There is an appeal process for getting the penalties reduced IF your current income is reduced from your 2 year prior income that triggered the penalty. This is mostly relevant to the recently retired and we were able to get a reduction in IRMAA penalties for three tax years!

[movdqa]

It is better to withdraw from non-taxable accounts first but it is human nature to withdraw from already taxed money first because then you don't have to pay taxes. The main problem is that you can get hit with RMDs that can put you in the top bracket and ouch!

[KSquared-]

I think you have to be 65, not 60 for the extra deduction

[allyb]

This chart is helpful. Thank you for sharing.

[rodrigok]

Traditional IRA and Traditional 401k are first, saving and brokerage next, and Roth last. Depends though on market conditions. Bad to pull money out if markets down. If markets down, it’s a great opportunity to convert some of the money to Roth, basically shifting it to the tax me never account. Need to have 2 or 3 years of savings in your brokerage/ savings account to weather the storm.

[beerbrewer]

4:03 Isn't the standard deduction increase at age *65* ?

[kfbob]

I don’t expect to ever withdraw my 401 or roth ever. I have a 55K yearly pension +2300/month SS.

[richdewitt]

Another good reason to retire early, worse case retire and collect SS at 62, in addition to of course enjoying life more. Medicare at the first year one can claim it, 65, looks back 2 years to 63 yrs old thus your income should be very low and no IRMAA penalties. Then when you do Roth conversions-(likely up to the 12% bracket)- just be very careful NOT to convert too much and trigger IRMAA as Azul stated correctly the Roth Conversion is fully taxable--(it is considered same as income). Good video Azul! Rich

[bmwkgttech]

I 58 but retiring next year. I am evenly split between taxable vs non-taxable. I have been talking to Fidelity about where to draw down funds from first and when to draw SS. I'm of the mind to draw down taxable, staying within 12% bracket, until I turn 67, to increase my SS payments. I am fortunate to have saved enough to not spend my non-taxable and save for future unforeseen expenses.
Would you suggest this approach, or draw SS at 62 and take less out of taxable access? Thanks

[skeller]

Hi Azul, I’m ~2 1/2 years from retiring and am trying to figure this out to keep my taxes out of the 22% tax bracket as much as possible. I plan to have two years without taking SS, so that, without a salary, I’ll have the ability to do Roth conversions by using some of my brokerage account money to live on while converting some of my traditional IRA holdings. I have it mostly figured; however, this tax planning piece is the most complicated part, so I’m studying now to get a handle on exactly what I need to do post-retirement, pre SS income to optimize taxes for the following years. Thanks for the pointers!

[travelingfool]

RMDs are 75 for anyone born after 1959
IRRMA is better than the reductions in healthcare subistities before 65.
It only make sense for conversions after I start Medicare
at about 30% in Roth now, will look at where ima at when I am 65

[juliehe]

Best order is to live on non retirement accounts and convert 401k to Roth at the early years of retirement. Once the none retirement accounts is gone, then continue to draw from 401k live on and convert, leave the Roth at the last. I plan to convert 380k every year. We have 4m to convert. Kick myself not to invest in Roth 401k. I will be hit with IRMM😭

[J.woltz]

I’ve worked hard to save about $800, 000 for retirement, and now I’m ready to turn my savings into a paycheck. But how much can I afford to withdraw from savings and spend is what I don’t know. If I spend too much, I risk being left with a shortfall later in retirement. But if I spend too little, I may not enjoy the retirement I envisioned. What’s your advice on this please?

[RBart-ossy]

Azul, at the 4:19 mark, shouldn't it be $16, 550? You show $16, 500.
How long has this rule been in effect? I don't think my tax guy included this addl amt last year. Thank you.