Many people refer to their retirement savings as a “retirement nest egg,” but in theory, it should be made up of many sources of retirement income-many eggs. Even if Social Security and a company retirement plan were their only retirement savings sources, likely they haven’t thought about their withdrawal strategy. It’s not as simple as just drawing down retirement income from one or two sources without a plan. Have the following been considered?
When considering these, having only one or two eggs doesn’t seem like enough. As Americans, we have many options to save for retirement:
All these types of retirement savings options have different rules on taxation and when they can withdraw without penalty. Delaying Social Security, while taking withdraws from other taxable retirement income sources, can greatly impact income. For this reason, a retirement portfolio must be adjusted and monitored, and a plan developed for withdrawing from each income source, and its taxation consequences. These make financial planning throughout retirement even more critical.
Financial planning before retirement is about accumulating assets and the future. But once retired, financial planning focuses on making the retirement nest egg last, accumulation and outpacing inflation, draw-down strategies, tax consequences, and estate planning in addition to many other things.
If you have multiple or only a few retirement ‘nest eggs,’ now is an excellent time for us to discuss how taxes will impact you this year or in the future.
Additional Disclosure: This article is designed to provide general information on the subjects covered. Pursuant to IRS Circular 230, it is not intended to provide specific legal or tax advice and cannot be used to avoid penalties or to promote, market, or recommend any tax plan or arrangement. You are encouraged to consult your personal tax advisor or attorney.
Additional Disclosure: Purchasing an annuity within a retirement plan that provides tax deferral under sections of the Internal Revenue Code results in no additional tax benefit. An annuity should be used to fund a qualified plan based upon the annuity’s features other than tax deferral. All annuity features, risks, limitations, and costs should be considered prior to purchase an annuity within a tax-qualified retirement plan.
At Lakeview Financial Solutions we truly enjoy helping people make smart financial decisions. In addition, we look forward to learning more about you, your priorities, and your goals. Contact us today to discuss your retirement strategy.