Clueless: The New Generation

By Admin Prepare

November 25, 2017

You work and save over many years to build a nest egg for retirement for basically one simple reason.  Do you know what that is?  Well, the ultimate reason of retirement is to provide yourself a sufficient or desired income stream throughout your retirement years.  Thus, it can be said that income is the outcome of retirement planning.  Unfortunately, most people, financial advisors included, are simply clueless as to how to setup their retirement plan properly for providing this lifetime income.

The retirement objective and focus changes as you enter your pre-retirement and retirement years, shifting from an accumulation mode to a preservation and distribution mode.  Taking income from your nest egg the proper way comes down to many factors and considerations.  Of course, each is based on your unique set of goals, objectives and desires, but here are some main provisions to consider.

What should you do with your money once you retire? Specifically, which accounts should you tap first and why?

How old are you?
Different plans have different age rules and requirements to tap into your nest egg, There is strategy involved here to maximize income and minimize taxes and avoid penalties.

Are you still going to work after retirement age?

If so, you need to be aware of and understand the rules and provisions that will affects savings, taxes. Social Security and RMDs. Again, different plans have different age rules and requirements

Beware of the taxman

Tax planning is critical in retirement.  You want to setup your income plan and distributions to minimize the taxes that you pay.  Remember, tax evasion is illegal, but tax avoidance using the right tools and strategies is not.

To roll over or not

There are reasons that you should or should not rollover a 401k plan to an IRA for income purposes.  You have to find out what is best for your specific situation.

There are many more factors to consider, including one distribution strategy that should be done even if you don’t need income right away. Start by learning the basics at one of our upcoming classes. Click here to find the one nearest you.