I’m Retiring Next Month – How Do I Take Money From My Portfolio?
Learn how changing one simple account setting and planning where to withdraw first can make your retirement smoother, simpler, and more tax-efficient.
When you hit retirement, one of the biggest questions you’ll face is:
Where should I take money from to live on?
Today I cover two simple strategies that can make your retirement withdrawals easier — and could even lower your tax bill along the way.
Step 1: Stop Reinvesting Your Dividends
When you were adding money into your investments, it made sense to reinvest all those dividends and capital gains. But now you’re taking the money out — why would you bother reinvesting each month and then take it out just a few days later?
It’s a small but powerful shift: if you’re retired and taking income from your accounts, you can change your dividend and capital gains setting from “reinvest” to “cash.”
That way, when your funds pay out interest or dividends each month, that cash automatically collects in your account — ready for you to withdraw when you need it.
I recently met with a couple who said, “Every time we try to take money out, it feels like there’s nothing there.” It turned out their dividends and capital gains were all set to reinvest. Once we changed their setting to send those payments to cash instead, withdrawals became effortless — no selling required.
This small tweak makes your investments work with your withdrawal plan, not against it.
Step 2: Choose the Right Account to Withdraw From
Once your withdrawal process is easier, the next question is:
Which account should your income come from?
Many retirees automatically pull money from their traditional IRA or 401(k) because, well, that’s their “retirement account.” But just because you saved into your retirement accounts doesn’t mean that’s where you have to take the money out.
If you’re younger than 73 (or 75 if you were born in 1960 or later), you’re not required to take withdrawals yet. That gives you a valuable window to be strategic.
In this couple’s case, they had:
- $500,000 in a regular brokerage account
- $50,000 in savings
- $1 million in a traditional IRA
- and nothing yet in a Roth IRA
They were withdrawing $50,000 per year from the traditional IRA — all of which showed up as taxable income. I suggested something different: Take that $50,000 from your regular brokerage account. That way, a lot of what you’re taking out is money you’ve already paid taxes on — your cost basis. You’ll still get the same $50,000 into your checking account, but at a lower tax cost.
By switching the withdrawal source, they reduced their current taxes and slowed the growth of their taxable investment income (interest, dividends, and capital gains). That meant fewer tax headaches down the road.
Step 3: Turn Withdrawals into Roth Conversions
Once we set up the right accounts for withdrawals, we took it one step further.
For this couple, they were already showing about $50,000 of taxable income each year — think of that as their taxable income budget. Instead of using it for living expenses, use it for Roth conversions.
Each year, they could convert $50,000 from their traditional IRA into a Roth IRA — paying taxes now at their current rate, rather than later when rates might be higher.
That simple move:
- Decreased their future Required Minimum Distributions (RMDs)
Grew their pool of tax-free retirement income - And lowered future taxes for themselves and potentially their heirs
Anything you can do to grow tax-free money is helpful. Anything you can do to lower taxable money is a good thing.
🪙 The Big Picture
When it comes to retirement income, it’s not just how much you take — it’s where you take it from and when.
Small changes like adjusting your dividend settings and planning which account to tap first can make your income simpler today and your taxes lower tomorrow.
If you’re a visual learner, make sure you watch the full video on YouTube where I break it down on the whiteboard: https://youtu.be/ItYj4JnfcUs
About the Author:
Jeremy Keil, CFP®, CFA® is a financial advisor in Milwaukee, WI, author of the bestseller Retire Today: Create Your Retirement Master Plan in 5 Simple Steps and host of both the Retire Today Podcast and Mr. Retirement YouTube channel
Links:
- Buy Jeremy’s book – Retire Today: Create Your Retirement Master Plan in 5 Simple Steps
- Learn how to build your retirement masterplan plan at FiveStepRetirementPlan.com
- Work with my team to get more income, pay less in taxes, and avoid big retirement mistakes: KeilFP.com
Disclosures
This media is provided for informational and educational purposes only and does not consider the investment objectives, financial situation, or particular needs of any consumer. Nothing in this program should be construed as investment, legal, or tax advice, nor as a recommendation to buy, sell, or hold any security or to adopt any investment strategy.
The views and opinions expressed are those of the host and any guest, current as of the date of recording, and may change without notice as market, political or economic conditions evolve. All investments involve risk, including the possible loss of principal. Past performance is no guarantee of future results.
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