How to Make Your Retirement Savings Last a Lifetime
Running out of money is a major concern for retirees. Social Security alone is not enough to finance anything but the most austere lifestyle, and few retirees are lucky enough to have a substantial pension from a former employer, so the bulk of retirement income must come from savings. If you're already retired, you can't do anything about how much you saved –- but you can optimize your management practices and stretch your money a bit further that way.
How and when you take money out of your accounts has a huge impact on whether those accounts flourish or wither on the vine. Most retirees have several different types of accounts: a tax-deferred retirement account such as a traditional IRA or 401(k); a standard brokerage account; a bank savings account; and perhaps a Roth account. Distributions from each of these accounts will have an entirely different effect on your tax bill for the year, which means that if you took exactly the same amount of money from each of these types of accounts, you'd actually end up with different amounts of income.
The rule of thumb for retirees is to start by taking distributions from a standard brokerage account; switch to a tax-deferred retirement account once the standard brokerage account empties out; and finally turn to the Roth account when the others are exhausted (leave your bank savings account alone so that you can save the money for emergencies).
Source: Fool.com
