The conventional wisdom is that retirees should first spend down their taxable accounts, then traditional retirement accounts and lastly tax free accounts like a Roth IRA.
That approach has its merits. But it can result in retirees paying almost no taxes in their first years and then hitting a “tax bump” when they begin receiving Social Security and are forced to take required minimum distributions from their tax-deferred accounts. Another issue with this strategy is it may cause retirees to pay increased Medicare premiums.
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