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How to Withdraw Retirement Savings Without a Huge Tax Hit
Explore tax-smart strategies for retirement withdrawals—from sequencing and RMDs to Roth conversions— to help manage liabilities and support...
Explore strategies for building a retirement income plan—covering taxes, timing, liquidity, and legacy—designed for high-net-worth households.
Creating a Balanced Retirement Income Plan
For individuals approaching or navigating retirement, generating income is no longer just about building wealth—it’s about using it carefully. A balanced retirement income plan can draw from multiple sources, account for tax implications, and adapt to changes over time. Especially for high-net-worth households, the complexity of assets and goals often requires a coordinated approach.
Here are strategies to keep in mind when building your plan:
- Diversify your retirement income across account types and asset classes
- Sequence withdrawals to manage taxes and preserve flexibility
- Plan for inflation and long-term cash flow needs
- Build liquidity for near-term spending without relying on market timing
- Explore when guaranteed income sources may make sense
- Integrate your retirement income plan with estate and legacy goals
Mapping Retirement Income Across Buckets
A balanced income plan typically includes a mix of the following:
Guaranteed Income
- Social Security benefits, which may be delayed to increase monthly amounts
- Pension payments, if available
- Annuities that provide a predictable monthly stream
Investment Withdrawals
- Distributions from traditional IRAs, Roth IRAs, and brokerage accounts
- Dividend or interest income from taxable investments
- Timing matters: some accounts are more tax-efficient to draw from earlier, others later
Other Income Sources
- Rental income from investment properties
- Business sale proceeds or installment payments
- Trust distributions or deferred compensation
Each income source comes with different tax treatments and liquidity characteristics, making coordination important.
Planning Your Withdrawal Sequence
Which accounts you tap into—and when—can make a significant difference in how long your retirement assets last and how much tax you owe each year.
Common withdrawal considerations:
- Spend from taxable accounts first, giving tax-deferred assets more time to grow
- Consider Roth conversions in lower-income years to reduce future RMDs
- Monitor IRMAA brackets for Medicare premiums and avoid income spikes that trigger higher rates
- Coordinate withdrawals with capital gains harvesting or charitable giving to balance tax impact
Working with a retirement planning team can help align your strategy with changes in tax law and income needs over time.
Accounting for Inflation and Longevity
The cost of living won’t remain static in retirement. Even modest inflation over two or three decades can have a major impact.
To plan around this:
- Include investments that offer growth potential, such as equities or real assets
- Consider the role of income sources with cost-of-living adjustments, like Social Security
- Periodically reassess your spending and assumptions about longevity
- Model scenarios for longer-than-expected retirement durations
Liquidity and Cash Flow Management
Maintaining access to cash may help you minimize the need to sell investments at inopportune times.
Strategies to support near-term needs:
- Maintain 12–24 months of living expenses in cash and low-volatility investments such as short-term bonds
- Set up regular distributions that create a “retirement paycheck”
- Align investment strategy with spending timelines—short-term needs in stable assets, long-term in growth-oriented ones
- Anticipate large future expenses such as healthcare or family support
Liquidity can also serve as a cushion during down markets or when waiting for other income sources to begin.
Evaluating Annuities and Other Income Vehicles
While not for everyone, certain annuity types may be used to create predictable income.
Options to consider:
- Immediate annuities for lifelong payments starting now
- Other vehicles may also play a role in producing income, depending on risk tolerance and time horizon
- Dividend-paying stocks
- Real estate
- Structured notes
Stress Testing for a Range of Scenarios
Even the most detailed plan can be affected by market shifts, rising costs, or unexpected health needs.
Stress testing helps you evaluate:
- A significant downturn early in retirement
- A longer retirement than initially planned
- A shift in healthcare expenses or family obligations
- Income disruptions from a business, trust, or other outside asset
Running different scenarios can help highlight where adjustments may be needed and how resilient the plan may be under pressure.
Aligning Income Planning with Broader Goals
Retirement income decisions should be made in the context of your full financial picture.
Considerations include:
- How income strategy supports or affects estate planning
- Opportunities for charitable giving, such as Qualified Charitable Distributions (QCDs)
- Gifting strategies to children or heirs while living
- Maintaining liquidity to support trust structures or long-term care planning
Retirement income planning involves coordinating withdrawals, managing tax exposure, and positioning assets to support both current needs and future legacy goals.
To explore strategies tailored to your situation, contact an EP Wealth advisor near you.
DISCLOSURES
- EP Wealth Advisors, LLC. is registered as an investment advisor with the SEC and only transacts business in states where it is properly registered, or is excluded or exempted from registration requirements. SEC registration does not constitute an endorsement of the firm by the Commission nor does it indicate that the advisor has attained a particular level of skill or ability.
- Request an appointment with an EP Wealth Advisor when you have a minimum of $500,000 in investable assets – which includes qualified retirement plans (IRA, Roth IRA, 401(k), taxable brokerage, cash (savings / checking) and CDs. Investable assets do not include your home, vehicles, or collectibles.
- An estate plan is a helpful tool that can assist individuals in managing and arranging affairs in the event of death or incapacity. However, the scope and extent of the plan varies depending on the unique circumstances and desires of the individual client. It is for this reason, that the analysis encompassed herein is not intended to be comprehensive in nature nor should it be interpreted as legal advice. Please consult a legal professional to determine the extent, scope, and the drafting and creation of the appropriate estate documents. EP Wealth Advisors is not in the business of providing legal advice or preparing legal documents. Our review is limited to and in association with Financial Planning only.
- Hiring a qualified advisor and/or financial planner does not guarantee investment success, and does not ensure that a client or prospective client will experience a higher level of performance or results. No guaranty or warranty is made that any direct or implied results or projections being represented here will be met or sustained.
- The need for a financial advisor or financial planner and/or the type of services required are specific to the uniqueness of each individual’s circumstances. There is no guarantee or warrantee that the services offered by EP Wealth Advisors, LLC will satisfy your specific financial services requirements. Services offered by other advisors may align more to your specific needs.
- Information presented is general in nature and should not be viewed as a comprehensive analysis of the topics discussed. It is intended to serve as a tool containing general information that should assist you in the development of subsequent discussions. Content does not involve the rendering of personalized investment advice nor is it intended to supplement professional individualized advice.
- EP Wealth Advisors (“EPWA”) makes no representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information presented. All expressions of option are subject to change without notice.
- All investment strategies have the potential for profit or loss. Different types of investments and investment strategies involve varying degrees of risk, and there can be no assurance that any specific investment strategy will be suitable or profitable for a client’s portfolio. The risk of loss can never be eliminated even if working with a professional.
