Retirement Income

Millions of Americans are entering a dramatically different phase of their financial lives every year, transitioning from full-time work into retirement. Moving from “accumulation”- building wealth through saving and investing – to “distribution” – drawing on these savings for income that will be needed throughout the golden years. Those life savings will also be the source for legacy planning.

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Maximize Social Security

When to claim may be one of the most important retirement decisions to make. Assuming enough credits, starting as early as age 62, waiting until full retirement (age 67), or collecting the maximum benefit at age 70.

Investments: predictable income and growth

When nearing or entering retirement, reviewing investment goals, tolerance for risk, and capacity for risk should not be overlooked. Whatever the situation, many investment options are available to help meet specific income needs.

Withdrawals & required minimum distributions (RMDs)

Withdrawals from an individual retirement account, or IRA, can begin without penalty at age 59½. Accessing funds as needed or establishing automatic distributions can be transferred to personal spending account.

Required minimum distributions (RMDs) must begin at age 73; or face a hefty 25% penalty on the required amount. Don’t forget the December 31st deadline.

Why it’s important

The general consensus says most people will need about 60-80% of final years compensation to support a comfortable retirement lifestyle. Proceeds from pension plans and Social Security currently account for about 35% of the typical retiree’s income. Another 23% is derived from earned income, either full or part-time employment. How will yours look?

Coordinating for Tax Efficacy

Choosing which type of account to withdraw from, and when, can be complicated when trying to manage taxes. Knowing the tax rules can reduce, or even avoid surprises:

  1. Taxable brokerage account: Dividends, interest, and realized gains on investments are generally taxed in the year they are generated, and this income may be taxed at ordinary income or long-term capital gains rates.
  2. Traditional IRA or 401(k): Withdrawals of pre-tax contributions and earnings are taxed at the same rate as your other earned income.
  3. Roth IRA or Roth 401(k): Withdrawals are generally tax-free, as long as certain requirements are followed.
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