If you are close to retirement, it is important to develop a withdrawal strategy that fits your needs and maximizes account values. Avoid these mistakes when that time comes:

  1. Withdrawing from your 401(k)s and IRAs first: this could cost yourself years worth tax-deferral. Additionally, it triggers taxable income that you will have to pay taxes on. In most cases, it is better to tap your brokerage accounts and any after-tax accounts first to let your retirement accounts continue growing tax-deferred or tax-free.
  2. Claiming social security at 62: if you can hold off, your SS benefit will be much higher if you wait to claim at your full retirement age.
  3. Tapping your Roth: put off withdrawing from your Roth IRA as long as possible so that it will continue to grow tax-free.
  4. Talk with an advisor: determining the optimal sequence to withdraw from your retirement accounts is different for everyone, so we recommend consulting an advisor to develop a plan that is right for you.
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