Upticks: Maximize Your Roth IRA–When Should You Spend Your Roth Money in Retirement?
By Luke Sullivan on July 17, 2025
When should you tap into your Roth IRA—and when should you not? Jake and Cory discuss one of retirement’s most misunderstood questions: Roth IRA timing. From tax brackets and Medicare premiums to estate planning and emotional decision-making, they unpack the real-world impact of getting it right (or wrong). With practical examples and a three-phase framework, we hope this episode provides insights to help you make smarter, more confident choices with your retirement dollars.
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Read an overview of the conversation below
Strategic Roth IRA Withdrawals: Timing Is Everything
Retirement planning is not just how much you save, but when and how you withdraw those savings—especially from a Roth IRA. As Jake puts it, “Once you pull money out of a Roth IRA, if you’re no longer working, if you no longer have earned income, you can’t put that money back in there. It’s out. The cat’s out of the bag.” This underscores the importance of timing. Many retirees’ default to withdrawing from pre-tax accounts first, often because financial planning software suggests it. However, this can lead to unintended consequences like higher Medicare premiums due to IRMAA (Income-Related Monthly Adjustment Amount) surcharges and inefficient tax outcomes. Cory adds, “The timing of when you pull money out of a Roth IRA is just as important as how much money you’re taking out of the account in the first place.”
The key takeaway is that Roth IRAs can offer flexibility and tax-free growth if used strategically. Without a withdrawal plan, retirees risk triggering unnecessary taxes and reducing the longevity of their portfolios. The emotional cost of uncertainty can also weigh heavily, making it even more important to have a clear, personalized strategy.
The Three-Phase Roth Timing Framework
Phase 1: Tax Alpha Window (Ages 60–72)
This is the ‘sweet spot’ for Roth conversions. Retirees can take advantage of lower tax brackets before Required Minimum Distributions (RMDs) begin. “We start doing Roth conversions every single year. Maybe it’s only 10 grand, maybe it’s 20 grand, but we’re just knocking these out, keeping you in the low bracket,” Jake explains. The goal is to reduce future RMDs and smooth out lifetime tax rates.
Phase 2: Brackets and Breaks (Ages 73–80)
Once RMDs kick in, Roth withdrawals can be used to manage tax brackets. If a retiree is forced to withdraw $100,000 or more from a traditional IRA, pulling additional funds from a Roth can prevent them from jumping into a higher tax bracket. “It’s all about controlling taxable income,” Cory emphasizes. Qualified charitable distributions (QCDs) can also be used to offset RMDs, while Roth funds provide additional flexibility.
Phase 3: Legacy Leverage (Ages 80+)
At this stage, the Roth can become a powerful estate planning tool. If not needed for personal expenses, it can be passed on to heirs tax-free. “Now we’re really trying to turbocharge that Roth,” Jake says. It can also be a safety net for unexpected healthcare costs or large gifts to family members.
Real-World and Practical Examples
To illustrate the impact of strategic Roth planning, Jake and Cory share both hypothetical and real-life examples. One fictional couple, Dave and Susan from Kansas City, had $3.4 million in investable assets spread across traditional IRAs, Roth IRAs, brokerage accounts, and HSAs. Initially, they didn’t want to touch their Roth funds, intending to leave them to their children. However, by modeling different withdrawal strategies, their advisors showed they could potentially save over $100,000 in taxes and $12,000 annually in Medicare premiums by incorporating a Roth withdrawal strategy.
Cory shares a real client case involving a retiree not yet on Medicare. With changes to Affordable Care Act subsidies looming, they used Roth distributions to control taxable income and maintain healthcare affordability. “The distributions from a Roth account can provide a lot of flexibility for this person to actually control their taxable income on paper,” Cory explains.
These stories highlight the importance of personalized planning. As Jake notes, “It’s not cookie cutter. Yes, there are defaults… but I don’t agree with that. That’s not always the best case.”
Busting the “Spend Roth Last” Myth
A common misconception is that Roth IRAs should be the last account tapped in retirement. Jake and Cory challenge this notion. “Here’s the myth, Cory: Save Roth for last,” Jake says. Cory responds, “I think that’s the mindset that a lot of people have, but I don’t know if that is the… I think that’s a myth that we need to bust.”
Instead, they advocate for using Roth funds when it makes the most sense—such as when markets are up or for specific lifestyle goals. Jake explains, “Typically our clients’ Roth IRAs are more aggressive because the money is growing tax free… I like people using their Roth when their stocks are way up.” Cory adds that Roth contributions can also serve as a liquidity buffer, especially for younger individuals or those facing unexpected expenses.
Whether it’s buying a first home, funding a dream vacation, or covering a large purchase, Roth IRAs can act as a “slush fund” without triggering taxes or penalties—if used wisely.
Emotions, Advice, and Avoiding Mistakes
Jake admits, “For years, I said it’s not [emotional]. You need to make the unemotional decision. You need to do what the math says… However, I would argue that that’s not always the right answer.” He emphasizes that while advisors can crunch the numbers, the final decision must align with the client’s values and comfort level.
Cory echoes this sentiment, sharing a story of a young parent who inherited money and was anxious about making the wrong move. “They were having questions… how can I be a good steward of the money and use it to actually make a better life for my family?” This contrasts with another case where someone chose to pay off a mortgage with a large tax hit simply because they didn’t trust the market.
Ultimately, the role of a financial advisor is to help clients avoid “stupid decisions,” as Jake puts it, while respecting their emotional and personal context. “If your plan works in multiple ways, then you should pick the way that feels best for you,” he concludes.
Thank you for tuning in, we hope you have a great week!
