Determining Your Retirement Fund Strategies

As you near retirement, it's increasingly important to determine how and when you'll take retirement account distributions.

mature couple walking together

Podcast Transcript

Host: Rob Miles, Senior Vice President, Wells Fargo Private Bank

Guest: Emily Irwin, Senior Wealth Planner, Wells Fargo Private Bank


Hello, I’m Rob Miles, Senior Vice President for Wells Fargo Private Bank, and this is “Your Financial Journey” — a podcast series that explores common financial issues that we all face. I’m joined today by Emily Irwin, Senior Wealth Planner, to discuss important planning retirement strategies.

Emily, I think it’s fair to say that the nearer you get to retirement, the more important it is to think about how you want to take distributions from retirement accounts and which accounts you want to tap into first.


You’re absolutely right, Rob. Good planning can help you to extend the life of your retirement resources. Making an inventory of your expected expenditures during retirement — and building in a cushion for unexpected expenditures — is an important first step. Determining how and when to take retirement distributions and when to dip into your savings are critical decisions that can have an impact on how well you live in retirement.


Emily, there are a number of different sources of income in retirement: from tax-deferred retirement accounts such as IRAs and 401ks to taxable brokerage accounts and lifetime income sources such as Social Security, annuities, pensions, and even insurance policies. With such a range of sources, how do you decide which account to draw on and when?


Great question, Rob. A common strategy is to cover essential expenses using lifetime income sources, the best known of which is Social Security. Using a mixture of these sources can help protect you from having to draw on investments during periods of market volatility, which lowers the risk that you’ll outlive your money.


And what about strategies, Emily, for taking distributions from those retirement accounts?


First of all, it’s important to remember that you’ll have to take distributions from retirement accounts by age 70 1/2. But, if you retire earlier than that, you will have some flexibility. If possible, we would suggest waiting until you have to take such distributions. The benefit of waiting is that these funds will continue to grow tax deferred.

If you are able to, we also recommend being flexible in taking money out of taxable accounts. It’s better to wait than to take money out in a down market. You may also want to consider the mix of your investments. Depending on your situation, you may need to invest for growth as well as income.


Emily, if you are one of the fortunate people out there who have an employer pension, how does that play into your retirement income strategy?


Well, Rob, there are different ways to tap into your pension assets, for example, through an annuity or a lump sum payment. There are a number of factors that will play into the decision whether to take one or the other. Considerations include things such as your need for income, your health, your tax situation, and maximizing estate planning strategies. I recommend discussing the best option for your specific situation with your financial [professional] or planning professional.


Emily, great suggestions. Do you have any other useful suggestions for our audience as they consider their retirement planning?


Just a couple, Rob. First, I would encourage our listeners to keep their fixed expenses as low as possible in retirement. And second, talk to your financial and tax professionals about how to prepare for retirement. Everyone’s situation is different and planning for retirement ahead of time can really help. Being proactive versus reactive often yields the best results.


All good points, Emily. So, to sum up for our listeners:

  1. Keep your fixed expenses low.
  2. Use lifetime income sources to fund fixed expenses.
  3. Consult with your financial professional, planner, and tax professional to create a plan that’s appropriate for your specific needs.


You’ve summed it up well, Rob. In my view, good planning can make a big difference during your retirement years.


Well, Emily let me thank you for your time and sharing your perspective today. This is useful information for all of us to keep in mind. And thanks to our listeners for joining this podcast.

This is “Your Financial Journey.”

What can Wells Fargo do for you?

No matter how your life may be changing, your team at Wells Fargo will be glad to help you plan and prepare. Call now.

Wells Fargo & Company and its affiliates do not provide legal advice. Wells Fargo Advisors is not a tax or legal advisor. Please consult your tax or legal advisors to determine how this information may apply to your own situation. Whether any planned tax result is realized by you depend on the specific facts of your own situation at the time your taxes are prepared.


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