If you're withdrawing from a traditional (pre-tax) 401k or traditional IRA, you have to pay income tax on it. If you're withdrawing from a roth 401k or roth IRA

If you're withdrawing from a traditional (pre-tax) 401k or traditional IRA, you have to pay income tax on it. If you're withdrawing from a roth 401k or roth IRA, you don't have to pay any tax on it. If you're withdrawing from a taxable stock market account, you have to pay capital gains tax on the gains. If you're withdrawing from a bank account, you don't have to pay any tax on it (you pay tax on the interest as you get interest). In the worst case scenario (traditional), $70k of withdrawals would be taxed the same as $70k of income. So this would be enough savings for someone who was making $70k before retirement. Probably actually better, because the person wouldn't have to save some of the withdrawals for retirement, and would get social security.