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Be conservative, but careful, when deciding how much to take from your IRA/401K type accounts.
There are two major things to consider -- tax regulations that govern the minimum you can withdraw
without taking a tax penalty on one hand (check out this site), and the risk of reducing the balances too
quickly at the other. As a rule of thumb, most financial planning professionals recommend you limit
annual withdrawals to no more than 4% of the account balance, adjusted each year for inflation. In the
past, this was considered by many to be very conservative, as long term returns in most managed
accounts with a reasonable risk portfolio averaged 6% or more. This meant the balances generally would
remain flat or grow. Check out the market returns over the past couple of years year to see how good
that advice turned out to be.
There are two major things to consider -- tax regulations that govern the minimum you can withdraw
without taking a tax penalty on one hand (check out this site), and the risk of reducing the balances too
quickly at the other. As a rule of thumb, most financial planning professionals recommend you limit
annual withdrawals to no more than 4% of the account balance, adjusted each year for inflation. In the
past, this was considered by many to be very conservative, as long term returns in most managed
accounts with a reasonable risk portfolio averaged 6% or more. This meant the balances generally would
remain flat or grow. Check out the market returns over the past couple of years year to see how good
that advice turned out to be.
If you do nothing else, take this piece of advise: Do what is necessary
to make sure you understand your retirement finances. Nothing
you do concerning retirement is more important. Study after study of
retirement issues lists this as the single biggest concern people have
once they enter retirement.
Most of us have worked for a paycheck all of our lives, and though we
might have hit some dry spells, we could usually count on the next one
being there sooner or later.
to make sure you understand your retirement finances. Nothing
you do concerning retirement is more important. Study after study of
retirement issues lists this as the single biggest concern people have
once they enter retirement.
Most of us have worked for a paycheck all of our lives, and though we
might have hit some dry spells, we could usually count on the next one
being there sooner or later.
Your Finances
Unless you plan on working during retirement, you can no longer count on that next paycheck. You are now
facing the reality that your future income is, for the most part, fixed. Social Security, your retirement
payout from your employer, and/or private retirement plan are all you can count on. So you will have no
choice but to come to terms with adjusting your spending to fit your income.
Accurate and realistic budgeting is paramount. The first step in any budgeting exercise is to get a firm
grip on income. For most of us this is fairly straight forward, since the sources are pretty well known.
facing the reality that your future income is, for the most part, fixed. Social Security, your retirement
payout from your employer, and/or private retirement plan are all you can count on. So you will have no
choice but to come to terms with adjusting your spending to fit your income.
Accurate and realistic budgeting is paramount. The first step in any budgeting exercise is to get a firm
grip on income. For most of us this is fairly straight forward, since the sources are pretty well known.
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If you are short of your “normal” Social Security retirement age (currently between 65 and 67 depending on
your birth date) you are going to take a hit on your Social Security benefit amount if you start taking your
payout immediately. Make sure you understand the pros and cons of waiting until you can draw penalty free.
Take a look here for a more detailed discussion of this issue.
your birth date) you are going to take a hit on your Social Security benefit amount if you start taking your
payout immediately. Make sure you understand the pros and cons of waiting until you can draw penalty free.
Take a look here for a more detailed discussion of this issue.
Get a Handle on Your Retirement Finances Now - What
You Need To Do To Be Sure Your Money Outlasts You
You Need To Do To Be Sure Your Money Outlasts You
Some Recommended Resources
The AARP website; always a good place to check on any senior issues. This page
on finances is a very good place to start
on finances is a very good place to start
A listing of the hundred best retirement and financial guides according to
About.com. This will keep you busy for a while.
About.com. This will keep you busy for a while.
The WiserAdvisor.com website. Contains some good articles about
retirement financial planning. They have a unique search engine for
locating a financial advisor. Give it a try.
retirement financial planning. They have a unique search engine for
locating a financial advisor. Give it a try.
A great resource for those who are thinking of working after retirement
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howsoever caused, arising out of use of this website, or the reliance on the information it contains.
Site lists made available by All Things Retired are for your convenience only, and contain links that will take
you to other sites. Please be aware that we are not responsible for the privacy practices of the sites we list,
or of any sites other than All Things Retired. We encourage our users to be aware of when they leave our
Site and to read the privacy statements of each and every web site that may collect their personally
identifiable information.
Links to other websites or references to products, services or publications other than those of All Things
Retired do not imply the endorsement or approval of such websites, products, services or publication by All
Things Retired
All Things Retired is not responsible in any manner for direct, indirect, special or consequential damages,
howsoever caused, arising out of use of this website, or the reliance on the information it contains.
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A list of questions to test your retirement readiness. Kind of broad, but
certainly essential to answer before you retire;
certainly essential to answer before you retire;
Answers to the most common money related retirement questions by USA
Today's experts.
Today's experts.
A good place to connect with a financial advisor or find fianacial services..
You can submit financial questions to a panel of experts and get their views.
You can submit financial questions to a panel of experts and get their views.