Posts Tagged Don’t Go Broke In Retirement

In this post, we continue our discussion of protecting your nest egg in retirement. Tap retirement accounts in the proper order. Lacking a sound withdrawal strategy can be costly. According to Carrie Schwab-Pomerantz, Chief Strategist for Consumer Education at Charles Schwab, the most tax-efficient approach is to first draw down the principal from maturing bonds and certificates of deposit, since they are no longer bearing interest. After that, if you are 70½ or older, you should take your required minimum distributions (RMDs) from traditional tax-deferred accounts, like IRAs and 401(k) plans, with a focus on assets that are no longer appropriate for your portfolio or overweighted. This is because you will be subject to severe penalties from the Internal Revenue Service if you fail to take your RMDs on time. Next, you’ll want to sell from taxable accounts, since you only have to pay taxes on their capital gains. (It

Americans are living longer than ever before. That’s great news, but it has a downside—the possibility of outliving our life savings. According to the Social Security Administration, a 65-year-old man can expect to live to age 84, on average, while a woman of the same age may make it closer to age 87. So if you retire at the age of 62, your nest egg may have to last for at least 20 years. Sure, Social Security will provide an income stream, but the amount is not enough for most retirees to live comfortably. Little wonder, then, that according to a survey by the Transamerica Center for Retirement Studies, the most frequently cited retirement concern among Americans is outliving their savings and investments. In the survey, 44% or respondents across all ages expressed this fear, as compared to 41% of retirees. In addition, 47% of retirees believed they had not