Concern about retirement“How Much to Withdraw From Retirement Savings?” –  is NOT the important question.

This Forbes article discusses withdrawal rates of 4%, 2% or 3% and also 6% or 7% – in that order. It is all over the map.

The KEY question is …  “When should retirement assets be withdrawn?”

The answer is   “When your taxes are the lowest! “

The senior partner in all of your retirement savings accounts is the Federal Government (and sometimes a junior partner is the state government).

The best way to minimize the amount of taxes due on your retirement withdrawals is by managing the marginal federal tax bracket. Currently there are wide gaps in the 12%, 22% and 24% Married filing Jointly (MFJ) marginal tax brackets.

For tax year 2021:

  • 12% federal tax bracket – gap between $19,901 to $81,050- $61,149
  • 22% federal tax bracket – gap between $81,051 to $172,750 – $91,699
  • 24% federal tax bracket – gap between $172,751 to $329,850 – $157,099

A strategy to minimize the risk of future tax increases would suggest increasing your withdrawals from retirement accounts to take advantage of these relatively large marginal tax brackets. Contact me for an analysis of your retirement and tax planning to maximize this opportunity while it still exists.