Why the sequence you draw accounts down in matters as much as how much you draw
Most people plan for retirement by focusing on one number: how much they've saved. Fewer people plan for the second question, which account that money comes out of first once they actually stop working. That second question turns out to matter more than most people expect, because taxable accounts, tax-deferred accounts, and Roth accounts are not interchangeable. Drawing from the wrong one at the wrong time can mean paying more tax than necessary, or running a tax-deferred account dry before it's had time to keep compounding.
A taxable brokerage account is money you've already paid tax on. Selling from it triggers capital gains tax, but only on the gain, not the whole balance, and if you've held the investment more than a year, that gain is taxed at the lower long-term capital gains rate rather than as ordinary income.
A tax-deferred account, a traditional 401(k) or IRA, works the opposite way. You never paid tax going in, so every dollar that comes out is taxed as ordinary income, the full amount, not just the growth.
A Roth account is the one exception to both of those. You paid tax before it went in, and the IRS doesn't touch it again. Growth, withdrawals, none of it is taxable, as long as you follow the account's basic holding rules.
Spending down the taxable account first does two things at once. It lets the tax-deferred account keep growing tax-deferred for longer, and it lets the Roth account, the one place growth is completely tax-free, sit untouched the longest. Held long enough, the Roth account ends up doing more of the heavy lifting for its owner than either of the other two, simply because it had the most years to compound without giving any of that growth back in tax.
This isn't a rule with no exceptions. Someone in an unusually low tax bracket early in retirement sometimes benefits from pulling a bit from the tax-deferred account earlier, deliberately, to use up a lower bracket before required withdrawals push them into a higher one later. That's a real strategy, but it's a deliberate override of the default order, not the default order itself.
Once you reach RMD age, the IRS stops letting the tax-deferred account sit untouched. It requires you to withdraw a minimum amount each year, calculated off your account balance and a life-expectancy table, whether you need the income or not. Miss it, and the penalty is steep. This is the one point where the "ideal" withdrawal order gets overridden by a hard requirement: once RMDs kick in, that withdrawal happens regardless of what the taxable and Roth balances look like.
NestPlan applies this order automatically, taxable first, then tax-deferred, then Roth last, and folds in RMDs the moment they're required, so the year-by-year projection reflects what actually has to happen, not just what would be ideal in a world without required withdrawals.
The common mistake isn't picking the wrong order on purpose, it's not thinking about order at all, and drawing roughly evenly from everything because that feels balanced. It isn't. Pulling evenly usually means paying more tax over the course of retirement than necessary, and it usually means the Roth account, the one piece of the plan that grows completely untaxed, gets used up years before it needed to be.