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  • 3-Minute Article
  • |
  • Jun 15, 2017

Managing Your Financial Portfolio After Retirement

A look at common questions upon entering retirement.

You’ve done it! After decades of saving and investing, you’ve made it to retirement. But while this milestone marks the end of one chapter of your life, it’s also the beginning of another.

This transition naturally raises questions about potential changes to a financial plan in order to secure your desired retirement lifestyle. To help you think through these options, here are answers to common questions you may have as you enter retirement:

Q: Should I Make Major Changes to My Investments?

If you’ve been shifting your savings into more stable investments leading up to retirement, your portfolio shouldn’t need a big shake up. In fact, it’s important to consider keeping at least some assets in stocks or other investments with good growth potential to protect against the risk of outliving savings.

Of course, stocks have potential to rise and fall with the market. If you’re worried about that uncertainty, consider adding a source of guaranteed income to your savings mix, such as an annuity—these products can provide a stable source of income to pay bills, regardless of what happens in the market.

One way to ensure your money lasts as long as you need it is to put some of your savings into a guaranteed income source like a deferred annuity.


Q: Which Sources of Income Should I Use First?

You’ve probably worked with a financial advisor to develop a savings withdrawal strategy before retirement. Now is the time to put that plan into action. The plan can include options like these to help make the most of your savings:

  • If you’re over age 70½, you’re required to claim Social Security and begin taking required minimum distributions (RMDs) from your retirement accounts.

  • If you’re younger than age 70½, you can delay Social Security and boost your future income. Each year you delay your claim, you increase the size of your lifetime Social Security benefit by 8%.

  • If you’re under age 70½, you also can wait to tap the savings in your retirement accounts, allowing them to continue growing for the future. For example, if you retire at age 65 and can avoid withdrawing from an IRA with $100,000 in it, you could see an additional $27,000 in growth from that account by the time you reach age 70½ and must begin taking RMDs.* In the meantime, you can use withdrawals from taxable savings accounts or guaranteed income sources such as annuities to cover your expenses.

  • Many retirees want to work in retirement. If you’re interested in pursuing a second career in retirement, learn more about how to put your plan into action.

Q: How Will My Taxes Change?

The taxes you owe during retirement depend on a number of factors. But whatever your circumstances, you can take steps to manage your tax bill.

For example, if you find yourself in a lower tax bracket entering retirement because you’ve stopped earning a large annual salary, it might make sense to withdraw money from retirement accounts like IRAs and 401(k)s first. That’s because withdrawals from those accounts are taxed as regular income, so you’d pay your new, lower income tax rate on those withdrawals.

If you remain in a high tax bracket, such as 35% or 39.6%, you might instead start by tapping other sources of income, such as savings in regular brokerage accounts. Withdrawals from these accounts may be taxed at the more favorable long-term capital gains rate, which is 15%–20%, depending on your income.

Q: I Feel Confident About My Income Now, But What About When I’m 85?

One way to help ensure you won't outlive savings is to put some savings into a guaranteed income source, such as a deferred annuity. These tools provide a stream of guaranteed lifetime income payments for later in retirement, no matter what happens with the rest of your savings during the coming years.

Working with a financial advisor can help answer these and other questions about your retirement financial strategy in a way that best suits your individual needs. A few simple steps may be all it takes to help secure the future you’ve spent decades working toward.