Work, Retire, or Repeat?
A recent survey found that many people retire without a plan for
turning their accumulated savings into income. And 51 percent of retirees are unsure about which assets to tap first.1
If you are looking forward to a long retirement, it's critical that you develop a strategy to help ensure that your portfolio will last and support your lifestyle. This involves evaluating all your sources of income, understanding the rules for taking money out of savings, and investing wisely.
At the Source of the Matter
The first step in planning for retirement income is to identify all your income sources. Many of today's retirees (57 percent) rely heavily on Social Security. A third are fortunate enough to earn a traditional pension, and almost a quarter have built up retirement savings in employer-sponsored plans.2 The question to ask yourself is, "Where will my money come from?"
Play by the Rules
Once you've evaluated your situation, you need to understand how and when you can withdraw funds. The rules and regulations for each income source may differ. Remember that distributions from traditional IRAs and most employer-sponsored retirement plans are taxed as ordinary income; withdrawals taken prior to reaching age 59½ may be subject to an additional 10 percent federal income tax penalty.
Invest for the Long Haul
As your goals shift from accumulating funds to spending and protecting them, your investment strategy may also need to shift. A well-thought-out strategy that is designed to help your portfolio outpace inflation can help you maintain your purchasing power and assets.
The decisions you make now may affect the longevity of your portfolio. Call for help in developing a plan to meet your retirement income objectives.
1) CNNMoney, 2005
2) The Gallup Organization, June 2005