Here are a few things to keep in mind.ĭon’t be late: Technically, you have until the year after you turn 70½ to take your first RMD. While the concept of an RMD is simple, there are rules you need to abide by to avoid substantial penalties. (However, you can delay taking an RMD from your 401(k) if you’re still employed.) If you have a Roth IRA, you’re in the clear. Starting at age 70½ you are required to begin withdrawing money from most of your retirement accounts-traditional, SEP and SIMPLE IRAs, and 401(k)s. Whether you need this money or not, you’ve still got to take it. ![]() Once you reach 70½, the IRS requires you to take a yearly required minimum distribution (RMD) from all of your retirement accounts except a Roth IRA (a Roth 401(k) and a Roth 403(b) have RMDs that kick in once you turn 70½-unless you’re still working). Chances are, though, that you’ll need to press on. If this is enough to supplement your other income, congratulations-you’re done. If you’ve done this, your first step can be to tap the principal of each bond as it matures. In Question 22 I talked about creating a short-term ladder of bonds or CDs. First, Draw Down Principal from Maturing Bonds and CDs See Question 5, page 69.Ĭaution: Stocks are the best protection against inflation-so unless you have a very large portfolio, and are certain that you can live on fixed income alone, don’t avoid stocks. Keep your most tax-efficient investments in your taxable accounts and your least tax-efficient investments in your tax-deferred accounts.If you want your portfolio to last for thirty years, it’s prudent to cap withdrawals at roughly 4 percent. Figure out how much money you need to withdraw to supplement your income from Social Security, a pension, real estate investments, or any other source.You probably shouldn’t be taking on as much risk as you did when you were younger, but I caution you not to avoid stocks, either. ![]() Give very careful thought to your asset allocation.Now I’ll go into some more depth.īefore I get started, though, I want to reiterate a few essentials for managing your portfolio at this point in your life: In Question 22, #7, on page 195, I gave you the CliffsNotes version. Their goal is to help you make decisions that minimize your taxes while also protecting your portfolio for the future. ![]() Thankfully, my colleagues at the Schwab Center for Financial Research have created a priority system. So, yes-it can be very confusing to know what to take from where. Each also holds a variety of investments, from individual stocks and bonds to mutual funds and ETFs. You have a half dozen or so accounts ranging from your 401(k) to your IRA, to your Roth IRA, to your brokerage accounts, each with different rules and regulations.
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