Sign up for our FREE Monthly Email Newsletter
In addition to keeping in the financial know, you may be interested in checking your credit score and report.
¹The credit scores provided under the offers described here use the Equifax Credit Score, which is a proprietary credit model developed by Equifax. The Equifax Credit Score and 3-Bureau scores are each based on the Equifax Credit Score model, but calculated using the information in your Equifax, Experian and TransUnion credit files. The Equifax Credit Score is intended for your own educational use. It is also commercially available to third parties along with numerous other credit scores and models in the marketplace. Please keep in mind third parties are likely to use a different score when evaluating your creditworthiness. Also, third parties will take into consideration items other than your credit score or information found in your credit file, such as your income.
²The Automatic Fraud Alert feature is made available to consumers by Equifax Information Services LLC and fulfilled on its behalf by Equifax Consumer Services LLC.
³Equifax Credit Report Control™ is only available while you have a current subscription to Equifax Complete Premier. Locking your credit file with Equifax Credit Report Control will prevent access to your Equifax credit file by certain third parties, such as credit grantors or other companies and agencies. Credit Report Control will not prevent access to your credit file at any other credit reporting agency, and will not prevent access to your Equifax credit file by companies like Equifax Personal Solutions which provide you with access to your credit report or credit score or monitor your credit file; Federal, state and local government agencies; companies reviewing your application for employment; companies that have a current account or relationship with you, and collection agencies acting on behalf of those whom you owe; for fraud detection and prevention purposes; and companies that wish to make pre-approved offers of credit or insurance to you. To opt out of such pre-approved offers, visit www.optoutprescreen.com/.
4We will require you to provide your payment information when you sign up and we will immediately charge your card $4.95. After that, we will charge the card $19.95 for each month you continue your subscription. You may cancel at any time; however, we do not provide partial month refunds.
Equifax® is a registered trademark and Equifax Complete™ Premier is a trademark of Equifax, Inc. © 2014, Equifax Inc., Atlanta, Georgia. All rights reserved.
You’re ready to transition from saving for retirement to withdrawing from your accounts, but how can you make sure that your money will last as long as you need it?
“The best advice,” says Lee Baker, CFP of Apex Financial Services, “is a healthy dose of realism.” You’re looking at a possible 30-year timeframe when it comes to your retirement, so you’ll want to understand your situation and then make a plan on which you believe you can act.
Ideally, you’ll already have something in place, such as a withdrawal policy statement (WPS) or investment policy statement (IPS). A WPS outlines how you’ll withdraw from your retirement accounts and what changes should be made to that strategy based on market conditions. An IPS outlines your goals and how you or your account manager should handle your investments. You can work with your investment advisor to create both of these documents.
Policies like these can be helpful as guides to which you have already committed and can eliminate the need to come up with a last-minute plan.
Starting to withdraw
Ask yourself about how you have been saving for retirement . Have you utilized several accounts? Do you have a spouse or partner, and if so, has he or she been contributing as well? Answers to these questions can help determine the best ways for you to withdraw your funds.
“In an ideal world, you should have multiple sources to withdraw from,” says Baker. Not only does this help to keep your portfolio more secure—with multiple accounts to draw on, you won’t have all of your eggs in one basket—but also it allows you to take advantage of accounts that are more tax efficient, such as Roth IRAs. These accounts will continue to accrue interest even while you withdraw from other accounts.
“One of the things I suggest no matter what is you’ve got to be careful not to take out too much money up front,” says Baker. A difficult part of retirement planning is that you will not know how long your money needs to last, so it’s important to stick to a budget. Rather than take out a large amount right away and possibly run out of funds later in life, let your money continue to grow by only withdrawing as much as you need when you need it.
Once you start down this path, keep in mind the future toward which you have been working. In order to benefit from your hard work, you’ll want to stick to your withdrawal plan.
Taking Social Security benefits with a spouse
“Saving for retirement with a spouse can be huge,” says Baker. If one spouse takes a spousal benefit, where a husband or wife can receive funds equal to 50 percent of the already retired spouse’s benefits, that spouse can delay taking his or her own Social Security payments for a few years. “For each year you delay [Social Security benefits],” says Baker, “you pick up about 8 percent in interest.”
Same-sex couples, both married and in non-marital relationships, are encouraged to apply for Social Security spousal benefits, though their eligibility depends on the state in which they live.
If you or your spouse has already retired and you can both live comfortably for a few years without the other’s full benefits, then this is a great way to make sure that you get the maximum worth out of your retirement funds and that you don’t run out of savings too soon.
During your retirement years, problems may still arise. The economy can hurt your portfolio, family emergencies can happen, and you may be tempted to use your savings as a solution.
Remember that smart withdrawing also means protecting your funds from yourself.
If something comes up and you aren’t prepared with an emergency savings fund, something such as a 401(k) loan from your retirement account might look like an attractive option. Before taking it, Baker advises that you should exhaust all other options.
If it’s the difference between you keeping your home or not then take it, Baker says. Otherwise, avoid this option like the plague. The problem with these loans, he explains, is that they carry many consequences if you cannot pay the money back, all of which are compounded by the fact that you have entered retirement.
Taking out money now is always easier than putting it back later, especially if “later” is during retirement, when you’ll likely have a reduced income. Remember that your retirement savings should be just for your retirement, and it would be unwise to use those funds for anything else.
Continue to keep the future in mind
Once you begin to withdraw, everything you do will affect your future. If you haven’t already, consider what you’d want to happen to your money once you no longer need it. Do you want to leave it to a child or heir? Would you like to donate it?
By planning these details out, you can be sure that none of your money goes to waste.
You’ve spent decades working toward this time. That’s why it’s important to stay financially smart and take advantage of every opportunity you can.
“If you pay attention and stay engaged,” says Baker, “you can make a huge difference in the longevity of your savings.”
Ilyce Glink is the author of over a dozen books, including the bestselling 100 Questions Every First-Time Home Buyer Should Ask and Buy, Close, Move In! Her nationally syndicated column, “Real Estate Matters,” appears in newspapers from coast-to-coast, and her Expert Real Estate Tips YouTube channel has nearly 4 million views. She is the managing editor of the Equifax Finance Blog, publisher of ThinkGlink.com, and owner of digital communications agencyThink Glink Media. In addition to her WSB radio show and WGN radio contributions, she is also a frequent guest on National Public Radio. Ilyce is a frequent contributor to Yahoo and CBS News.
The information contained in this blog post is designed to generally educate and inform visitors to the Equifax Finance Blog. The blog posts do not give, and should not be assumed to provide, personalized tax, investment, real estate, legal, retirement, credit, personal financial, or other professional advice. Before making any financial decision, you should always consult with the appropriate professionals who can explain your options, rights, and legal responsibilities, and advise you on any tax, legal, credit, or business implications that may result from those decisions. The views and opinions expressed by the authors of blog posts are their own views and may not be the views or opinions of Equifax, Inc. and/or its affiliates.
Equifax maintains this interactive forum for education and information purposes in order to allow individuals to share their relevant knowledge and opinions with other members and visitors. We encourage you to participate in discussions about personal finance issues and other topics of interest to this community, but please read our commenting guidelines first. Equifax reserves the right to monitor postings to the forum and comments will be published at our discretion. Do you have questions or comments about your Equifax credit report or customer-service issues regarding an Equifax product? If so, please contact Equifax directly. All opinions and information expressed or shared in blog comments are solely those of the person submitting the comments, and don't necessarily represent the views of Equifax or its management.