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4 Genius Moves to Make With Your Retirement Accounts After Retiring (And 4 To Avoid)

Smart adjustments can help retirees protect their nest egg, reduce taxes, and avoid costly missteps.

By Adam Palasciano

Edited by Laura Hohenstein

Updated Dec. 9, 2025

After you retire, what you do with your retirement accounts can meaningfully shape your long-term financial security.

Your income sources change, tax rules shift, and investment needs evolve — which means your strategy needs to evolve too. Understanding your options can help you make informed decisions that strengthen your retirement plan and reduce unnecessary risk.

Here are the most common choices retirees face — and what to think about before taking action.

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What a lot of retirees do with their retirement plans

Many retirees follow familiar paths with their savings, but not all of these decisions lead to the best outcomes. Here are the strategies many people choose once they stop working.

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1. Buy annuities

Some retirees use part of their nest egg to purchase annuities, which provide guaranteed income for life. Annuities can appeal to those who want predictability in retirement income and less exposure to market swings. However, they can come with high fees, limited flexibility, and complex terms that require careful review.

Before committing, it's essential to compare products and understand the long-term trade-offs.

2. Roll over funds into an IRA

Rolling retirement savings into an IRA gives retirees more control over their investments.IRAs may offer more choices than employer plans and could simplify required minimum distribution (RMD) management.

This option can also consolidate scattered accounts, making withdrawals easier to track. Just be cautious about rollover timing so you avoid penalties or unnecessary taxes.

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3. Elect for lump-sum distributions

Some retirees may request a lump-sum payout from their retirement plan to gain immediate access to their savings. However, while the payout may feel empowering, it can also expose retirees to major tax consequences.

For example, a large distribution could push you into a higher tax bracket. Taking this route requires careful planning to avoid losing too much of your income to taxes and potentially depleting your savings faster.

4. Leave money in their employer plan

Others choose to leave their money in their employer-sponsored plan after retiring. This can be a reasonable choice when the plan offers low fees and strong investment options.

However, retirees should review the plan's withdrawal rules, since employer accounts could possibly limit how often you can access your funds. If flexibility is important, an IRA rollover may be worth exploring.

What retirees should do with their retirement plans

Once you retire, shifting your focus to tax efficiency, long-term planning, and financial protection can help preserve your nest egg. Here are smarter moves to consider.

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1. Minimize taxes

Reducing taxes becomes a priority in retirement. For example, strategically managing withdrawals from different types of retirement accounts, a Roth IRA versus a traditional 401(k), can help spread taxable income over years and may lower overall tax liability.

Additionally, coordinating withdrawals with Social Security and other income sources may also help avoid unnecessary tax spikes.

2. Create a viable withdrawal strategy

A sustainable withdrawal strategy can help ensure you don't outlive your savings. For example, setting up a plan that balances predictable expenses, anticipated healthcare needs, expected longevity, and market fluctuations is a wise choice.

For some retirees, a blended approach, such as combining guaranteed income sources with investment withdrawals, can help smooth out cash flow. It's best to revisit your strategy annually to stay aligned with changing needs.

3. Diversify sources of income

Relying heavily on a single income stream can leave retirees vulnerable. However, combining Social Security, retirement account withdrawals, rental income, part-time employment, and investment distributions can help build financial resilience.

This diversification may also help protect you if one source temporarily underperforms. It can also provide more flexibility when adjusting for taxes or unexpected expenses.

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4. Account for health care and long-term care costs

Health care costs often rise with age, and long-term care is a major expense many retirees may underestimate. Evaluating insurance options, such as long-term care coverage and health savings accounts (HSAs), can help manage future costs.

Setting aside savings or earmarking part of your retirement accounts for medical needs could help prevent financial strain later. At the same time, planning early may help preserve flexibility for future healthcare decisions.

Bottom line

Retirement opens the door to new financial possibilities, but it also requires careful decision-making to preserve your savings.

By understanding the advantages and drawbacks of common strategies, you can make smarter choices that protect your nest egg and simplify your long-term plan. Retirees who stay focused on tax efficiency, sustainable withdrawals, and diversified income are better positioned to avoid money mistakes and maintain financial stability.

These thoughtful adjustments can give your retirement accounts room to support your lifestyle for years to come, helping you move confidently into a stress-free retirement.

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