BiggerPockets Money Podcast The Case for Blended (Instead of Sequential) Drawdown for Early Retirees
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Dec 5, 2025 In this engaging discussion, Mark, an Enrolled Agent and tax specialist, reveals the hidden costs of common retirement withdrawal strategies. He advocates for blended drawdown methods, showing how they can drastically reduce lifetime taxes compared to sequential approaches. Mark delves into Roth conversions, highlights the benefits of utilizing lower tax brackets, and explains the impact of healthcare costs in early retirement. Listeners also learn strategies for optimizing portfolios, protecting assets, and navigating the complexities of ACA subsidies.
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Blended Drawdown Beats Sequential Thinking
- Blended drawdown mixes withdrawals from taxable, tax-deferred, and Roth accounts each year instead of emptying one bucket first.
- This approach can reduce lifetime tax by exploiting low ordinary rates and 0% long-term capital gains windows.
Sequential Drawdown Has Hidden Costs
- Sequential drawdown wastes the standard deduction and 0% cap gains bracket when used rigidly.
- Early retirees with long horizons gain more from blended strategies than near-Medicare retirees.
Use HSA Reimbursements Before Death
- Reimburse medical expenses from HSA strategically, then roll excess into brokerage if unused.
- That converts HSA funds into inheritable taxable assets with stepped-up basis.
