The reason is that your tax picture will change from year to year based on your expenses, your available deductions, your investments' performance, and your RMDs, among other factors.
In order to keep your total tax outlay down during your retirement years, it's often worthwhile to maintain holdings in the three major tax categories throughout retirement: taxable, tax-deferred, and Roth. Generally speaking, Roth Armed with exposure to investments with those three types of tax treatment, retirees can consider withdrawal sequencing on a year-by-year basis, staying flexible about where they draw their income bases on their tax picture at large. They can help limit the pain of an otherwise high-tax year by favoring taxable and Roth distributions, for example, while giving preference to tax-deferred distributions in lower-tax years
This is an area in which a trusted tax advisor--or a financial advisor who's knowledgeable about tax matters--can help provide guidance on an ongoing basis, strategizing on where to go for income and how to get the most bang for your deductions. Here are some key situations when it can be advantageous to flout the rules of thumb about withdrawal sequencing, as well as alternative tactics to consider................
Christine Benz Morningstar..... Ok Sweetie: sounds like a plan retirees can/should use..already on my radar ...tb
Comments
morningstar.com/cover/videocenter.aspx?id=671308
Here's a way to help pay healthcare cost tax free (Draw down your Tax deferred dollars prior to retirement):
Year one:
-Prior to medicare kicking in, enroll in a H.S.A compatible Health Insurance plan and open an H.S.A. (Health Savings account).
-Contribute to your H.S.A. by doing a one time rollover from your taxed deferred account. For a 55 year old this could be as much as a $4350 tax free rollover for TY 2015.
Year two, but prior to age 59.5 (better to do this at least 5 years prior to 59.5):
-Set up a SEPP (Substantially Equal Period Payment) schedule and use these distributions to help contribute to your H.S.A. This acts to cancel out any tax on these SEPP distributions since they are offset by a tax credit to the extent that you contribute to your H.S.A.
Between Ages 59.5 - 65:
-Take normal distributions from your tax deferred account and receive a tax credit to the extent that you contribute to your H.S.A.
At any age, your H.S.A. contributions can be distributed to help pay health related costs tax free.
H.S.A. Resource link:
hsacenter/faqs
Point is you have to plan Retirement income based on tax considerations,
I think its called Tax Planning or Tax-efficient Draw Downs...
Either you spend it or politicians do.....your choice...