Other books on finances in retirement focus on how to save your money as you get ready for and enter retirement. But there is one big decision that these books don’t help you make: How should you withdraw from your accounts to meet your monthly expenses in retirement? You spent decades accumulating savings to use in retirement. You put a lot of effort into how you saved that money. Shouldn’t you put some effort into how to spend it wisely too?
Maybe you’ve wondered about this. I know I did. In my gut, I thought it could be an important and potentially costly decision. I was frustrated, however, by the lack of information and guidance on retirement withdrawals. (Could it be because the big financial institutions care a lot more about helping you give them money than helping you take it out? That’s not for me to say.) Call it “withdrawal symptoms” with no cure.
Finding no answers to my questions, I decided to run the numbers myself by creating a retirement tax simulator I call the Retirement Tax Saver (created with the help of my son, a software engineer and graduate from Cornell University in Computer Science). The numbers showed that how and when money is withdrawn from tax-deferred and other accounts can have an enormous impact on taxes. I thought the information was important enough to share with others that I interrupted my attempt at early semi-retirement to write the book, From Savvy Saver to Smart Spender: How to Pick a Tax-Wise Retirement Withdrawal Strategy.
Maybe you have had “withdrawal symptoms” too. Maybe you haven’t given it a second thought. Either way, this is a decision every retiree with substantial savings will make. For many, the decision will save—or cost—thousands or even tens of thousands of dollars in taxes over the retirement years. Plus, with tax rates scheduled to increase in 2026, and potential tax increases even sooner, this decision is even more critical today.
Some experts estimate that about 80 percent of retirees wait to use tax-deferred accounts such as 401(k) and IRA accounts until they “have” to withdraw from them at age 72 (when Required Minimum Distributions kick in for most people who are not already 72 when they read this book). While that “Conventional Wisdom” approach might save taxes pre-72, it can wind up costing a lot more in taxes in the years after 72. This book shows you a better way that takes advantage of lower tax rates before you reach age 72.
This book goes even further by helping guide you regarding how much you should withdraw before age 72 to reduce your overall tax liabilities in the short or long run. Of course, every situation is different, including yours. How? This book sends you to a website where you can input your own account information into the Retirement Tax Saver tool and use a simple process to help you make this critical decision.
The Retirement Tax Saver tool can be tailored specifically to your situation—whether you are married filing jointly or single, when and how much you will receive in Social Security, your target income per year, and other information specific to you are all factored in. It even can help you estimate how much you can save compared to conventional, wait-to-withdraw wisdom. The Retirement Tax Saver will not calculate your exact future taxes owed—an impossible task, really. However, it will run simulations that will help you pick your best approach to withdrawals. And at least give you an idea of how much you may be able to save in taxes! The Retirement Tax Saver illustrates how wisely using low tax brackets pre-72 can help you avoid higher taxes post-72.
Finally, the book will walk you through how to implement the strategy you pick and how to maintain your strategy as your circumstances change in future years. You might be surprised to find that, even if it is late in the calendar year, you can still take steps to implement the strategy you choose right now. The strategy outlined in this book is so simple that you can implement its guidance and improve your future tax situation before this year is over.
Did I mention that this strategy does not require you to buy into any new insurance or investment products or pay a single cent in new fees, hidden or not, of any kind? This book is not trying to sell you any new products. It simply helps you withdraw your income needs from your existing accounts in a better way.
In short, in the time it takes to read this book and input your personal information into the online Retirement Tax Saver tool, you will be ready to implement a simple withdrawal strategy for retirement immediately that could save you thousands, or even tens of thousands, of dollars over the course of your retirement.
Are you in your fifties or sixties and about to retire or already retired (like me)? Do you expect your 401(k) and other accounts to total a few hundred thousand dollars or more by the time you start withdrawing from them? Then you are in the “sweet spot” for gaining maximum benefits from using the strategy outlined in this book.
Daniel McDonald is a semi-retired intellectual property lawyer, author of From Savvy Saver to Smart Spender, and creator of the retirementtaxsaver.com website. Dan has a B.S. in Electrical Engineering and a law degree, both from the University of Minnesota. Dan has been an attorney for over 36 years, admitted in Minnesota, Georgia, and various federal district courts, appellate courts, and the U.S. Supreme Court. He is also a registered patent agent authorized to practice before the U.S. Patent and Trademark Office. Recognized for many years as a SuperLawyer® and U.S. News and World Report Best Lawyer®, Dan has successfully presented and defended against dozens of multi-million-dollar patent, trademark and copyright claims. He has volunteered in many roles at the University of Minnesota including Chair of the Alumni Association, receiving the University’s Alumni Service Award. Dan currently resides in Naples, Florida and enjoys bicycling, kick boxing, and traveling with his wife Kim.
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