When financially preparing for retirement, remember to consider five things about income sources and preparation.
You may plan to get your retirement income from many different places. Maybe you've planned on a mix of guaranteed sources (like Social Security and possibly a pension) and non-guaranteed sources (like withdrawals from your investments). Did you know there are ways to add more guaranteed income to your retirement cash flow each month? Income annuities are an option you may want to consider.
Did you know that more than half of people claim their Social Security retirement benefits at age 62 instead of waiting until their full retirement age or later? That means that many people are leaving money on the table. Recognize this blind spot and don't rush into a Social Security claiming decision. Remember that Social Security will likely be just one part of your overall retirement income, and you may want to make sure you get the most out of that part.
Many people think about asset allocation, meaning how overall money is divided among different types of investments, as an important factor in growing and protecting retirement savings. But if you're not also thinking about asset location, you may be missing out on smart tax strategizing. Understanding how different types of accounts are taxed, or not taxed, depending on where you live, can help you make better decisions. Talk to your tax advisor to make sure you're considering the tax implications of the different types of accounts you might own.
Chances are you have a good deal of your retirement savings in tax-qualified accounts like IRAs and 401(k)s. You probably know that when you turn 73, you must start withdrawing some of that money via required minimum distributions. If you fail to do so, you will face a significant penalty. What most people miss, though, is that there is an additional option when it comes to required minimum distributions. You may be able to defer some of your required minimum distributions until as late as age 85 with a qualified longevity annuity contract (QLAC) if you don't want or need that income, or the associated taxes, now.1
In today's DIY world, it makes sense to use online tools, calculators, and articles to help you make sense of what you need to do to prepare for retirement. It's good to do your homework, but you don't have to do it all yourself. A trusted New York Life financial professional can help you to prioritize your options and get you to where you want to be.
1 New York Life does not provide legal, accounting, or tax advice. You should obtain advice specific to your circumstances from your own legal, accounting, and tax advisors.