Life Lessons: Countdown to Retirement

Feb 27, 2014

If retirement is close at hand, you’re probably ready to start relaxing after years of working hard. However, there are still a few more details to take care of to make sure you’re well prepared for your future. Here are a few suggestions to help you count down to retirement.

early_retirementReview Your Asset Allocation

Look closely at your portfolio’s asset allocation. As you near retirement, you may want to reduce your exposure to more volatile investments, such as stocks. However, consider keeping some of your retirement dollars allocated to stock funds or portfolios. Since your retirement could last a long time, you may want some investments that have the potential to produce inflation-beating returns.

Consider Distribution Options

Well before your retirement date, consider your plan distribution options. Keep in mind that if you take a lump-sum payment, you’ll owe income taxes in the year you receive the distribution.* That will leave you with less money to spend and reinvest during retirement.

Instead, you may choose to roll over the distribution into an individual retirement account (IRA) to defer taxation. Or you may be able to keep your money in your existing plan account. Either way, withdrawing the money over time would spread out your tax liability. If you decide to roll a plan distribution into an IRA, consider having your money directly transferred by your plan to the IRA to avoid federal income-tax withholding.

Keep Contributing to Your Plan

Use the time between now and retirement to add to your retirement savings. If you’re age 50 or over, your employer’s plan may allow you to make extra “catch-up” contributions. If this opportunity is available to you, taking advantage of it may help you accumulate more money for your retirement.

  • Qualified Roth distributions are not subject to federal income taxes.

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