The which-pot-first puzzle

You retire with money in three places and every article names a different one to spend first. The honest answer is that each order wins something and loses something, so the only way to see the trade is to run it three ways.

Appreciating Asset Passive Income Tax Efficient Capital Gains Retirement Planning Home Ownership

ISA

Investments

Savings Account

Property

Expenses

Let the app decide

3 Goals

Leave every account on Automatic and let the shipped money strategy preserve the tax-efficient wrappers.

Try this plan

ISA

Investments

Savings Account

Property

Expenses

Spend the ISA first

3 Goals

Reach for the ISA before anything else, keeping the pension and the taxable account intact.

Try this plan

ISA

Investments

Savings Account

Property

Expenses

Spend the pension first

3 Goals

Draw the pension down before anything else, keeping the ISA intact for later.

Try this plan

Let the app decide

Spend the ISA first

Reaching for the ISA first pays more lifetime tax, not less, than leaving the order to the app, and it spends the one pot you can never rebuild.

Let the app decide

Spend the pension first

Emptying the pension first pays the most tax of the three orders, and what it buys is a bigger ISA at the end that you paid for decades earlier.

Spend the ISA first

Spend the pension first

The two orders you can pick by hand trade against each other: one keeps the most shelter and pays the most tax, the other pays less and ends with the least shelter left.