After years of careful saving and investing, you’re finally ready to retire. And as you enjoy your post-working life, you’ll need to determine how to maximize your retirement funds.
While certain retirement accounts, like IRAs, 401(k)s and 403(b)s, come with required minimum distributions, you also likely have discretion over how much to withdraw overall and when.
What are some of the common retirement distribution strategies? Here are a few to know.
Fixed-amount withdrawals: You can determine how much money you need on an annual basis and withdraw that amount each year.
Income withdrawal: An income-based withdrawal strategy means that you withdraw income generated by your retirement portfolio, leaving the principal untouched.
The 4% rule: The 4% rule is designed to provide enough funds for a 30-year retirement. If you go this route, you can withdraw 4% from a fund in your first year of retirement, followed by set percentages adjusted for inflation in subsequent years.
Bucket strategy: The bucket strategy separates funds into different categories based on when you plan to spend. The first bucket could have cash that you plan to use in the next few years. The second bucket could hold invested funds that you won’t need to touch until, say, 10 years down the road. The final bucket can focus on investment growth.
Mix and match: Of course, you don’t have to pick one option and stick with it. Different options might make sense for different accounts. And, you might find that remaining flexible and changing your approach makes sense at different points during your retirement.
Do you have questions about which approach is right for you? Reach out with your questions today.
