Sequence of Withdrawal Strategy, Part 3

July 02, 2019
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During the past 2 weeks we have covered the basics of sequence of withdrawals and several strategies to implement before retirement. Today, I will discuss several strategies to use for current income during your retirement years.

Part 3 – 2 Strategies to implement during your retirement years


Split Withdrawals

  1. Scenario – You are between tax brackets in retirement.
    1. Example - Married couple has $90,000 of taxable income while taking $40,000/year from IRA’s. If they lowered their IRA withdrawals to $28,950 and took the rest from after-tax saving or a Roth IRA, their entire income would be taxed at 12% or less.


Bunching Capital Gains & Cash Savings

  1. Scenario – You are between capital gain tax brackets in retirement
    1. Example – Married couple has taxable income of $20,000 because they are living on after-tax savings before Social Security and not withdrawing from IRA. They take advantage of the federal capital gains bracket of 0% (for couples within the 12% federal tax bracket) by realizing gains of $55,000 to increase taxable income to $75,000 but taxed at 0% federally on the capital gain portion of their income.


Disclaimer: Alex Voorhees and Reston Wealth Management do not provide legal, accounting or tax advice. This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified investment, tax or legal advisor. The opinions voiced in this article are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) or strategies may be appropriate for you, consult your financial advisor prior to investing. No strategy assures success or protects against loss. You should consider the investment objectives, risks, charges and expenses of any investment carefully before investing.