Creating More Options to Fund Your Retirement

Are you providing yourself enough options to prepare for retirement? This is an issue I address often while helping my clients plan for their future retirement needs. Typically, to create more options we work collaboratively to fill up three buckets of assets. These include:

1.  Tax-deferred assets:

These are assets which you have deferred paying the taxes on until the time you choose to make a withdrawal from the account. These can include 401(k) retirement plans, 403(b) retirement plans and various forms of IRA accounts such as simple IRAs and SEP IRAs.

2.  Tax-free assets:

These are assets which you have already paid taxes on. Growth in the account may be tax-free so long as certain conditions are met, which typically includes attaining age 59 ½  at the time of withdrawal. These include primarily Roth IRA accounts.

3.  Taxable assets:

These are assets that are not in either of the tax-deferred or tax-free assets types. These types of accounts include taxable individual,  joint, transfer on death, revocable or irrevocable trust accounts.

Options to Fund Your Retirement

By developing these three asset buckets you will more effectively plan for the amount in taxes you will pay during your retirement years.  What do I mean by that? Well, because you now have three different types of assets (the buckets above) you are able to choose how much to pull from each bucket to fund your retirement needs. For example, let’s say that you are looking to fund $10,000 of expenses per month. Instead of taking the entire amount from a tax-deferred account (which would be entirely taxable on the withdrawal), you could split this amount between the three buckets to avoid the potentially higher tax brackets and effectively lower the taxes you would need to pay in the long run.

As illustrated, you can give yourself more options for your retirement by utilizing different asset buckets and perhaps working more closely with your tax accountant and/or financial planner.

 

Hewins Financial Advisors, LLC d/b/a Wipfli Hewins Investment Advisors, LLC (“Hewins”) is an investment advisor registered with the U.S. Securities and Exchange Commission (SEC) under the Investment Advisers Act of 1940. Hewins is a proud affiliate of Wipfli LLP. Information pertaining to Hewins’ advisory operations, services and fees is set forth in Hewins’ current Form ADV Part 2A brochure, copies of which are available upon request at no cost or at www.adviserinfo.sec.gov. The views expressed by the author are the author’s alone and do not necessarily represent the views of Hewins or its affiliates. The information contained in any third-party resource cited herein is not owned or controlled by Hewins, and Hewins does not guarantee the accuracy or reliability of any information that may be found in such resources. Links to any third-party resource are provided as a courtesy for reference only and are not intended to be, and do not act as, an endorsement by Hewins of the third party or any of its content or use of its content. The standard information provided in this blog is for general purposes only and should not be construed as, or used as a substitute for, financial, investment or other professional advice. If you have questions regarding your financial situation, you should consult your financial planner, investment advisor, attorney or other professional. Hewins does not provide tax, accounting or legal services.
OneBite Editorial Staff
OneBite Editorial Staff

OneBite® is a Top 50 Financial Advisor Blog powered by Hewins Financial Advisors. Founded in 2011, the digital magazine is dedicated to providing intelligent, in-depth coverage and analysis of the top financial and economic issues facing investors today.

No Comments Yet

Comments are closed

Creating More Options to Fund Your Retirement

time to read: 1 min