The Wrong Retirement Withdrawal Strategy Can Cost You (A Lot)
We all know how important it is to have enough money saved to live on in retirement (although unfortunately far too many of us procrastinate a lot longer than we should) but did you know that the way you withdraw your money during retirement is equally important? In fact, drawing money from your retirement funds in the wrong order may actually mean you run out of money a lot sooner!
This recent article from Time Magazine explored several different withdrawal strategies, and found that the difference between these methods was quite substantial. In fact, in the example shown, utilizing different income strategies could result in a difference of up to $4 million!
Obviously this was just an example, and the results will depend a lot on where you have your retirement money saved, and the features of each vehicle you are utilizing for your retirement savings. But it does illustrate an important point:
Along with having a good, solid, and properly structured and diversified retirement savings plan, it is also important to have a plan in place for how you will withdraw these funds once you retire.
Where and how you save for retirement will determine how you should take income from these funds, so, as with most financial strategies, there is not a one-size-fits-all solution. This is why we focus on providing personalized financial plans for each and every one of our clients, that are tailored to suit each client’s particular goals.
Our advisors utilize a number of different tools to accomplish this, and one of the tools we have recently adopted over the past year or so allows us to provide a detailed report showing exactly how you should withdraw money in retirement. Using this software, we can input your current retirement savings accounts (and their projected growth in the years to your expected retirement date), and then design a personalized withdrawal strategy to help you make your money last as long as possible.
Now, you may be wondering, isn’t this something that you don’t need to worry about until it’s time to retire?
In a word, No.
As with anything in life, planning ahead gives you options. By assessing potential withdrawal strategies well before you retire, you can get a much better idea of whether you will have enough money saved in time for retirement, and if there is likely to be a shortfall, you can also determine how much extra money you will need to save, how to to so, and where is the best place to save it.
If you would like to discuss your retirement plan and see how long your retirement savings will last, and find out what strategy would work best for you when withdrawing your funds in retirement, please contact us today to schedule a FREE retirement strategy session with one of our qualified retirement planners. Just call 614-536-0088, or fill out our Contact Form and someone will be in touch shortly.