Retirement Income Plans
Choosing a Withdrawal Strategy
It’s important to choose a withdrawal strategy for accessing the funds from your retirement accounts instead of withdrawing money whenever you’re low on funds. Using a strategy ensures you don’t run out of money too soon. A popular option is the bucket strategy, but you can also use systematic withdrawals. Another way to ensure a reliable stream of income is to purchase an annuity.
The bucket strategy divides your retirement funds into different buckets. The buckets are allocated to different time periods. For example, your first bucket may provide a retirement income for the first 3 years of your retirement. The next bucket will cover years 4 through 6. The bucket strategy allows you to have a reliable income source while your other investments continue to mature.
Instead of a bucket strategy, you can use systematic withdrawals. You can withdraw a fixed amount or a fixed percentage of your wealth each year to finance your expenses in retirement. Systematic withdrawals can prevent overspending. Alternatively, you can purchase annuities to fulfill the same purpose. An annuity provides a fixed income, much like a paycheck.
Maximize Your Income
Maybe you don’t have enough money saved to retire as early as you’d like or you just want to maximize your retirement income. You can delay your Social Security benefits until you’re 70 to get the highest amount possible. You can also supplement your retirement benefits with earnings from a part-time job or a small business. Using a withdrawal strategy helps you maximize your income, because we can be strategic about which investments to liquidate first. For example, some of your assets may need more time to mature.
Tax Planning Strategy
It’s important to consider your tax planning strategy during retirement. Our retirement income planners can help you create a distribution strategy that minimizes your taxable income. For example, we may recommend supplementing your Social Security benefits with Roth distributions to avoid slipping into a higher tax bracket.