Income Withdrawal Strategies
What should you consider when withdrawing money?
First and foremost, it's important to work with your financial professional to create a strategy that best addresses your objectives. Whichever withdrawal strategy you employ, you'll need to temper your withdrawal rates. If you don't, you risk running out of money long before you've run out of bills.
In general, you may want to withdraw from your least tax-advantaged resources first:
- Taxable investments – like mutual funds;
- Tax-deferred plans – like your employer's retirement savings accounts, IRAs and annuities;
- Tax-free sources – like Roth IRAs.
This ordering allows you to extend the time your tax-advantaged assets can compound – which, in turn, can potentially boost the income they generate over time.
Keep in mind, this is a general rule-of-thumb. You should always consult with your financial professional and tax advisor to help you determine what might be your most tax-efficient withdrawal strategy.
The information provided is not written or intended as specific tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. MassMutual, its employees and representatives are not authorized to give tax or legal advice. Individuals are encouraged to seek advice from their own tax or legal counsel.