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« Saving Money Around the Home | Main | MND: Trade Sparingly and Invest for the Long Haul, Part 3 »

October 26, 2005


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Managing withdrawals in retirement is going to become a higher-profile item in the next few years. Starting with taxable accts makes some sense, since the bulk of the money in these may well already have been taxed -- so that the income tax will be low. If you can keep your tax rate in the low brackets, then you may also want to withdraw some from the pre-tax accts, pay the low tax rate on that, and then roll that money into a Roth IRA for later use. If you exhaust the post-tax accts first, then go all pre-tax, you may end up in a higher tax bracket and pay more. Obviously, calculating the "best" thing to do will depend on each person's financial situation (pensions, SS, amount in post- and pre-tax savings, part-time earnings). So no general rule could be given, just a set of principles. Which of course makes the situation too complex for many people, so I suppose a parasitic industry will grow up around this, too.

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