Which Retirement Account Should You Spend First?

The principle: plan withdrawals for lifetime taxes, not just this year

Where your retirement income comes from each year can change how much tax you pay over your lifetime, sometimes by a meaningful amount. The goal is not to pay the least tax this year. It is to create sustainable income while managing taxes across all the years of retirement, including years when Social Security and required minimum distributions add income you cannot turn off.

The conventional order, and why it is popular

A common default is:

1. Taxable accounts first. Only the gains on what you sell are taxed, often at lower long-term capital gains rates, and drawing these down lets tax-advantaged accounts keep growing.
2. Traditional (tax-deferred) accounts next. Withdrawals are taxed as ordinary income, and RMDs eventually force withdrawals anyway.
3. Roth accounts last. Qualified withdrawals are tax-free, Roth IRAs have no RMDs for the original owner, and Roth money can be valuable to a surviving spouse or heirs.

This order is a reasonable starting point. Its weakness is that following it rigidly can leave the traditional accounts growing untouched for years, which can produce large RMDs later, push income into higher brackets and raise Medicare premiums.

The tax features that make a blended approach possible

• The standard deduction. For 2026 it is $32,200 for married couples filing jointly. Ordinary income up to that amount, such as traditional IRA withdrawals, can be effectively untaxed at the federal level if you have no other ordinary income.
• Low ordinary brackets. For 2026, joint filers pay 10% on taxable income up to $24,800 and 12% up to $100,800.
• The 0% long-term capital gains rate. For 2026, IRS Revenue Procedure 2025-32 sets the maximum zero-rate amount at $98,900 of taxable income for married couples filing jointly and $49,450 for single filers. Long-term gains that fall within that range are taxed at 0% federally.
• RMD timing. Required distributions begin at 73 for most people born 1951 to 1958 and at 75 for people born in 1960 or later, per IRS regulations. Years before RMDs (and before Social Security) are often the most flexible.

A worked example: three ways to fund $90,000

Assumptions (hypothetical): married filing jointly, both 64, 2026 federal rules; no Social Security or pension yet; $10,000 of taxable interest from savings each year; the brokerage account's shares have a cost basis of half their value, so selling $1 of shares realizes $0.50 of long-term gain; standard deduction $32,200; state taxes, IRMAA and ACA effects are not modeled. Federal income tax only.

Options B and C both produce no federal income tax this year, because the interest and IRA withdrawals fit within the standard deduction and the gains fall within the 0% capital gains range. The difference is what they leave behind. Option C moves $22,200 out of the traditional IRA at a 0% federal rate, every year it is repeated. Over the six years until Social Security begins, that is more than $130,000 of tax-deferred money withdrawn without federal income tax, which reduces future RMDs and the income that will stack on top of Social Security later.

Option A, which looks simple, costs $6,440 this year. It does shrink the IRA faster, but in this example a good part of that drawdown could have been done at a 0% federal rate, as Option C shows.

Simplifications: in reality the capital gains calculation interacts with deductions in a specific order, brokerage basis varies by lot, and other income (including any Roth conversions) changes the result. Check your own numbers with tax software or a professional.

How the plan changes over time

What you can do

• List each account by tax type, along with the cost basis of your taxable investments.
• Estimate your income for each year until RMDs begin, including when Social Security will start.
• Each year, check how much room you have under the standard deduction, the 12% bracket and the 0% capital gains threshold.
• Decide whether to use that room for traditional IRA withdrawals, capital gains or Roth conversions.
• Keep a cash-flow reserve so you are not forced to sell investments at a bad time; see Principle 02.
• Review the plan every year; tax brackets, spending and markets all change.

To test different paths, the WealthLanding Roth strategy tool and Retirement Feasibility Engine can help. For a worked case study of how RMDs can compound tax costs, see Bill Left $5.1 Million. Tom Left $3.3 Million.

Put this principle to work

These WealthLanding tools and guides from the Retirement Lab help you apply this principle to your own numbers.

• Roth strategy tool (Optimize Roth)Test withdrawal and conversion amounts year by year.
• Retirement Scenario LabChart pretax, Roth and brokerage withdrawals together.
• The Letter That Quietly Cost Over One Million DollarsA case study of how required distributions can cascade.

Common mistakes

Treating the conventional order as a law

Taxable-first, traditional-next, Roth-last is a starting point. Following it rigidly can waste low-tax years.

Ignoring RMDs until they arrive

By the time RMDs start, many of the best opportunities to reduce them have passed.

Spending the Roth early for convenience

Roth money is often the most flexible asset you have for high-expense years, a surviving spouse or heirs.

Forgetting other programs

A withdrawal that looks cheap for income tax can still raise Medicare premiums through IRMAA or reduce ACA subsidies.

When individual circumstances change the answer

• Large unrealized gains in a taxable account, or assets you plan to leave to heirs, can change which shares to sell and when.
• Pensions or annuities that already fill the lower brackets reduce the room available.
• Charitable giving can be funded efficiently from certain accounts.
• State taxes and moves between states can shift the best timing.
• Health and spending changes may require more flexibility than any plan assumes.

Questions readers ask

Which retirement account should I withdraw from first?

A common default is taxable accounts first, then traditional, then Roth. Many retirees instead blend sources each year to use low tax brackets, the standard deduction and the 0% capital gains rate, which can reduce lifetime taxes. The right mix depends on your income, balances and plans.

What is the 0% capital gains rate for 2026?

Under IRS Revenue Procedure 2025-32, long-term capital gains are taxed at 0% to the extent taxable income does not exceed $98,900 for married couples filing jointly or $49,450 for single filers in 2026.

Do I have to take money from my IRA before RMDs start?

No, but you may choose to. Withdrawals or Roth conversions in lower-income years before RMDs can reduce the size of later required distributions, which are taxed as ordinary income.