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Four Things -- If You’re Retiring in the Next Three Years

Four Things -- If You’re Retiring in the Next Three Years

July 24, 2023

So, your thinking you may, or will, retire in the next three years. Here are four things to know.

FIRST – You May Want to Move Your 401K Out of the Company Plan Now.

  • In-service distribution. Many 401k plans allow employees who are better than 55 years of age to remove some, or all, of their money from the 401K with out terminating employment.
  • Position your money for your retirement needs, not your accumulation needs. If you move your money out of the plan BEFORE you retire, you can begin building your lifetime income machine in your self-directed IRA account sooner. And you can direct your savings during the last couple of years of work into low-risk investments so the money is ready to fund your first few years of retirement.
  • No tax consequences. An in-service rollover distribution is a custodian-to-custodian transfer. So, the money never touches the employee’s hands. There is NO income tax consequence.
  • More investment options. Most 401K plans have a limited menu of investment choices. When you roll your funds to a self-directed IRA with a fiduciary financial planner, you will have access to ALL the investment options in the market.
  • Fiduciary financial planning advice and assistance. Most people who are considering an in-service 401K distribution would NOT be thinking about this without the advice of a fiduciary financial planner. It will be easier for your advisor to monitor and manage your investments when they sit in your IRA.

SECOND – Reflect on Your Values.

What is the next chapter of your life about? Service? Adventure? Family? Hobbies? Health? When you clarify your values, you create guideposts that help you stay on course as you face various options and decisions.

THIRD – Create a Retirement Game Plan.

I suggest you work with an experienced, well-trained, CERTIFIED FINANCIAL PLANNER™ professional and Behavioral Financial Advisor. Yes, I’m always a fiduciary, I’m a CFP® professional, a BFA™ and I work on a fee basis. Follow this LINK if you would like to find a time for us to talk. I suggest you work to create a specific and customized game plan to serve your values as you transition out of everyday work. Specific elements you will want to consider include:

  • When to begin taking Social Security benefits.
  • When to start your work pension, and which of your election options fit you best?
  • How can you harmonize your plan with the tax code? Do you need to convert some IRA money to Roth IRA money? How much? When?
  • What tools should you use to maximize your retirement income and efficiently deliver on your estate planning goals? Maybe life insurance, annuities, and Roth IRAs fit. But how?
  • Does your estate plan provide for all the “what-ifs” that might pop up later in life? Both while you are living and after you are gone.

FOURTH – Establish a Process to Deliver Consistent Results.

Working with a fiduciary planner will help you create a systematic consistent process. Your plan should tie to your values and guide your actions in six areas of your financial life.

  1. Cash flow and budgeting.
  2. Savings/spending strategy.
  3. Investment management
  4. Retirement income planning.
  5. Tax smart strategies.
  6. Estate planning.

Of course, your situation is unique. So, if you want to talk about the specifics of your retirement, I would be honored to visit with you. As a fiduciary financial planner, CERTIFIED FINANCIAL PLANNER™ professional, and Behavioral Financial Advisor I’m always an advocate for my clients. I love talking with new people. And yes, I’m still taking on a few great families to be part of my financial planning practice.

Please, reach out and we can have a get-acquainted visit. Just follow this LINK to find a time that works for you.

Dunncreek Advisors does not provide legal or tax advice, nor is this article intended to do so.