Congrats! You have worked hard and saved for retirement, now what is the best way to fund all of the years and plans you have in front of you? Here is my humble opinion as to where to go to make sure you have the cash flow necessary to do what you want in retirement.
These can be checking, savings, or money market accounts set up for funding your lifestyle, not your emergency fund account. Cash accounts will not earn much, if anything in the way of interest, but these accounts are easily accessible for funding your lifestyle.
If you happen to have an annuity in your investment portfolio, annuities grow on a tax deferred basis, when the time comes to withdraw from them, and part of your withdrawal may be considered return of principal. Many times annuities will pay all income first, which will be taxable, then return of principal, there is also the option to have a guaranteed payment from an annuity.
Non-retirement investment accounts:
These accounts invested in mutual funds, or individual stocks will earn dividends and capital gains. If you have been reinvesting the dividends and capital gains, you can now have those paid out to you. For most people, capital gains are taxed at a lower rate than ordinary income, this is a plus in my book.
Roth IRA accounts grow tax-free, so again, with my distain for paying taxes, I would tap into this area before Traditional IRA accounts.
Depending on when you were born, you may not have to take a Required Minimum Distribution from your IRA until age 75. This will allow those dollars to grow as long as possible without having to pay ordinary income tax on your withdrawals.
Everyone’s situation is different, depending on your cash flow needs and income from various sources, these recommendations may work for you. Please consult your tax professional before putting your plan into action.