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Lloyd I'm checking on something re RMDs and will be right with you.
Lloyd, when you transfer the 401K to an IRA and purchase a single premium immediate annuity, the annual distributions ARE the RMD for the annuity. I suggest you look at a low cost provider like Vanguard for the single premium annuity. Also, if you think interest rates may go up, you may want to wait for a bit. You will get a higher annual amount the older you are so I often have clients wait until age 70 to purchase such single premium immediate annuities. Do other advisors have comments?
Bryson: an immediate annuity could be a solution. Please determine total costs. Immediate annuities are not bad, if they are inexpensive, if you have a defined expense that you want to cover and don't want to be subject to the fluctuations in the market. Withdrawing from your bond fund each (do you have equities as well?) if you have equities as well... don't just withdraw from bonds because you will be increasing your risk as you get older. If you don't want to purchase an immedidate annuity then you should withdraw from your portfolio of both equities and bonds.
Robert: if you are referring to social security then your full retirement age is 66
Bobintexas,: to continue, planning for retirement is more than making sure you're financially prepared -- it's also planning for meaningful and productive work, paid or unpaid, for the next 30-40 years, IMHO. That being said, how do you figure out if you're financially prepared? It's all about the proportion between your assets (IRAs, investment accounts, pensions, etc) and your spending goals. Run a long term retirement projection for starters (Kiplinger's has one) to see how things look should you and your wife live well into your 90s. And I recommend you take the next step to hire a financial planner to help you with retirement projections. As an aside -- I think one of your greatest assets going into this is your ability to turn a hobby into part-time work; that's a huge help (financially and psychologically) if you get unlucky with timing and the market tanks just when you start taking distributions.
Nope -- We're just giving the advisers the chance to answer thoroughly!
Therese, love your comment re hobbies/part-time work. They can make a big difference both mentally and financially as you point out.
Thanks for joining, Lloyd!
Patricia -- It will show the adviser's name and photo.
Maria, you and your husband will have to start taking required minimum distributions when you are age 70.5 and you will pay taxes on those distributions. Any remaining amount that is left to your children when you die will have to be taken out over their lifetimes (they cannot wait until age 70.5) and will be taxed. IF (and only if) you are planning to leave some money to a charity, I strongly suggest carve out that amount into a separate IRA and name the charity as the beneficiary as they will pay little if any taxes on the distributions. Then leave the funds in taxable accounts that you were going to leave to the charity to your children instead.
Salvador congrats, I am not sure what options your plan has for investments. At 64 I believe you need some exposure to a more diversified fund to temper inflation etc. One of the thing that you need to understand is that you will probably need money for another 25 years. If this is all the funds you have and assuming that you will be taking SS soon you may want to carve out pieces and allocate it amongst different categories depending on your needs. An advisor may be able to tell you whether its better to do a rollover depending on whether the Entity you worked for is a TAx exempt entity or a Government Entity. LTC is extremely important in your retirement strategy. You should talk to someone soon about that as the longer you wait, the more costly it becomes Most LTCI policies will let you select the amount of your coverage, typically running anywhere from $60 to $150 or more per day. Make sure it has an inflation rider. When buying your policy, you may want to choose the longest period your money can buy. LTC should be priority in your planning. I suggest you meet with a fee only advisor to guide you at thus critical stage
Hi Mike T -- Deb actually signed off for the day. Could you resend the original question so one of the advisers can tackle it.
Collin: REITs are preferable in retirement accounts because 75% of income is paid to shareholders, if the REIT wants tax preference. Therefore, the REIT is an inefficient asset class and the after-tax return will be greater for you if the REIT is in a retirement account. Try to use global REITS for diversification.
Molly -- We have you now :)
Hi Sam. Makes a lot of sense to make a plan for when your wife might be managing the finances on her own. I can't give specific investment advice on this call, but an asset allocation fund (a fund that holds cash/bonds/stocks in a diversified portfolio and rebalances back to a stated target) like the Vanguard Lifestrategy series, is a great option for people who basically want to set-it-and-forget it. The usual principles of investing apply: select an asset allocation that's consistent with your (and her) risk tolerance, your time horizon for tapping the funds, and your required rate of return. And pause to think about a single mutual fund in a taxable account; if you decide you don't like it, you have to sell the whole balance and incur whatever capital gains that generates!
Hi Ric T: to clarify -- you are taking your pension as a lump sum, rolling it to an IRA, and you're asking how to invest it? Or how to invest pension checks you don't need?
Larry: why pay the mortgage off with such a low rate? Are you benefiting from a tax deduction? If so, talk to your CPA if you should do it. If not, then question is - are you getting a better rate of return on your investments than you are by paying 4.25%. I imagine that your liquid savings is not paying much, this is an option but by paying off the $33k are you depleting your savings to un uncomfortable level. Finally, if you withdraw $33k from IRA, are you creeping up to the next tax bracket. I suggest asking your CPA for assistance. But, if you have ample reserves (liquid savings for 1 -1.5 years if retired and 6-8 months if working)
and only receiving .5% or 1% and your are not getting a tax benefit, then I would pay off the mortgage with savings.