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Cracking Your Retirement Nest Egg Without Scrambling Your Finances: 25 things You Must Know before You Tap your 401(k) IRA or Other Retirement Savings Plan (Bloomberg)

Cracking Your Retirement Nest Egg (Without Scrambling Your Finances): 25 Things You Must Know Before You Tap Your 401(k), IRA, or Other Retirement Savings Plan - Margaret A Malaspina, Margaret A. Malaspina I went through this quickly. There's a lot to digest here, and it would be worth going though it more thoroughly at another time, in particular with our own retirement (rather than our parents') in mind. 5 yr countdown list.5 years -- review your investment strategy.2 years -- assess your financial resources & future income needs. Organize documentation & records of retirement plans & accts. Review your investment strategy. 1 year -- contact Soc. Security. Rollover savings, where appropriate. Ask your employer to review all financial benefits. 6 months -- consolidate retirment savings accts & open new accts for your income plan. Check out eligibility for favorable tax strategies. Beneficiary forms are best kept in paper form. You'll need several copies. They belong with your will, copies of your insurance policies, and other essential paperwork that applies to your estate. Complete a beneficiary form for each retirement savings acct you have on record. For each account, designate 1 or more beneficiaries as well as 1 or more contingent beneficiaries. You cannot contribute to an IRA after age 70. Age 90 Depending on the state you are living in and your annuity provider's interpretation of the IRC, you must generally begin min. withdrawals by age 90 from any annuities that you have purchased with after-tax dollars. Income plan -- create an income acct and fund it with 1 year of cash in a high-quality money mkt acct) and 2-3 yrs of bonds, laddered to come due in each of the following years. Or divide the remaining amt between a short-term & an intermediate-term bond fund. With 3-4 yrs of income in your acct, you will shield your income plan from short-term mkt volatility. Any earnings on your income acct can be plowed back into your income to provide an inflation raise for the following yr. When you deplete a yr of income, you'll add to your intermediate-term bonds or bond fund with dividends or income generated by your investment portfolio or by selling some of your assets during yrs when income & dividends are adequate. Income annuity basics. An income annuity is not an investment. And it's different than a tax-deferred annuity. An income annuity is a contract between you & an insurance co. You "purchase" an annuity ($10,000 is a typical min.; $100,000 is a more typical purchase). In return, the insurance co. agrees to pay you regular income over a specified period of time, based on your age & gender & purchase amt. Money that comes either from a deferred annuity or from other after-tax savings will be subject to tax only on earnings, and you can postpone required min withdrawals until you are 90. Income annuities are either fixed income or variable income. Caveats: Buy a fixed income annuity from an insurance company with a A+ rating from A.M. Best's Rating Service (www.ambest.com). The purchase of an income annuity is an irrevocable decision. You can't get your money back. Annuities with liquidity options cost more or reduce the income payout. Cost really matters. Stick with low-fee annuities from companies such as Fidelity, Vanguard, T.Rowe Price and TIAA-CREF. Don't put too much of your savings into an annuity. 25% is a reasonable amount. Think of it as a way to cover your fixed expenses.