Tags: Approach | withdrawals | retirement | savings

CNBC: How to Approach Withdrawals From Your Retirement Savings

By    |   Monday, 23 February 2015 06:50 AM


Given increased life spans and financial market volatility, it's natural for you to worry about whether your retirement savings will last through the end of your life.

Formulating a plan for withdrawing your savings is an important part of retirement finances.

There is no single plan, experts tell CNBC.com. "When you are saving for retirement, general guidelines can work pretty well," Judith Ward, a senior financial planner at T. Rowe Price, told the news service.

"When you are heading into retirement, you want something specific to your situation. There isn't really a good place to go for guidance around this issue."

For years, the field has been dominated by the 4 percent rule: withdraw 4 percent of your retirement nest egg each year. But some view the rule as too inflexible.

"Four percent is a conservative starting point, but people need to come back every year and look at what's going on," Ward said. "If the markets are doing great, you might want to take a little more. If they're not great, tighten the belt."

Taxes also are an issue, she points out.

When it comes to minimizing your taxes on Social Security benefits, Emily Brandon, senior editor for retirement at U.S. News & World Report, offers several ideas.

Keep in mind that you must pay taxes on Social Security income if the sum of your adjusted gross income, non-taxable interest income and half of your Social Security income exceeds $25,000. Depending on the total, up to 85 percent of your Social Security income may be taxable.

So obviously you want to keep your income below that trigger level. One strategy to do so is drawing down your 401k and IRA accounts before you start taking Social Security, Brandon notes. That money counts as income when you withdraw it.

So withdrawing it before you start receiving Social Security payments lowers your income once you do start receiving Social Security.

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Given increased life spans and financial market volatility, it's natural for you to worry about whether your retirement savings will last through the end of your life.
Approach, withdrawals, retirement, savings
341
2015-50-23
Monday, 23 February 2015 06:50 AM
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