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RMDs: An IRS Change is Making Them Smaller in 2022

 The way you calculate your required minimum distribution (RMD) just changed. “The methodology of calculating your required minimum distribution (RMD) is rather simple. Your yearly RMD is calculated using a formula based on the IRS’ Uniform Lifetime Table. Basically, this table estimates the maximum number of years (also known as distribution periods) your retirement account…

Skippiing mandatory RMDs… the details

Skipping a mandatory distribution from your IRA? Everything you need to know Wed, Apr 8 2020 by Darla Mercado “This year, the coronavirus relief law is letting savers bypass mandatory withdrawals from their retirement accounts.”  The one-year reprieve enables those who can afford to leave the money invested a better chance of recovering losses. Key…

To ease stock-turmoil jitters, try these strategies

Writing for The Wall Street Journal (3/9/20), Anne Tergesen interviewed Dr. Wade Pfau, a leading investing researcher and professor at the American College of Financial Services. For investors far from retirement, there is no need to panic but now is a good time to review your asset allocation. But for those nearing or in retirement,…

Required Minimum Distributions (RMDs) from retirement accounts

After you turn 70½, you must prepare for required minimum distributions from your individual retirement accounts and 401(k) plans. If you don’t take your so-called RMD in time, you’ll face a penalty of 50% of what you were supposed to withdraw. Got an RMD for 2019? You have less than four weeks to get it…

Single Premium Immediate Annuity vs. "Safe Withdrawal" Strategy

“Economist and mathematician Michael Edesess compares a “safe withdrawal” strategy from a 60/40 stock-and-bond retirement portfolio with a single premium immediate annuity of the same value. He found the SPIA offers retirees a bigger monthly payout and decreases their chances of running out of money.” Author/researcher Michael Edesess explains:“A safe withdrawal rate is the percentage…

Income annuities increase income while reducing stress for retirees

“Incorporating an income annuity into a retirement portfolio increases income, cuts retirement stress and boosts retirees’ confidence, according to a study by researchers Michael Finke and Wade Pfau from The American College. Income annuities lower the risk of outliving savings in retirement without lowering overall income, compared with an investment-only approach, the study found.” Retirement…

Sequence of Returns Risk in Retirement

Many have heard that it is “safe” to spend 4% of one’s nest egg (adjusted for inflation) each year in retirement, expecting funds to last for a 30 year retirement.Michael Kitces explains both the up and down side risk:https://www.kitces.com/blog/url-upside-potential-sequence-of-return-risk-in-retirement-median-final-wealth/There are many reasons for adjusting one’s spending during a lengthy retirement rather than expecting to spend…

How to spend just the right amount in retirement

“Retirees tend to gravitate to opposing poles in how they spend their nest eggs, with some too parsimonious and others too carefree. The best course lies somewhere in between, as Steve Vernon explains” in Forbes.The Spend Safely in Retirement Strategy is simple enough that you can implement it on your own.1. optimize your social Security benefits.2.…

Turning a nest egg into retirement income

There are plenty of strategies for how to turn your retirement accounts into a reliable income stream at retirement. Walter Updegrave is one of my favorite financial columnists due to the high quality of his research and writing. He answers this question in an article that is short enough to absorb but also includes links…

Understanding Social Security: 35 years of earnings

While many Americans have strong opinions about Social Security, and too many people falsely believe that it won’t be there for them due to irresponsible media reports and irresponsible politicians, this blog attempts to educate people about the realities of Social Security. The Squared Away Blog from the Center for Retirement Research at Boston College,…