Why the order matters
Retirement savings usually live in three buckets that are taxed differently when you spend them:
- Taxable brokerage. Only the gains are taxed, at capital-gains rates — often the lowest bill per dollar withdrawn.
- Traditional / IRA. Every dollar withdrawn is ordinary income, taxed at your marginal rate.
- Roth. Qualified withdrawals are tax-free, which makes Roth the most valuable bucket to preserve and the most flexible to tap.
Because the U.S. uses graduated tax brackets, how much you pull from the taxable IRA in any one year decides which bracket that income lands in. Draw too much in a single year and you push the top slice into a higher bracket; spread it out and you can fill the lower brackets cheaply year after year.
Common sequencing approaches
- Taxable → traditional → Roth. The conventional default: spend the lightly-taxed brokerage first and let tax-advantaged accounts keep compounding, saving Roth for last.
- Bracket-filling. Each year, draw just enough from the traditional IRA to “fill up” a target bracket, then top up spending from Roth or brokerage. This smooths ordinary income across decades.
- Proportional. Draw from all three in fixed proportions to keep the relative balances — and thus future flexibility — intact.
There's no single winner; the best sequence depends on your balances, your spending, and the tax brackets in play each year. That's a lot of interacting variables to optimize by hand.
Let an optimizer do the sequencing
FIRE Planner includes a withdrawal optimizer that searches for a tax-efficient drawdown schedule across your brokerage, Roth, and IRA balances — proportionally drawing down accounts while respecting a cash target and early-withdrawal age limits. It runs entirely in your browser, so you can try different spending levels and watch the resulting tax bill in real time.
Open the planner to model your own accounts — free, private, no signup. For the spending side of the question, see the 4% rule and safe withdrawal rates.