Picture this. You’re 65, newly retired, and you have three pots of savings to draw from: a brokerage account, a traditional IRA, and a Roth. Your monthly need is $4,000 above what Social Security covers. Where does that $4,000 come from?
Most retirement advice gives the same answer: spend the taxable account first, then the traditional, then the Roth last. It’s a clean, memorable rule. It’s also incomplete — and following it without thinking can quietly cost you six figures over the course of a 25-year retirement.
The conventional order — and what it gets right
The textbook drawdown sequence is taxable → tax-deferred → Roth. The logic is straightforward. You pull from accounts where the gains are already (mostly) taxed, then from accounts where withdrawals are fully taxed, and you let the Roth — the one bucket that grows tax-free forever — compound as long as possible.
That logic isn’t wrong. It just isn’t the whole picture.
What the conventional order gets right is the early-year tax bill. Brokerage withdrawals are usually taxed at long-term capital gains rates of 0%, 15%, or 20%, depending on income — and sometimes not at all. Pulling from there first lets you live cheaply on taxes in the first few years of retirement. Roth dollars compound tax-free and pass to heirs tax-free, so spending them last makes mathematical sense in isolation.
What it misses is the next twenty years of your tax life.
The real lever — your tax bracket between 65 and 73
The years between retirement and required minimum distributions at 73 are the most underutilized tax planning window in the American retirement system. For most retirees, taxable income drops dramatically in those years. The paycheck is gone. Social Security may not have started yet, especially if you’re delaying. The 12% federal bracket — and even the standard-deduction-only zone — is suddenly within reach.
If you spend strictly out of the brokerage account during those low-income years, you’re wasting the empty bracket space. Then RMDs hit at 73, your traditional IRA dumps a forced taxable distribution on top of Social Security, and you’re pushed into a higher bracket than you would have been in if you’d drawn measured traditional withdrawals years earlier.
This is the heart of account ordering. It isn’t really about which account to spend. It’s about what tax rate you pay on each dollar — and when.
A hypothetical that makes it concrete
Consider a hypothetical couple, Richard and Diane, both 65 and just retired. They have $400,000 in a joint brokerage account (with $250,000 in basis), $900,000 in a traditional IRA in his name, and $200,000 in a Roth IRA in hers. They’re delaying Social Security to 70 for both of them.
They need roughly $80,000 a year before tax to cover their lifestyle. The standard deduction for a married couple in their bracket runs around $30,000 (using 2026 figures, rounded for illustration). That leaves them with about $50,000 of taxable room before they pass through the 12% bracket.
The conventional answer is to pull all $80,000 from the brokerage account each year until it runs out. Because their cost basis is high, only about $30,000 of each year’s pull is gain — comfortably under the 0% capital gains threshold for a couple at this income level. They’d pay almost no federal tax during those years. Sounds great.
Now run the math five years out. The brokerage is gone. Social Security kicks in at 70, contributing roughly $70,000 to their household. RMDs hit at 73 and start at about 4% of the IRA — somewhere around $40,000 the first year, climbing every year thereafter. Suddenly Richard and Diane are sitting at $110,000+ of taxable income with most of it taxed at 22% or higher, and 85% of their Social Security is being taxed alongside it.
The better answer is to do the opposite of what feels intuitive. In those five low-income years, pull a modest amount from the traditional IRA each year — enough to fill the 10% and 12% brackets without pushing into the 22%. Take the rest from the brokerage. They convert traditional dollars into already-taxed dollars at a 10–12% rate, intentionally, instead of letting RMDs force the same money out later at 22% or more. Planners call this “bracket-filling.” The lifetime savings can easily run into six figures.
The Roth doesn’t have to be spent last
Thomas’s Take: The traditional drawdown order is account-type advice. Real account ordering is bracket-management advice. The question isn’t “which account holds the next dollar I spend?” It’s “what tax rate would I pay on that dollar today versus the tax rate I’d pay if I waited?”
The bucket framework helps here. Your Now bucket — current liquidity — gets refilled from wherever the math says is cheapest this year. Your Soon bucket — the guaranteed income floor from Social Security and any pensions or income-rider annuities — does its job regardless of account ordering. Your Later bucket is where the long-game decisions live, and that’s where the Roth’s tax-free compounding earns its keep.
But the Roth doesn’t have to be spent dead last. It earns its place as the bucket that absorbs the unexpected — the year the roof needs replacing, the year you fund a grandchild’s tuition, the year a medical event creates an unbudgeted need. Spending Roth in those years prevents a one-time large withdrawal from pushing you into a higher bracket. That flexibility is often worth more than the tax-free growth it would have produced.
Free Download: Social Security Optimization Guide
Learn the strategies that could maximize your lifetime Social Security benefits.
Get Your Free CopyThree real levers, not one rule
Account ordering in retirement comes down to three things.
The first is bracket-filling between 65 and 73. Pull intentionally from traditional accounts to fill low brackets each year. This is the highest-leverage move most retirees never make, because the reflex is to leave tax-deferred accounts alone.
The second is RMD foresight. Your future RMDs are predictable. If you can see them pushing you into a 24% bracket at 75, you have ten years to chip away at the IRA balance at 12% or 22%. That’s the math. Letting the IRA balloon because “compounding is good” is how you end up paying 24% on dollars you could have paid 12% on.
The third is the surviving spouse tax rate. Married filing jointly is a far friendlier tax structure than single filer. When the first spouse dies, the survivor’s brackets shrink dramatically while RMD obligations don’t. Couples can plan ahead by clearing more traditional dollars while both filers are alive. This isn’t morbid — it’s just math, and ignoring it leaves the survivor with a tax problem nobody asked for.
Order is downstream of strategy
There’s no universal “right” order for retirement withdrawals. There’s a right order for your tax situation, and that situation changes year by year.
The conventional taxable → traditional → Roth rule is a fine default for retirees with simple finances and no income-tax planning window. For everyone else — and that’s most retirees who’ve saved well enough to have all three account types — account ordering is the lever that quietly determines whether you keep an extra $50,000 to $200,000 across your retirement, or you hand it back to the IRS one bracket-bump at a time.
The right answer depends entirely on your personal situation. The math itself isn’t complicated. Sitting down with last year’s tax return and a calculator gives you most of what you need. The hard part is breaking the reflex to leave traditional accounts alone “because they grow tax-deferred.” Sometimes the most expensive thing you can do with a traditional IRA is nothing.
This article is published by Confluence Media Group LLC, an independent publisher of educational financial content. Thomas Clark is a Series 65 Investment Advisor Representative. The information provided is for educational and informational purposes only and is not personalized financial, tax, or legal advice. Past performance does not guarantee future results. All investing involves risk, including potential loss of principal. Consult a qualified professional before making financial decisions.
Confluence Media Group LLC is a separate entity from Confluence Capital Management, the investment advisory practice through which Thomas Clark provides advisory services. Advisory services are not offered through this publishing platform.
About Thomas Clark
Thomas Clark is the founder of Confluence Media Group LLC and a Series 65 Investment Advisor Representative. He has spent nearly two decades working with families on retirement planning, with a focus on Social Security optimization, retirement income coordination, and the bucket planning approach to building a guaranteed income floor.
Thomas writes and publishes at thomasclarkadvisor.com and is the author of The Just in Case Binder — a 148-page printable family financial organizer for households who want to make sure the people they love know where everything is.
He lives in North Carolina with his family.
Subscribe to the weekly newsletter · Get the Just in Case Binder
Thomas Clark is a Series 65 licensed investment advisor and experienced trader. He specializes in investing, retirement planning, and market analysis, helping individuals build wealth and make informed financial decisions.
