3 times it makes sense to withdraw from a Roth for retirement income

When should you withdraw from a Roth in retirement?
Roth IRAs or 401(k)s are great long term retirement accounts to have. The money in these accounts grows tax free, and the proceeds will also be tax free for any heirs that inherit the account.
For that reason, Roth IRAs are typically kept until later in retirement before being used.
However, it is important to know that there are a few times that can be very advantageous to withdrawal from a Roth in early retirement:
First, if you are retiring before you are eligible for Medicare. If you are purchasing health insurance on the healthcare.gov marketplace, your insurance premium will depend on your Modified Adjusted Gross Income. Using your Roth in these early years of retirement may help you save hundreds or thousands of dollars per month.
Next, if your income is just above levels that will trigger IRMAA, or the surcharge that gets applied to your Medicare premium based on your income. This is a tax that can come into play if your income is just $1 above a certain threshold. So monitoring your income during the year is really important if you are close to one of these thresholds. If you can take just a few thousand dollars from a Roth during the year to avoid triggering IRMAA, it is usually well worth it
Finally, if you have a large one-time expense during the year. Perhaps buying a car or a retirement home, it may be advantageous to use some money from the Roth to avoid other retirement account withdrawals being taxed at higher tax rates.
Ultimately, it makes sense to use Roth money when the cost of taking money from other retirement accounts is much higher than it will be in the future. Taking money from Roths unnecessarily can be wasteful, but tactical withdrawals as part of a tax-efficient retirement strategy can make a lot of sense.
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