What I know for sure is one of the largest expenses you will face is taxes. If you can save money on your taxes, I am confident that you will have more money to spend in the long run.

Your withdrawal sequence is one way to save money on your taxes. Assume you have a pension, money in an IRA, a ROTH IRA and a non-qualified account and Social Security. The first thing you want to do is make sure you take your RMD (Required Minimum Distribution) since failing to do so can result in a 50% penalty for not taking it.

After that let’s assume you are taking Social Security. If the Social Security payments are $3,000 a month from both spouses combined. You receive a pension payment of $3,000 a month. That means you receive $72,000 a year before you withdraw any money from your savings.

In 2016, you will stay in the 15% tax bracket as long as your income is less than $75,300, if you file, Married Filing Jointly. If you need $90,000 a year to cover your expenses. You will still need $18,000 in additional funds. $14,700 more than the then $75,300 to stay in the 15% tax bracket. You can pull $3,300 from your IRA and still be in the 15% tax bracket; the additional $14,700 is taxed at 25% if withdrawn from your retirement assets.

If you pulled money from your non-qualified accounts, avoid positions with gains, or if you take it from your ROTH IRA, you will not increase your tax liability. Let’s assume you fill the 15% bracket with taxable income to $75,300. The remaining $14,700 comes from savings that are not taxable.

The additional $14,700, taken from an account that does not create taxable income saves $3,675 in taxes. $14,700 x 25% = $3,675. $3,673 may not seem like a lot, but is roughly 4% of what you spend for the year.

People are always concerned about their fees, and rightfully so. If you have a $700,000 retirement account, and you pay a 1% management fee, that is $7,000. If I can save you $3,675 in taxes that is a real benefit, you save a little more than half the amount of your management fee.

It is always smart to know your expenses, but it is equally important to manage your tax bill. Planning which accounts to derive your income from is something you should consult with you tax preparer and investment advisor.

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