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Published April 2006
Retiring
soon? Time In last month’s column, we talked about the necessity of taking a “big picture” approach to your financial situation. By looking at your needs at different stages of your life, you can develop a strategy containing elements that work together to help you achieve your goals. Last month, we discussed the importance of building financial assets and protecting your resources. Now, let’s consider two issues that will be important to you during your retirement years: creating an income stream and transferring your wealth. Creating a retirement
income stream Once you know how much income you’ll require, you’ll need to look at all available sources: your savings and investments, your retirement plans (401(k), IRA) and your Social Security. In determining how much to take from each source, and when, you’ll have to consider some different factors. For example, it might be wise to delay making withdrawals from your tax-advantaged retirement accounts for as long as possible, so that these funds can continue to grow tax-deferred. However, you must start taking required minimum distributions (RMDs) from your traditional IRA and 401(k) when you turn 70-1/2. (Roth IRAs don’t require you to begin taking RMDs at 70-1/2, or at any age.) You can withdraw more than the RMD, but not less. As for Social Security, you can start receiving monthly checks at age 62, but your payments will be larger if you wait until your full retirement age, which can be between 65 to 67. For every year past your normal retirement age that you delay collecting benefits, you’ll get “bonus’’ payments, but once you reach 70, you’ll have earned the largest monthly payment you’re going to get. Transferring your
wealth To achieve these wealth-transfer goals, you will probably need to work with a team of experts, including your investment professional, your tax adviser and an attorney specializing in estate planning. You will need to create the appropriate legal documents, which may include the following:
Start planning
early Eric Cumley, CFP, is an investment representative with Edward Jones in south Everett. He can be reached at 425-353-2322. Edward Jones is an NYSE-member investment firm with more than 9,000 offices nationwide. |
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© The Daily Herald Co., Everett, WA |
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