At the heart of any retirement plan is the distribution of accumulated assets. The correct distribution method will help to ensure that your retirement savings last beyond your lifetime with minimum shrinkage from taxes. From premature distribution options that allow access to retirement assets prior to age 59 and 1/2, to products intended to provide stable monthly payments for retirement, distribution planning is paramount to a successful retirement plan.
Inflation-adjusted portfolio withdrawals
Effectively managing income sources
Inflation must be taken into account when planning for retirement and when creating a distribution plan. Normal inflationary expenses and the additional inflation of health care must be considered.
Effectively managing income sources includes incorporating guaranteed sources of income such as pensions and Social security along with portfolio distributions. It's important to take both the taxation of social security and the potential additional cost of Medicare into account. Reallocating portfolio assets to provide additional income may be needed based upon risk tolerance levels and goals.
In addition to social security and pensions, there are other sources of guaranteed income available. The utilization of these sources varies depending upon the income need, risk tolerance level, and size of the portfolio.
All of these issues, in addition to determining the best source(s) for the income distribution stream, need to be considered. A monthly or semimonthly distribution may be desired to match income distributions received during employment years.