How Do You Create a Retirement Paycheck? The Question Most Executives Ask About Retirement Income
Retirement Questions – Create Your Retirement Paycheck
If you’re within a few years of retirement, you may be sorting through several questions as you move towards your “Work Optional Years”. These may include
- What does my social circle look like now that I’m not working?
- How will I spend my time?
- Should stay in my current home or move? Maybe closer to the kids?
And do I have enough money to retire?
Typically, successful senior managers have accumulated enough funds to maintain their pre-retirement lifestyle. Many are like Jim, a former VP of Operations, who had a 401k, some IRAs, and an investment account. He also owned shares of his employer’s company stock.
On the surface, you would think that Jim could put his income needs on auto pilot and BOOM, time for 18 holes! But like many successful professionals , Jim realized that Uncle Sam and the IRS are partners in his withdrawal decisions. So, he asked THE important question that almost all the sharp executives ask,
What is the best way to build my retirement paycheck?
Building Your Retirement Income Stream
If you have a combination of taxable and pre-tax accounts and you want to keep as much of your wealth as possible, there is no “one size fits all” solution to creating your retirement income. Improper sequencing of account withdrawals can increase taxes in the short and long term and permanently shrink the nest egg that you were hoping would carry you through a long and prosperous retirement.
Here’s a quick hypothetical example.
Last year, Jim and his wife Joan made $250000. They saved $20000 in their 401k accounts so their adjusted gross income was $230000. Their tax liability was $34992. They retired on December 31st and estimate that they will need $200000 to pay their expenses this year. They have IRAs and a joint investment account holding stocks with Long Term Gains. If they pulled $200000 from their IRAs, their tax liability would be $27431. However, if they liquidated $200000 if appreciated stock, their liability would be $11280.
Creating Your Custom Plan
Tax Efficient retirement income requires a custom plan that fits your ongoing needs, your future goals, and your resources. Together, we can create a retirement income plan with the help of several tools that will allow us to determine the impact of withdrawal decisions on your ongoing cash flow, your taxes and your wealth.
We can answer questions like-
- Do I withdraw from my IRA or my investment account?
- Does a Roth conversion make sense this year?
- How will capital gains affect my Medicare surcharges?
- Should I rollover company stock that’s in a 401k to an IRA?
- Does it make sense to take my investment gains this year or next?
- How will Social Security affect my income taxes?
If you need help answering any of these questions, please give me a call and Let’s Make A Plan!
Disclosures to use: Advisory Services offered through Lincoln Investment or Capital Analysts, Registered Investment Advisers. Securities offered through Lincoln Investment, Broker Dealer, Member FINRA/SIPC. www.lincolninvestment.com West Coast Financial Group, Inc. and the above firms are independent, and non-affiliated. Tax services are not offered through, nor supervised by, The Lincoln Investment Companies. The hypothetical example used was for illustrative purposes only, and is not meant to represent the any specific individual. None of the information in this video should be considered as tax advice. You should consult your tax professional for information concerning your individual situation