Nearing Retirement

Retirement can open a world of new opportunities, so you'll want to make sure you have the finances available to live the way you want. When you retire or are very close, your retirement plan is just as critical as when you were saving.

During retirement you will begin to shift your strategies from building your investments to planning your withdrawal strategy. Consider the following as you think about how and when you will withdraw money from your savings.

Determine Your Withdrawal Rate

A major factor in determining how long your money will last is how much you will withdraw each year. Experts say a good place to start is with a 4% to 5% withdrawal rate.

Develop Your Withdrawal Strategy

Your strategy will help you determine from which accounts to withdraw first and how you want to receive your payments.

  • Consider taxable versus tax-deferred account withdrawals and whether you will receive regular payments versus a lump sum.
  • You'll also want to have a good understanding about the IRS's rules for Required Minimum Distributions (RMDs). The RMD Distribution Guide can help clarify those rules.

Decide When to Receive Withdrawals

There are many options for how and when you want to receive your money during retirement. You can set up an automatic withdrawal plan to receive your money as often as you would like.

Past performance is no guarantee of future results. Investment returns will fluctuate and it is possible to lose money.

IRA investment earnings are not taxed. Depending on the type of IRA and certain other factors, these earnings, as well as the original contributions, may be taxed at your ordinary income tax rate upon withdrawal. A 10% penalty may be imposed for early withdrawal before age 59½.

Brokerage Services are provided by American Century Brokerage, a division of American Century Investment Services, Inc., registered broker/dealer, member FINRA, SIPC.