So retirement is approaching quickly, and you’re worried you don’t have enough money saved. You’re not alone. According to a Gallup survey, more than 50 percent of Americans are worried about having enough money for retirement. In fact, retirement is Americans’ top financial concern.1
Unfortunately, those concerns may be justified, especially for baby boomers. A survey from the Transamerica Center for Retirement Studies found that baby boomers have a median retirement savings balance of $147,000.2 While that may be a significant amount of money, it’s unlikely to be sufficient to fund a long, enjoyable retirement. If you feel like you’re behind on your savings, there’s still time to get back on track. However, you may need to take action quickly. Below are three simple steps you can take to correct course. A financial professional can help you develop and implement a plan that’s specific to your needs. Is retirement right around the corner? If so, you may be in the process of planning your retirement income. If you’re like many retirees, you’ll be able to count on income from multiple sources, including Social Security, retirement account distributions and possibly even a pension.
Many retirees rely on withdrawals from their savings and investments to fund their spending in retirement. Unfortunately, much of that income may not be guaranteed. If you suffer a market downturn in retirement, or if you live longer than expected, you may struggle to generate the kind of income you need. Fortunately there are tools you can use to create reliable sources of retirement income. One such tool is an annuity. Annuities offer a variety of ways to generate income, sometimes guaranteed for life. Below are three different annuity strategies you can use to generate consistent, predictable retirement cash flow: Turning 70 soon? If so, the IRS may have a gift for you. It’s required minimum distributions, also known as RMDs. As the name suggests, RMDs are mandated withdrawals from your retirement account. They’re required if you own a traditional IRA, 401(k) plan or similar qualified account.
As you likely know, traditional IRAs and 401(k) plans are treated as tax-deferred accounts. You don’t pay taxes on growth inside the account as long as you don’t take a withdrawal. Also, you may have made contributions to the account with pretax dollars. That means your entire amount of IRA or 401(k) dollars may be untaxed. While tax deferral is a powerful tool, you can’t defer taxes forever. Eventually, the IRS wants to tax your accumulated growth. When you’re age 70½, the IRS requires you to take taxable distributions out of your tax-deferred accounts. The exception to this rule is the Roth IRA. Since Roth distributions are tax-free, they’re exempt from the RMD rule. Have you prepared a projected budget for your retirement? If so, that’s a good first step toward planning your retirement income strategy. Your budget can help you determine how much income you may need and whether you’re on track to reach your goals. You can also use your budget to adjust your spending as needed.
Your budget probably includes things such as housing, groceries, travel, dining, clothes, utilities and much more. You may be able to estimate these costs based on your current spending and your plans for the future. |
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