I've seen some random posts on this, but I'm curious about what withdrawal strategies you are using and whether there are some rational strategies with longterm benefit.
You asked about withdrawal strategies and there are several to consider when you aren't yet eligible (or want to) collect Social Security. So far I have divided them into three stages. I won't know if it worked for several more years/decades hopefully!
I Early Retirement
Create an asset allocation that is moderate.
Determine your cash needs and set aside a bucket (see Bucket Strategy) to hold cash needs for the year
Consider Roth conversions and do them over several years. Read Ed Slott! See his website. Do this now - it's important!
Do withdrawals (what investments you get them from is up to you as long as you maintain your asset allocation).
Consider all of the above once a year and be aware of the tax consequences.
II Social Security Eligible
Note: You may not take Social Security but at age 65 you WILL be taking Medicare
Create/maintain an asset allocation that is moderate unless you have cash needs concerns, then reduce risk using cash investments.
Use the bucket strategy for cash needs, reducing your cash needed by the income generated by Social Security.
Consider continue Roth Conversions
Do withdrawals and maintain asset allocation
Consider where else your health insurance is coming from (Medigap, Medicare Advantage - don't depend on Medicare alone)
AVOID IRMAA!! No one wants to pay a Medicare premium that is 400% higher than the rest of the population
III RMD Required
Create/maintain an asset allocation that is moderate to conservative depending on your SAN factor (SAN = Sleep at Night)
Consider what you will do with RMDs - you have to take them, you don't have to spend them, there are tax implications to your withdrawals that can be reduced by gifting them. If you have read anything by Ed Slott you should have before you were eligible for Medicare.
Stop any conversions to Roth (hopefully your Traditional IRA is now very small)
Spending money should now come from several sources: Pensions/Social Security, RMDs, taxable accounts, and Roth accounts.
Know the tax consequences of your withdrawals and prepare for them
AVOID IRMAA!!
Plenty to think about without getting in the weeds of which investment instrument you liquidate to fund your spending.
- Rita