SmartAsset and Yahoo Finance LLC may earn commission or revenue through links in the content below. I have a 401(k) with $120,000 in it. I’m 74 and getting the required minimum distribution at the end of each year. Do I need a retirement planner to help handle the withdrawal?  – Susan While technically you don’t need a financial advisor to handle your retirement account withdrawals, it can be useful to talk with one. Between deciding which investments to liquidate, navigating potential tax implications ...

Budgeting is essential at every stage of life — but in retirement, it’s critical. With a fixed income and rising costs, retirees need a clear plan for how much they’ll spend and where the money will come from. Find Out: The Most Common Retirement Mistake, According to an Expert Read Next: 10 Used Cars That Will Last Longer Than the Average New Vehicle To help, GOBankingRates asked financial experts to share their top budgeting rule retirees should follow in 2025 — here’s what they said. Start With a Reti ...

Finally, you can invest in mixed assets, like index funds and bond portfolios. This would let you balance growth and security as you see fit, but with more volatility. In this scenario, you also need to sell assets to generate income.Like bonds and dividends, annuities are a popular choice among retirees looking for security in their income. With an annuity, you buy a contract from a life insurance company that guarantees you a fixed monthly payment for life based on the purchase price and other factors. Ac ...

Core Insights - Fall is an optimal time for baby boomers to refine their financial strategies before year-end deadlines, focusing on RMDs and charitable giving to lower taxes and enhance retirement savings [1][2] Group 1: Required Minimum Distributions (RMDs) - Boomers aged 73 or older must adhere to strict RMD deadlines, with penalties for non-compliance; reviewing distribution amounts now allows for corrections and exploration of charitable giving options [3] - Financial advisors recommend aligning withdrawals with tax strategies before year-end, as RMDs can significantly affect annual financial plans [4] Group 2: Retirement Contributions - Working boomers can utilize catch-up contributions to reduce taxable income and enhance retirement savings, with additional contributions of $7,500 for 401(k) and $1,000 for IRA available for those aged 50 and older in 2025 [5] Group 3: Charitable Giving - Charitable contributions made before December 31 can lower taxable income while supporting preferred causes; reviewing taxable accounts in the fall is advisable for strategic gifting [5][6] - Tax-loss harvesting and donating appreciated stock or making QCDs from IRAs are effective strategies to reduce taxable income while contributing to charitable causes [6] Group 4: Medicare Coverage - The Medicare open enrollment period from October 15 to December 7 provides boomers an essential opportunity to review plan changes and avoid unexpected costs in 2026 [6]

SmartAsset and Yahoo Finance LLC may earn commission or revenue through links in the content below. Many retirement savers with sizable tax-deferred accounts like a 401(k) are interested in converting those funds to Roth accounts so they can escape having to pay Required Minimum Distributions (RMDs) and the associated taxes after they retire. It's not always the right move, in part because of the hefty upfront tax bill on conversions. However, in the right situation, this can be a solid financial move. F ...

Core Insights - The article discusses strategies for retirees to effectively manage their Required Minimum Distributions (RMDs) from retirement accounts, emphasizing the importance of reinvesting and utilizing these funds wisely to enhance financial security and growth potential [24]. Group 1: Reinvesting RMDs - Retirees can transfer assets in kind from retirement plans to taxable accounts, allowing them to keep investments intact while fulfilling RMD requirements [1]. - After paying taxes on RMDs, retirees can reinvest remaining funds in regular investment accounts, which can continue to grow even after leaving tax-deferred accounts [2][5]. - Reinvesting RMDs is beneficial for retirees with stable income sources who do not rely on RMDs for regular expenses, as it helps preserve purchasing power over time [3]. Group 2: Investment Options - When considering reinvestment, retirees should assess their timeline for needing the funds; safer options like CDs or money market funds are advisable for short-term needs, while a mix of stock and bond funds can be suitable for longer-term investments [4]. - Common reinvestment options include mutual funds, ETFs, dividend-paying stocks, and high-yield savings products, aimed at maintaining growth despite the funds leaving retirement accounts [5][6]. Group 3: Annuities and Emergency Funds - Funding an annuity with RMDs can provide predictable income for retirees who have sufficient liquid assets for short-term needs, allowing for part of their retirement savings to be converted into guaranteed payments [8][9]. - Establishing an emergency fund is crucial for retirees to manage unexpected expenses without having to liquidate long-term investments during market downturns [13][14]. Group 4: Charitable Giving and Tax Management - Utilizing Qualified Charitable Distributions (QCDs) allows retirees to donate up to $108,000 from their IRAs directly to charities, which can reduce taxable income and count towards RMDs [16][17]. - Lowering Adjusted Gross Income (AGI) through QCDs can also help reduce taxes on Social Security benefits and maintain eligibility for certain tax credits [18]. Group 5: Roth Conversions - RMDs cannot be used directly for Roth IRA conversions, but they can be used to pay taxes on conversions, allowing retirees to manage future tax exposure and reduce required withdrawals over time [19][20]. - Gradually shifting funds into a Roth IRA can create more flexibility for future income planning, as qualified withdrawals from Roth accounts are tax-free [21].

Core Insights - The article discusses the misconception that taxes will decrease in retirement, highlighting various factors that can lead to higher tax rates during retirement years compared to earning years [11] Group 1: Tax Implications of Retirement Income - Inherited IRAs must be fully distributed within 10 years, potentially increasing a beneficiary's taxable income significantly [1] - The RMD age will increase to 75 in 2033, allowing for more time for investments to grow, which may result in larger distributions and higher tax brackets [2] - Required Minimum Distributions (RMDs) starting at age 73 can lead to increased tax liabilities due to larger annual distributions from pre-tax accounts [2][3] Group 2: Specific Tax Scenarios - The "widow(er) tax" affects surviving spouses, who may face higher tax rates due to being taxed as single filers instead of married couples [4] - Large one-time expenses can lead to higher taxes in retirement if significant pre-tax distributions are taken to cover these costs [5] - Changes in tax codes, such as the expiration of the Tax Cuts and Jobs Act in 2026, are expected to increase tax rates, impacting retirees [6][7] Group 3: Legacy and Tax Planning - Inherited pre-tax money can lead to increased taxes for beneficiaries, especially if received during their peak earning years [9] - Tax planning strategies should consider the timing of income and potential future tax rate changes to avoid unexpected tax burdens [10] - Proactive tax planning is essential to manage retirement tax liabilities effectively, as the assumption that taxes will decrease can lead to inaction [11]

SmartAsset and Yahoo Finance LLC may earn commission or revenue through links in the content below. People with Roth IRAs generally have to wait five years before withdrawing earnings from their account. But the devil is in the details, and for this particular rule, getting those details can be surprisingly difficult. For starters, the IRS has three different five-year rules that apply to Roth IRAs. One of them, the conversion rule, appears self-contradictory. The IRS doesn’t publish clear instructions ...

Core Insights - Roth conversions can be beneficial even after the initiation of required minimum distributions (RMDs), as they help in tax reduction and provide greater control over future distributions [2][5] - An incremental approach to Roth conversions is generally recommended, but the decision should be based on account balance and other income considerations [2] RMDs Overview - Required Minimum Distributions (RMDs) must be taken starting at age 73 (or age 75 for those born in 1960 or later), calculated based on the account balance as of December 31 of the previous year [4] - RMDs are mandatory withdrawals that are taxable, aimed at preventing indefinite tax deferral [4] Roth Accounts and RMDs - Roth accounts are exempt from RMDs, and converting tax-deferred funds into a Roth account can lower future RMDs by decreasing the balance of the tax-deferred account [5] - It is important to note that the RMD itself cannot be converted into a Roth IRA; it must be withdrawn [7] Impact of Conversions on RMDs - Converting funds reduces the account balance, which in turn lowers the subsequent year's RMD. For example, converting $10,000 from a $100,000 balance results in a reduced balance of $85,000, leading to a smaller RMD and less taxable income in the following year [8]

Core Insights - The article discusses the importance of long-term care insurance for retirees, highlighting the potential high costs of long-term care without coverage [2][4] - It emphasizes the need for retirees to consider financial planning strategies, including Required Minimum Distributions (RMDs) from retirement accounts [7][10] Long-Term Care Insurance - Long-term care insurance can mitigate the costs associated with aging, with an average annual premium of $1,900 for single females [1][2] - The monthly costs for long-term care can range from $4,000 to $15,000 or more, making insurance a critical consideration for financial security [2][4] - Various options for long-term care insurance are available, including hybrid life or annuity insurance with long-term care benefits [6] Financial Planning and RMDs - Retirees like Alice should be aware of RMDs, which require withdrawals from traditional IRAs starting at age 73 [8][10] - A financial advisor can help create a strategy to minimize RMDs, potentially through converting traditional IRA funds to a Roth IRA [10][11] - Understanding the tax implications of RMDs is crucial, as skipping them can result in a 25% tax penalty [8][9] Retirement Income - Alice has a monthly pension of $5,000 and Social Security payments of $2,000, totaling approximately $6,000 per month, which covers her living expenses [4][5] - The article suggests that retirees should consider their overall financial situation, including potential long-term care needs and RMD strategies, to ensure financial stability [3][7]