Making Your Money Last
By: Barbara Arndt
http://www.arndtfinancialservices.com
Consider that you have saved diligently throughout your career, putting as much as possible into your 401K, your IRA’s and other investment accounts. Now you’re looking forward to relaxation and fun, feeling secure in the knowledge that your portfolio will carry you comfortably through retirement.
Or will it?
Seeing that much money in your 401K might make you feel rich, but remember that it will have to support you for 20, 25, 30 or more years. Therein lies the biggest challenge for retirees: How do you take the money you’ve accumulated and turn it into a reliable source of income?
It is within your power to create a steady flow of income that, along with Social Security and a pension, will fund a long retirement. You have a couple of choices to make: You can create your own retirement portfolio or you can seek help and guidance.
For the do-it-yourselfers, essentially your first step is to plan your income stream. You need a cash-flow strategy and to accomplish that, you need to know how much income you need to be comfortable. Each 12 to 18 months, you should review your spending needs and adjust accordingly if necessary.
Be tax smart. Another consideration is which accounts you should tap and in what order. Leaving tax-deferred accounts such as a 401K and IRA alone as long as possible is wise because of the tax deferral advantage. Therefore, taxable brokerage or fund accounts should be used first, spending dividend and interest income before selling shares of stocks and funds because you’ll owe tax on that money even if you reinvested it.
Next would be your 401K money and traditional IRAs. Last would be your tax-free Roth.
One caveat to remember: Upon reaching 70 ½, you will need to take your required minimum distribution from your 401K and IRAs. If you don’t, you could be hit with an IRS penalty.
The main point is this: However you decide to fund your retirement, it’s crucial that you have a plan for estimating how much income you’ll need and how you intend to get it.
Barbara Arndt is a registered representative and owner of Arndt Financial Services LLC. To contact Barbara please email her at: barndt@leighbaldwin.com. By telephone call: (315)432-8334 or by mail at: Arndt Financial Services 6700 Kirkville Road E. Syracuse, NY 13057. Barbara Arndt is registered in the following states: FL, ME, NY, VA
Securities offered through Leigh Baldwin & Co., LLC Member NASD and SIPC
accounts carried by National Financial Services, LLC
Representatives are registered to conduct business in the following states: AL, AZ, CO, CT, DC, DE, FL, KS, LA, MA, ME, MD, MI, NC, NH, NJ, NV, NY, OH, PA, RI, SC, TN, TX, VA, VT, WA, W.VA
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