Retirement Withdrawal Strategies: How to Make Your Portfolio Last in Retirement

After decades of diligently saving and investing, retirement flips the script: now it's time to start taking money out. But here’s the real question we hear all the time from clients and students in our community classes: 

“What’s the best way to withdraw from my accounts to make my money last and avoid paying unnecessary taxes?” 

That’s exactly what we’re unpacking in this post. Think of it as your retirement withdrawal playbook designed to help you live off your portfolio, minimize taxes, and plan with purpose for the next 30+ years. 

Retirement Is Different: The Rules of Engagement Change 

During your working years, you're building wealth through consistent contributions, often without even realizing you’re investing (hello, 401(k) paycheck deductions). But in retirement, you're in distribution mode, and that shift requires a whole new strategy. 

• You’re no longer dollar-cost averaging.  
• Your income sources change.  
• And inflation becomes a long-term threat to your purchasing power.  

You need to treat your withdrawal plan with the same care you gave your savings plan. 

The Tax-Efficient Withdrawal Order (In Most Cases) 

Here’s a general framework we follow when mapping out tax-smart withdrawal strategies: 

1. Cash (1–2 Years of Living Expenses) 

Before you touch your investment accounts, make sure you’ve got one to two years of expenses in cash. This helps you avoid selling investments when markets are down and gives you breathing room for strategies like Roth conversions. 

2. Taxable Investment Accounts 

Think brokerage accounts or trusts. These dollars have already been taxed and benefit from favorable long-term capital gains rates (0%, 15%, or 20%). 

Tip: Make sure you're selling investments you've held for over a year to lock in long-term gains. Otherwise, you could be hit with higher ordinary income rates. 

3. Traditional IRA / 401(k) 

Withdrawals from these accounts are taxed as ordinary income, which is often higher than capital gains rates. But here's the twist—if you're in the 12% tax bracket, it might make sense to strategically withdraw or even convert some IRA dollars to a Roth while keeping your tax bill low. 

4. Roth IRA 

Roth IRAs are your tax-free powerhouse. Let these dollars grow as long as possible, and consider using them later in retirement or leaving them as a legacy asset for your kids. 

Why Order Matters: It’s About More Than Just Income 

Your withdrawal sequence doesn’t just impact your taxes today, it can influence: 

✅ How long your money lasts  

✅ The taxes your heirs will pay  

✅ Whether you trigger higher Medicare premiums (IRMAA)  

✅ Whether you cross into higher tax brackets or face the Net Investment Income Tax 

We’re even seeing cases where Required Minimum Distributions (RMDs) in later years push retirees from a 22% bracket into the 32% range—something that’s avoidable with the right strategy.

What About Roth Conversions? 

Early retirement is often a golden window to convert traditional IRA dollars to Roth while keeping yourself in a lower tax bracket. Market downturns, temporary income gaps, and delayed Social Security can all create opportunities to do this efficiently. 

What About Social Security Timing? 

Delaying Social Security to age 70 means you: 

• Get an 8% annual boost in benefits  
• Give yourself more time to execute tax strategies  
• Reduce the taxable portion of Social Security in your early retirement years  

Think of Social Security as your income “ace” to hold in your back pocket while you do the heavy lifting with cash and taxable accounts early on. 

Mechanics: How to Actually Take Money Out

Let’s keep it simple:

• Link your investment accounts to your bank.  
• Set up monthly distributions—just like a paycheck.  
• Have your advisor coordinate which assets to sell, rebalancing intelligently based on market performance.  

Bonus Tip: Have dividends and interest flow to cash (not reinvested) to help fund your monthly income stream. 

Final Thoughts: It’s All About the Plan 

There’s no one-size-fits-all order. The right strategy for you depends on your account balances, tax bracket, goals for legacy, market conditions, and even your Social Security timing. 

But here’s the bottom line:  You need a distribution plan just as much as you needed a savings plan. 

Let’s make sure your retirement years are backed by intentional planning, tax efficiency, and smart decision-making. 

🎥 Want to hear Brad and Matt break this down with real examples and humor? Watch the full conversation on YouTube here.

If you’re navigating retirement planning or looking for guidance on tax-efficient investment strategies, Seaside Wealth Management provides ongoing financial planning support for individuals and families in the Carlsbad, Oceanside, San Marcos, and Encinitas California areas. Our team of Certified Financial Planners™ helps clients make informed decisions about Social Security, portfolio withdrawals, and long-term planning. If you’ve been searching for a “financial advisor near me,” we’re here to be a local resource for thoughtful, research-driven financial guidance.

This commentary reflects the personal opinions, viewpoints and analyses of the Seaside Wealth Management, Inc. employees providing such comments, and should not be regarded as a description of advisory services provided by Seaside Wealth Management, Inc. or performance returns of any Seaside Wealth Management, Inc. client. The views reflected in the commentary are subject to change at any time without notice. Nothing in this commentary constitutes investment advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Seaside Wealth Management, Inc. manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.