A Simple Guide to Withdrawing Retirement Assets

Suppose you are considering withdrawing funds from your retirement accounts.

In that case, it’s important to develop a strategy that ensures that your funds will last for a lifetime, are used efficiently, and will not be diminished by heavy taxes.

The first step in creating a retirement withdrawal strategy is identifying all your retirement income sources. For example:

  • Social Security benefits
  • A pension
  • Annuities
  • Part-time work

It is important to also consider passive income sources as a rental property if they will contribute to your source of income in retirement.

Retirement spending

In order to properly plan your retirement, you must be able to estimate how much you will need to save.

Additionally, it may be important to differentiate between your spending needs and wants.

Finally, understanding how much you need to withdraw to live (vs. how much you would like to withdraw for your desired lifestyle) is important.

Tax implications

One of the key elements of your retirement withdrawal strategy will be the tax implications.

It is important to understand how taxes work for various accounts and investments and your overall tax situation.

Although you may have limited options in some circumstances, a tax-smart retirement withdrawal strategy can result in significant savings.

More importantly, it may help to extend the life of your nest egg.

Consult a Certified Financial Planner (CFP)

The best thing that you can do is to speak with a Certified Financial Planner and ask them to design a plan based on your current assets, liabilities, as well as your needs, wants, and wishes.

During the consultation, you will be asked to complete a detailed questionnaire in order to better understand how you live today and how you intend to live in the future.

Once they have gained a better understanding of your financial situation and goals, they will consider withdrawal strategies that work best for you, such as the 4% rule, the strategic withdrawal plan, and the bucket strategy.

A Certified Financial Planner may also be able to discuss the impact of taxes on your income sources in advance.

The more tax-diversified your sources of income, the greater the opportunity to keep and stretch your retirement savings.