The theme this week on the Retirement Quick Tips Podcast is: penalty-free early withdrawals for retirement. 

Today, I’m talking about an idea that clients will often bring up and ask about and that is taking withdrawals in retirement from Roth accounts first. 

After all, you can always withdraw Roth IRA contributions tax-free and penalty-free, so a lot of clients are like well - why don’t I just do that. 

I was racking my brain trying to think of a scenario where that would work and I came up blank. Here’s why: There’s enough flexibility with the early withdrawal rules on retirement accounts that allow for you to tap into these accounts early for an emergency.

And even a small withdrawal from your Roth IRA say at age 55 could prove costly later on in life when you miss out on that tax-free growth because you took the money out of your Roth. 

Think of your Roth like a castle. The castle has a big wall and a moat and guards at every tower. Nothing should enter to pillage the castle, unless you have no other options left. Allowing the account to grow tax-free for you for as long as possible will help maximize your overall assets and income in retirement, so don’t underestimate the powerful growth opportunities of the roth and certainly don’t let anything but the last resort be the reason why you withdraw funds from your Roth accounts earlier than you need to. 

That’s it for today. Thanks for listening! My name is Ashley Micciche and this is the Retirement Quick Tips podcast. 

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