What is the best way to start a withdrawal from my savings? I am 64 and three years into my retirement this October. We have $45,000 taxable yearly income at this time. What is a good plan, tax-wise? Should we pay off our car and mortgage with savings? Our savings totals about $100,000. -Terry


Our first thought is that if things are going well and you can pay your bills with the income you have coming in each month it’s probably a good thing to keep some “dry powder.” In other words, don’t tap into your savings. You didn’t mention how much debt you have or what type of savings (IRAs, retirement accounts, non-retirement, etc.) you have accumulated, but we would point out that pulling big lump sums out of IRAs or other pre-tax retirement plans can result in substantial taxes. For example, you might have to withdraw $30,000 just to get $20,000 after you consider the income taxes created by the withdrawal. Beyond that, we don’t know enough about your situation to provide specific guidance. However, this might be a good time to enlist the help of a fee-based financial planner or CPA. They should be able to help you map out a game plan that makes sense based on your specific circumstances.