Ask the Hammer: Should I Withdraw Money from Taxable Accounts to Meet Living Expenses or Save Less for Retirement?
Jeffrey Levine of Buckingham Wealth Partners helps a viewer decide whether to withdraw money from a taxable account to meet living expenses or save less for retirement.
Key Takeaways
- Always capture your full employer 401(k) match first—it's an immediate 100% return on investment that's hard to beat
- In low-income years, prioritize funding a Roth 401(k) or Roth IRA with up to $25,000 (including catch-up contributions if age 50+) to lock in tax-free growth on future earnings
- Trade taxable brokerage account dollars (subject to annual taxes on interest, dividends, and capital gains) for tax-advantaged retirement account contributions to eliminate future taxation on that money's growth
- Use non-retirement savings (brokerage, joint, or trust accounts) to cover living expenses in lower-income years rather than reducing retirement contributions
- A low salary year is an opportunity to pay taxes at a lower rate now on Roth contributions, versus paying taxes at potentially higher rates on the growth later
Ask the Hammer: Should I Withdraw Money from Taxable Accounts to Meet Living Expenses or Save Less for Retirement? In this episode of Ask The Hammer, Jeffrey Levine of Buckingham Wealth Partners helps a viewer decide whether to withdraw money from a taxable account to meet living expenses or save less for retirement. Watch more episodes of Ask The Hammer at this link: https://www.finstream.tv/videos/ask-the-hammer/
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