Menashe Morley Group

Retirement Income That Measures Up

Posted on December 10, 2017

Pension income, investments, a 401(k) account: All those potential resources can provide you with a solid foundation for retirement. But how do you develop a strategy for drawing them down in a way that will see you through retirement?

Your approach will depend on your age and lifestyle, as well as all of your anticipated—and unanticipated—expenses. A conversation with your financial advisor can help clarify the strategy that might work best in your situation. Here are some points that anyone entering retirement should think about.

One of the first things you will want to do is figure out which of your accounts might have required minimum distributions (RMD). Because there can be penalties for missing a deadline, keeping track of all of your RMD deadlines can help you get the most efficient use of your various sources of income. Some people find it convenient to roll multiple 401(k) accounts into one IRA so that they only have to worry about one RMD deadline.

You have choices for what to do with employer-sponsored retirement plan accounts such as 401(k)s. Depending on your financial circumstances, needs and goals, you may choose to rollover to an IRA or convert to a Roth IRA, rollover an employer- sponsored plan from a prior employer to an employer-sponsored plan at your new employer, take a distribution or leave the account where it is. Each choice may offer different investment options and services, fees and expenses, withdrawal options, required minimum distributions, tax treatment, and provide different protection from creditors and legal judgments. These are complex choices and should be considered with care.

Taxes are another important factor to consider as you create your drawdown strategy. Withdrawals from taxable investment accounts are taxed at capital gains rates, while withdrawals from an IRA or a 401(k) may be taxed at higher rates—as regular income. If you exhaust your taxable accounts too soon, and you suddenly find yourself facing unexpected expenses, you will be forced to take the money out of an account that could cost you more in taxes.

No matter what plans you have at the outset, life keeps changing, and so will your needs. Most retirees will find that their answer today will almost certainly be different in five years. Take the time to think through a drawdown strategy that suits your individual needs and as your life and the markets change, look for ways to correct your course as needed.

For more information, contact The Menashe Morley Group in the Rancho Santa Fe office 858-381-8113. The Menashe Morley Group, serving the community for over 32 years: David Menashe is a Senior Vice President and Wealth Management Advisor, Bruce Morley CRPC ® is a First Vice President and Wealth Management Advisor and John Naviaux CPWA ® is a Vice President and Wealth Management Advisor. Merrill Lynch makes available products and services offered by Merrill Lynch, Pierce, Fenner & Smith Incorporated (MLPF&S) and other subsidiaries of Bank of America Corporation. Investment products: Are Not FDIC Insured, Are Not Bank Guaranteed, and May Lose Value. MLPF&S is a registered broker-dealer, Member SIPC and a wholly owned subsidiary of Bank of America Corporation. Neither Merrill Lynch nor any of its affiliates or financial advisors provide legal, tax or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions. © 2017 Bank of America Corporation. All rights reserved. AR9Y5FS4

Menashe Morley Group

Menashe Morley Group

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