UpTrajectory Review

Beth Pinsker's MarketWatch piece tackles a deceptively simple question with outsized consequences for anyone holding multiple account types: the sequence in which you draw down retirement savings. The available text is spare, but the headline and dek signal a topic that financial planners treat as foundational yet many savers never think about. The core insight is that whether you tap taxable brokerage accounts, traditional IRAs and 401(k)s, or Roth accounts first — and in what proportions and timing — can meaningfully alter your lifetime tax bill and, as Pinsker frames it, your quality of life in the years when you are finally spending what you worked decades to accumulate.

For a small-business owner or operator, this is not an abstract retirement-planning nicety. Many entrepreneurs hold a patchwork of assets: a SEP-IRA or Solo 401(k) built during high-earning years, a taxable brokerage account holding concentrated stock or proceeds from a business sale, perhaps a Roth IRA converted during leaner years, and possibly the business itself as a saleable asset or ongoing income stream. The withdrawal order question becomes a coordination problem across all of these. Spend from the wrong bucket at the wrong time and you can push yourself into a higher bracket, trigger larger portions of Social Security taxation, increase Medicare premium surcharges, or squander years of low-income Roth conversion opportunities that are gone forever once RMDs kick in.

What makes this piece worth reading is that Pinsker appears to push beyond the standard advisor mantra — 'spend taxable first, then tax-deferred, then Roth' — which is a useful default but often wrong in practice. The genuinely contested territory is whether that conventional order actually serves retirees well in an era of historically low but rising tax rates, large standard deductions that go unused if you defer too aggressively, and the reality that many retirees underspend early in retirement out of anxiety, not strategy. We are skeptical of any one-size-fits-all rule, and we suspect Pinsker is too. The 'enjoyment of life' framing in the dek suggests she grapples with the behavioral side: the order you withdraw in shapes not just your tax return but your willingness to actually spend on travel, family, and health while you can.

The second-order effects here are significant and often invisible until they compound. Drawing exclusively from tax-deferred accounts early can leave large RMDs later that force income you do not need, raising Medicare IRMAA surcharges and potentially triggering the 3.8% net investment income tax on other income. Conversely, spending taxable accounts first while letting tax-deferred balances grow can create a tax-deferred time bomb. For business owners specifically, the interaction with a future business sale is critical: if you plan to sell your company at 65, the income spike from that sale changes the calculus of which accounts to draw from at 60. And for married couples, the surviving spouse's tax situation — filing as single — can make today's withdrawal order decisions look shortsighted in hindsight.

What to do next: if you are within five to ten years of retirement or of selling a business, run a multi-year tax projection with a CPA or fee-only planner that models different withdrawal sequences against projected income, not just a single year in isolation. Look specifically for Roth conversion windows — years between retirement and RMD age or Social Security claiming where your taxable income is artificially low. And revisit the plan annually, because tax law, market returns, and your own spending patterns will all shift. Pinsker's piece is a useful entry point, but the real value is in the personalized math it should prompt you to run.

“The order in which you spend your money makes a difference for your taxes — and your enjoyment of life.” — MarketWatch Top Stories

Takeaway: Model your retirement withdrawal sequence across multiple years with a tax professional before you stop working — the conventional order is often wrong for your situation.