Retirement Distribution Planning

You’ve saved up for retirement using traditional retirement accounts, Roth accounts, and private investment accounts, but how do you decide where to withdraw money from when you retire? A retirement distribution plan answers that question for you. The right retirement income plan reduces your taxable income during retirement, preserves your assets to make your money last, and provides you with a reliable income when you stop receiving paychecks. 

The primary goal for retirees is to receive an adequate amount of income during retirement without running out of money. Even if you have a sizable nest egg, you probably don’t know how you can start tapping into those savings. We’re here to help you decide which assets to liquidate to make your money last. Together, we’ll create an income distribution plan for your retirement years. 

There is no one right way to create an income distribution plan. Everyone’s situation is just a little different. We will consider your tax bracket, the types of retirement accounts you have, your minimum required distribution amounts, and the estimated length of your retirement to create a customized distribution strategy for you. We may use one or more of the strategies below to create this plan.  

If your investment accounts are performing well and you have a sizeable amount of savings, you may limit your withdrawals only to income. This means you’ll only withdraw the income you receive, for example, as dividends. This leaves your principal capital untouched. However, this may not be a sufficient amount to support your lifestyle during retirement. 

When we talk about creating a floor, we’re referring to creating a base income using fixed income sources. This could include your Social Security benefits or an annuity. When you convert some of your assets to an annuity, you’ll receive a fixed income every month, which can help you budget for everyday expenses. 

Given that some investments need more time to mature and others are ready for liquidation sooner, it makes sense to divide your investment accounts using the bucket strategy. With the bucket strategy, you allocate savings for a specific time in the future. You’ll have a current bucket for the next 1 to 3 years, and you’ll have a bucket to use 4 to 8 years from now and so on. 

No matter which strategy we utilize, we want to be very strategic about your withdrawals. Some of your retirement accounts will have minimum distributions, which we need to consider when creating your plan. We also want to delay Social Security benefits if possible to increase those earnings. 

One fixed income source is your Social Security benefits. You can also use annuities to create a fixed income stream to help you budget for your living expenses. We can help you create a distribution plan to ensure you receive a steady retirement income. 

Which account you withdraw from depends on several factors. Your retirement account may have required minimum distributions you can’t avoid. We’ll look at your financial situation and make the appropriate recommendations. For example, we may suggest withdrawing from your 401(k) and supplementing that income with your Roth account to reduce your tax burden. 

When we create a retirement income plan for you, we’ll help you make those retirement savings last. Using a systematic approach also reduces your tax burden, which increases your net income. Finally, having a retirement income plan can provide you with peace of mind that you have a regular income to finance your retirement lifestyle. 

Don’t wait to create your retirement distribution plan. Call our financial advisors and set up an appointment today. We’ll make sure that you don’t run out of money during retirement and don’t pay more in taxes than you need to.