FINANCIAL MATTER$ – IRA withdrawals: how much is too much?

by Jac M. Arbour CFP, ChFC
President, J.M. Arbour Wealth Management

People are living longer and, thus, living longer in retirement. This is both the good news and the bad news. Sure, living longer is a great thing, but in the world of financial planning, it is causing concerns for a number of retirees. One of the questions we are consistently asked is “will I have enough?” It’s a great question! Once you consider how many people are living into their late eighties or early nineties, the volatility of the markets, and how investment risk is now in the lap of the investor more so than ever (due to fewer pensions), it is understandable why so many people are wondering if they will outlive their money.

So what is the right amount to take? There are many things to consider and there is no simple answer. If you have an advisor, I suggest you review the following talking points on an annual basis to help derive the best answer for you:

Time Horizon: How many years do you plan to receive an income from your investments? Things such as health and the timing of the income payments should be considered and discussed annually.

Investment Objective: Are you focused on the growth of the account or more so on income? Maybe you are focused on a combination of the two. Maybe you are focused on something completely different. Clarifying the answer to this question will help determine the allocation of your portfolio and help answer some questions that pop up when discussing the following talking points.

Risk Tolerance: Conservative, Moderate, Balanced, Growth, and Aggressive. Which of these categories best suits you? What is aggressive to one person might be conservative to another and therefore, makes it important to understand what is truly meant by each of these categories. Have your advisor explain the expectations of each.

Target Rate of Return: Are you looking for slow and steady and higher predictability, or are you shooting for the moon and ready for a ride? Higher rewards often times means increased risks, which can lead to seemingly lower consistency when it comes to income planning.

Legacy Plans: Do you want to spend your last penny on your last day or do you want to leave something to the loved ones or to a charitable organization? Knowing how much you want to leave behind is a major factor when determining how much to spend while alive.

Consider discussing these topics and others with your advisor. Any of them is a good place to start the conversation. If we can be of any assistance to you in anyway with the above, or any concerns you may have with your retirement planning, please reach out for a free retirement planning consultation. As always, I hope this helps you and your family to make better financial decisions. See you next month.

Trivia Question: How many days does a person have to complete an indirect rollover of an IRA? A. 180 days B. 90 Days C. 60 days, or D. 30 days

Answer can be found here.

Jac M. Arbour, CFP®, ChFC®, is president of J.M. Arbour Wealth Management, 77 Water Street, Hallowell, ME 04347; phone: 207-248-6767 | cell: 207-431-3376 | fax: 207-620-7264; www.jmarbour.com; www.facebook.com/jmawealth.