Wealth Management & Financial Planning

Wealth Management & Financial Planning

Retirement Distribution

Retirement Realities

As a child and young adult, you begin to save and accumulate assets for a better future.  This future, called retirement was usually an open-ended and vague thought. After all, who wants to start their career by figuring out when they could quit?

To save for retirement, you make some sacrifices, and you do the “heavy lifting.”   When retirement is within reach, congratulations, your discipline should pay off and you move to the next phase of your financial journey.

For years you save in defined contribution plans and tax-deferred savings plans.  What does this mean for you in retirement? There are three shocking situations we encounter advising people about retirement.

The first reality is that many people don’t need the money in their retirement accounts. They either worked longer than they planned or more often, lived within their means and require less than expected to live a happy life.

The second reality is that some people are so attached to the value on their statements that they cannot fathom the emotional shift from saving to spending. For more than 40 years they have deliberately saved and accumulated, watched the values go up and down and found themselves emotionally invested in the value. The struggle to change that emotion is delayed 70% of the time. That 70% is the percentage of tax-deferred accounts that are never accessed until people are required to make distributions according to the IRS, at 70.5 years of age.

The third reality is the fear of the unknown. “What if I run out of money?“ “What if I have to go to a nursing home?” The fear of the future debilitates more families than you might imagine. This is perhaps the hardest of the realities to overcome.

The truth is simple: what goes in must come out. We will all exit this planet, and we will all have to exit our retirement savings. Retirement is indeed an optional event, but distribution is not.

At 70.5 years of age, Required Minimum Distributions are mandatory, or you will leave the money to your heirs. Your heirs will then enter into Required Minimum Distributions regardless of their ages – even grandchildren! The only logical choice is to look at your unique circumstances and design a distribution strategy that best uses your assets for your benefit.

Most of you reading this article started with retirement dreams and are now facing or getting ready to face retirement realities. Will you wait for the IRS or will you take charge?

Disclaimer: Do not construe anything written in this post or this blog in its entirety as a recommendation, research, or an offer to buy or sell any securities. Everything in this post is meant for educational and entertainment purposes only. I or my affiliates may hold positions in securities mentioned in the blog. Please see our Disclosure page for the full disclaimer.

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