“Retirement Withdrawal Order: Why Spending Cash First Can Backfire, According to Financial ” — what this page in the network covers. Many retirees follow a simple plan: spend cash first, then tap retirement accounts. But financial planners warn this can lead to a sudden income surge later, pushing you into a higher tax bracket and potentially increasing Medicare premiums. The issue is that cash withdrawals are not taxable, while IRA distributions and annuity payments are.
By draining cash early, you defer taxes only to face a larger tax bill when forced to take required minimum distributions (RMDs) from IRAs at age 73. Planners suggest a more balanced approach, such as withdrawing from IRAs up to the top of your current tax bracket each year, then using cash to cover the rest. For example, a couple with $500,000 in IRAs and $200,000 in cash could avoid a $30,000 tax spike by withdrawing $50,000 annually from IRAs instead of waiting. The full version stays on the original page, which this listing opens directly.