Everyone
knows the phrase, "What goes up must come down."
The very same idea applies to your retirement savings
once you retire. You spend your career building up
your savings and then when you retire, you start spending
your savings down. And if you spend it too fast, your
money might not last your lifetime.
How much?
Your retirement savings professional
can review your expenses and figure out how much money
(or the percentage of your assets) you'll withdraw
each year.
Tax-Smart Withdrawals
Setting up a tax-smart withdrawl plan that keeps your
money growing tax deferred for as long as possible
can help your savings last. All else being equal,
tax-deferred investments grow more quickly than taxable
ones because you don't lose part of your returns to
taxes each year.
It's a Plan
The specifics of your retirement savings withdrawal
plan will depend on your personal situation. But here's
an example of a tax-smart withdrawal order:
-
Fully
taxable savings and investments
- 401
(k) and other qualified retirement plans; 403 (b)
and 457 plan accounts; traditional IRAs*
- Roth
IRAs (no withdrawals are required during your lifetime).
*The tax law's required minimum distribution
(RDM) rules generally require you to withdraw a certain
amount from these accounts each year are you reach
ago 70 1/2.