Does this scenario sound familiar?
You check your 401(k) statement and immediately your mind is full of questions. My account is growing, but will it be enough for retirement? What do I do with my 401k when I retire? What, if anything, do we need to change?
First, some perspective…that 401(k) balance you’re staring at is more than a dollar figure. It’s a testament to years – decades, even – of discipline, patience, and saying “no” to certain wants so you could say “yes” to financial needs down the road. You’ve been wise. Well done!
Second, it’s normal to have questions. Before you know it, your retirement will be here. You’ll shift from building your nest egg to drawing from it. That’s when the questions get intensely practical.
Here are three to start grappling with now…
- Where will you hold your assets?
You may be able to keep your retirement assets where they are now. Or, you may wish to move (“roll”) them into a new account at a different firm. If you want a financial advisor to actively manage those funds, that often requires rolling them into an IRA. Each choice comes with pros and cons – from fees to investment options – so this question is worth reviewing carefully.
- When will you start withdrawing money from your retirement account(s)?
The biggest financial issue in retirement is this: How will you cover your living expenses once you stop working? In addition to Social Security benefits, you may also receive a pension. And you’ll likely be taking other money from other accounts. It’s important that any such withdrawals fit with your overall retirement income plan. Since they will determine your cash flow and possibly impact your tax bill, the timing of these distributions is critical.
- What’s your plan for taking required minimum distributions (RMDs)?
Current law mandates, click here for the IRS website, that you must start taking RMDs from certain retirement accounts beginning at age 73 or 75, depending on your birth year. Planning ahead can help you estimate how much you’ll need to withdraw – and give you time to devise strategies for minimizing taxes on those distributions. The good news is, there are options!
As you can probably guess, your retirement finances will involve much more than these three questions, but this is a wise place to start.
At Meriwether, we believe every financial decision you make should move you closer to your ultimate destination – the life you’ve been envisioning all along. If you’d like a guide to help navigate the turns ahead, we’d be honored to walk with you.
Schedule a meeting here!
This content is for educational purposes only and should not be considered personalized financial advice. Please consult with a qualified financial professional to discuss your specific situation and needs.