The Essential Financial Checklist for 2017 Retirees – Part II

Have a retirement date circled on the calendar for 2017? Click here to review Part I of our planning checklist.

Congratulations! If you scoped out the first part of this article, you already have a head start in preparing your finances for your second act. Here are five, final tasks to check off your retirement planning to-do list.

Have a distribution strategy in place

You can potentially minimize your taxes by knowing the right “bucket” of money from which to withdraw funds when needed. Distributions from certain types of accounts will be taxed at different rates so this is another area where you can exercise control.

Roth IRAs and Roth 401(k) accounts: Since they are funded with after-tax dollars, distributions from these accounts will be tax-free, so long as you are age 59 ½ or older and have held the account for five years from the time of your first contribution.

Taxable accounts: When you make withdrawals from taxable accounts, these distributions will be subject to capital gains tax, which is likely a much more favorable tax rate than your ordinary income tax rates.

2017 Federal Income Tax Brackets

2017 Federal Income Tax Brackets

Chart developed by Charles Schwab, January 4, 2017.

Pre-tax retirement accounts: Since they are funded with pre-tax dollars, distributions from these accounts will be subject to ordinary income taxes. The required minimum distributions (RMDs) I mentioned in Part I fall into this category, so when you reach 70 ½, you should think about the effect that these distributions will have on your income taxes. However, if you have a combination of Roth, taxable and pre-tax retirement accounts, you will have the flexibility to choose the account from which to withdraw — providing you with the ability to create an income stream that meets your tax situation for that year.

Consider a Roth conversion

To take advantage of the tax-free distributions available in Roth IRAs, you may want to consider doing a Roth conversion in a year where your taxable income is low. This allows you to convert some of your pre-tax retirement dollars into a Roth IRA. You will pay income taxes on the entire amount you convert so this may be a beneficial strategy if you’re in a low-income year. This strategy will also allow you to take out future distributions tax-free!

The best time to consider a Roth conversion is after you’ve retired, but before you have reached age 70 ½ (when you need to start taking RMDs and may see your income rise). Be sure to consult with your tax advisor on an annual basis to see if a conversion makes sense for your situation.

Review your investment strategy

In Part I of this article, I mentioned that it is important to focus on the factors you can control. In addition to controlling your expenses, you can also control the level of risk you take on in your investment portfolio. Generally, the closer you are to taking withdrawals in retirement, the more conservative you should be with your investments. However, you also need to make sure your portfolio is designed to keep up with your income needs and inflation, so it’s important to find a suitable balance that accounts for those factors and still meets your individual needs.

Unfortunately, there is no one investment strategy that is best for all retirees. When developing your own strategy or reviewing your investments, there are several questions to consider. For example, do you have sufficient cash available to meet short-term needs or unexpected expenses? After you have identified your income sources and available assets and weighed those against your expenses, should you adjust your portfolio to cover any potential gaps? Your financial advisor can help you answer these questions and tailor your strategy accordingly.

Schedule a financial planning meeting

Retirement is not a one-time planning event; it’s important to revisit your strategies and financial plan as your circumstances change. Work with a financial advisor who can guide you through these decisions and help you navigate this new stage in your life.


Last, but not least, you have worked very hard to get to where you are today; take time to relax, focus on what is important to you and embrace your retirement!

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The Essential Financial Checklist for 2017 Retirees – Part II

time to read: 3 min