.png)
Welcome to the latest episode of the Physician Cents Podcast, where we explore complex financial topics tailored specifically for physicians. Whether you're a medical student, resident, fellow, or attending physician, you're going to find valuable insights that can help you increase your financial IQ, further your financial journey, and improve your overall well-being. Hosted by Chad Chubb and Tyler Olson, let’s dive in!
Watch this episode instead (Don’t forget to subscribe 🙏):
Listen to this episode instead (Once you love it (we know you will 😉), please leave us a review):
Follow Us:
Join the Physician Cents Newsletter: Conversations helping graduating medical students to attending physicians build a strong financial foundation
🚨 Looking for help with Disability Insurance, Physician Banking, Student Loan Refinancing, Physician Mortgages, Contract Reviews, and more? Check out our "Best of the Best" sponsors page to find a list of the professionals Chad & Tyler team up with for their clients.
For decades, your financial plan had one job: build savings. Retirement flips that job. Now the question is how to turn those savings into income you can count on, without handing more to the IRS than you need to and without running out of money.
That’s what retirement withdrawal strategies for physicians are all about. In Part 1 of the Pre-Retirement Playbook, we covered the RMD tax bomb and the five moves to make before you retire. In Part 2, we move into the drawdown years. We’ll look at which accounts to pull from first, how Roth conversions and required minimum distributions (RMDs) fit together, when a qualified charitable distribution (QCD) or a QLAC makes sense, and how IRMAA can quietly change the math.
There’s no one-size-fits-all answer here. Your best approach depends on the mix of accounts you’ve built and your tax picture. What follows is a framework that gives you more control.
A retirement withdrawal strategy is a plan for which accounts you draw income from, in what order, and in what amounts each year. A good one balances three things at once:
For physicians, the details matter more than usual. Most of us retire with savings spread across a 403(b), a 457(b), maybe a cash balance plan, IRAs, a brokerage account, and some Roth dollars. Each one plays a different role.
You’ve probably heard the classic sequence: spend taxable first, then pre-tax, then Roth. It’s a reasonable starting point, but following it blindly can backfire. If you live only on taxable savings for a decade, your pre-tax accounts keep growing untouched. That sets up larger RMDs later, which is exactly the tax bomb we covered in Part 1.
Many physicians do better with a blended approach:
Blending also helps with market risk. When stocks are down, you can pull from bonds, cash, or whichever account holds the assets that haven’t fallen, instead of being forced to sell stocks at a loss. For a deeper look at how withdrawal sequencing works with asset location and Roth conversions, see these tax-smart moves for a stronger retirement.
A Roth conversion moves money from a pre-tax account into a Roth IRA. You pay income tax on the converted amount now, and future qualified withdrawals are tax-free.
The window between retirement and RMD age, which we called the “tax valley” in Part 1, is often the best time to convert. Spreading conversions across several years usually beats one large conversion that pushes you into a higher bracket. That said, conversions don’t guarantee lower lifetime taxes. The right call depends on your current and future income, tax rates, and goals.
Before converting each year:
The better approach is a repeatable annual review. Each year, look at your income, account balances, expected spending, tax brackets, and Medicare costs. Then decide whether a conversion fits this year’s plan and how much to convert. As Tyler said in Part 1, we don’t time the market, but we do time Roth conversions.
Forecast your RMDs early, then decide in advance which assets you’ll sell to satisfy them. Where you take each RMD from depends on the account type:
Many physicians consolidate old workplace plans into an IRA before RMD age for exactly this reason. Fewer accounts means fewer separate RMDs to track.
No. Your RMD must come out first, and it can’t be converted to a Roth. Once you’ve satisfied the RMD, you can convert additional pre-tax dollars, which are taxable that year.
A qualified charitable distribution (QCD) is a direct transfer from your IRA to an eligible charity, available once you’re at least 70½. For charitably minded physicians, it’s one of the most efficient giving tools available.
Why QCDs matter:
Hypothetical example: Your IRA RMD this year is $60,000, and you normally give $15,000 to charity. If you send $15,000 directly from your IRA to the charity as a QCD, only $45,000 of your RMD shows up as taxable income. Your giving stays the same, and your taxable income goes down.
Get the details right:
A qualified longevity annuity contract (QLAC) is a deferred annuity bought with eligible retirement funds. It provides guaranteed income later in life. Under current rules, the amount used to buy it can be excluded from RMD calculations until payments begin, up to an IRS limit.
Potential pros:
Potential cons:
When a QLAC may make sense: You’re worried about longevity, you don’t have a pension, and you want a guaranteed floor of income in your 80s and beyond. Even then, it’s one option to compare alongside Social Security timing, bond ladders, and your other investments.
IRMAA (Medicare’s income-related monthly adjustment amount) is a surcharge on Part B and Part D premiums for higher-income retirees. It generally uses your tax return from two years earlier. That means a Roth conversion at 63 can raise your Medicare premiums at 65.
Before converting, estimate the full cost of the move: federal tax, state tax, and any added Medicare premiums. A conversion that looks attractive based on brackets alone may cost more once IRMAA enters the picture.
But here’s the part physicians often miss: don’t avoid IRMAA at all costs. Paying a surcharge for a few years can be far cheaper than letting pre-tax balances grow into larger RMDs, which may trigger higher IRMAA tiers for many years later. Kiplinger has a helpful breakdown of why avoiding IRMAA can actually cost you more in retirement. Make the decision using the full plan, not one premium threshold.
Retiring before Medicare eligibility can leave a costly gap. Coverage may come from a former employer, a spouse’s plan, or the Health Insurance Marketplace. Get actual premium quotes before you set a retirement date. If you’re using the Marketplace, remember that premium subsidies are tied to your income, so large conversions or withdrawals can affect those costs too.
Plan for higher spending early on as well. The first years of retirement are often when physicians travel and pursue hobbies the most. For more on budgeting realistically for healthcare and spending, see these retirement mistakes that could cost you millions.
When one spouse dies, the survivor typically moves to single filing status, often with similar income but narrower tax brackets. Social Security and pension income may change too.
Talk through this now:
It’s not a fun conversation, but it’s one of the most valuable ones you can have.
There isn’t a universal one. Many physicians blend withdrawals, filling a target tax bracket with pre-tax withdrawals or Roth conversions and covering the rest of their spending from taxable savings.
It depends on your age, how long your Roth IRA has been open, and whether you’re withdrawing converted principal or earnings. If you’re under 59½, each conversion has its own five-year period for penalty-free access.
No. A QCD is one way to give from an IRA. You can keep giving cash, appreciated stock, or through a donor-advised fund as usual.
No. Compare the surcharge with the long-term tax savings from lower future RMDs. Sometimes paying IRMAA is the better deal.
A sustainable retirement withdrawal strategy coordinates your accounts, taxes, healthcare costs, and household needs. No single account or rule can do all the work. Revisit your projections every year, and bring in qualified professionals for the decisions that depend on your specific tax situation. The strongest plan is one you can adjust as life changes.
This post is based on Part 2 of our pre-retirement mailbag series. If you missed it, start with Part 1: Top 5 Moves & The Tax Bomb.
The best of the best list is a paid sponsorship, but these are professionals/companies that Tyler and Chad collaborate with within their own practices or have been vetted to earn a spot on this list. By supporting our sponsors, it allows Chad & Tyler to dedicate more time to you and the Physician Cents community. If you ever have a question (or not a great experience, which we don’t expect!) about a sponsor, please let us know. We call it the “best of the best” for a reason, and we will maintain that standard for our listeners & viewers.
This information is for general purposes only. This information is not intended to be a substitute for specific professional financial, tax, or legal advice, as individual circumstances vary. Please see a financial professional, CPA, and/or an attorney in regards to your own individual situation.
Wealthkeel’s Advisory Services and Financial Planning offered through Vicus Capital, Inc., a Federally Registered Investment Advisor. WealthKeel LLC, 615 Channelside Drive, Suite 207, Tampa, FL 33602 -- 267.590.9533.
Olson Consulting LLC, Offering Advisory Services and Financial Planning, is a State-Registered Investment Advisor.
A podcast designed specifically for physicians, offering a breakdown of complex financial topics to help you develop your financial IQ, further your financial journey, and improve your well-being. Whether you're a medical student, resident, fellow, or attending physician, you're sure to learn something new that will benefit your journey.
.png)
Conversations helping graduating medical students to attending physicians build a strong financial foundation
