Turn your savings into a paycheck that lasts

Withdrawal sequencing across your three tax buckets

The default advice is taxable first, then traditional, then Roth. That is a reasonable starting point because it keeps tax-deferred growth running, but followed blindly it creates a problem: you arrive at 73 with a large traditional balance, and required distributions plus Social Security push you into brackets you avoided for a decade.

The better version is a hybrid. Spend from taxable accounts for cash flow, then deliberately add traditional withdrawals or Roth conversions each year up to the top of a target bracket. For 2026, the 12% bracket ends at $100,800 of taxable income for joint filers and $50,400 for single filers, and the standard deduction is $32,200 and $16,100 respectively, per the IRS 2026 inflation adjustments. A couple with $60,000 of gross spending needs may have room for $50,000 or more of conversions at 12% or less in the years between retirement and Social Security.

Roth dollars are your most flexible asset, so they usually go last. They also have no lifetime required distributions, which makes them the natural place to leave a legacy. Keep one exception in mind: pulling a small amount from a Roth late in a year can stop you from crossing an IRMAA line or losing a marketplace subsidy.

Bucket strategies versus floor and upside

A bucket plan divides money by when you will spend it. Bucket one holds one to three years of withdrawals in cash, Treasury bills, or a short bond ladder so a bear market never forces you to sell stocks at a loss. Bucket two holds five to ten years in intermediate bonds. Bucket three is long-term growth. The psychological benefit is real: people with a visible cash reserve are far less likely to panic-sell.

Floor and upside works differently. You add up essential expenses, subtract Social Security and any pension, and cover whatever remains with a guaranteed source, then invest everything else for growth. In August 2026, $100,000 of premium bought a 65-year-old man roughly $675 a month for life in survey data compiled by Insurance Geek immediate annuity rate tables, or about 8.1% of premium per year. That is not a return, it is a payout that includes your own principal, and it stops at death unless you buy a period certain or joint option.

Either approach beats improvising. If you want the mechanics of contracts that create a floor, read our guide to annuities before you talk to anyone selling one.

RMDs at 73 or 75, and the Medicare surcharge that follows

Required minimum distributions begin at age 73 for most people today, and SECURE 2.0 moves the age to 75 for those born in 1960 or later. The IRS notes the first distribution is due by April 1 of the year after you reach the applicable age, with each later one due by December 31, and that missing it triggers a 25% excise tax reduced to 10% if corrected within two years. Roth IRAs have no lifetime distribution requirement, and designated Roth accounts inside a 401(k) no longer do either.

RMDs matter because of what they stack on. Medicare sets premiums using your modified adjusted gross income from two years earlier. For 2026, CMS set the standard Part B premium at $202.90 with a $283 annual deductible, and surcharges begin above $109,000 of individual or $218,000 of joint income:

These are cliffs, not phase-ins. One dollar over a line raises the surcharge for all twelve months, and for a couple both people pay it. That is why conversion work usually belongs in the years before age 63, and why a large one-time capital gain deserves a projection first. If a life-changing event such as retirement caused the income drop, you can ask Social Security to reduce the surcharge using Form SSA-44.

Bridging healthcare before 65

Retire at 60 and you need five years of coverage before Medicare. Your realistic options are COBRA from your former employer, usually 18 months at full unsubsidized cost, a spouse's plan, or an Affordable Care Act marketplace policy. The enhanced premium tax credits that held marketplace costs down expired at the end of 2025, and the KFF premium tax credit calculator shows what that means for 2026 premiums at various income levels.

The planning tension is direct. Marketplace subsidies shrink as modified adjusted gross income rises, and Roth conversions raise that income. Running large conversions during the bridge years can cost you more in lost premium credits than you save in future taxes. Model both. Sometimes the answer is small conversions until 65, then larger ones from 65 to the RMD age.

• Confirm the coverage gap. Count the exact months between your last day of employer coverage and your Medicare start date.
• Price all three routes. COBRA, spousal coverage, and marketplace plans at your projected income, not last year.
• Fund an HSA while you can. The 2026 limits are $4,400 self-only and $8,750 family under IRS Rev. Proc. 2025-19, and HSA money pays Medicare premiums later.
• Set your conversion ceiling. Pick the income level that keeps subsidies and IRMAA where you want them, then convert to that line, not past it.
• Enroll in Medicare on time. Sign up during the seven-month window around your 65th birthday unless you have qualifying employer coverage.

Rules and premiums vary by state and by plan year, so verify your own numbers before acting. Advisory services are offered through a registered investment adviser, and this page is educational only.