Top Three Retirement.tips Articles of the Year
Number 3:
Does the 4 Percent Rule Still Apply to Retirement Withdrawals?
The 4% rule suggests that retirees can safely withdraw the amount equal to 4 percent of their savings during their retirement year and then adjust for inflation each subsequent year for 30 years.
Key Highlights:
- Due to high inflation rates, financial planners, including the rule’s creator, Bill Bengen, caution that the 4% rule may no longer be feasible for the long term, and retirees should consider adjusting their withdrawal rates.
- Alternative withdrawal strategies, such as the bucket and fixed dollar withdrawals, provide retirees with options beyond the traditional 4% rule, allowing for a more personalized approach based on individual circumstances and financial goals.
- Factors such as marital status, state of residence, life expectancy, types of retirement accounts, and expected living expenses in retirement should be carefully evaluated to determine the most suitable approach for each individual’s financial situation and goals.
Number 2:
How Much Cash Should I Have on Hand in Retirement?
This article underscores the importance of maintaining an emergency fund in retirement despite the ability to withdraw from retirement accounts without penalties.
Key Highlights:
- Despite penalty-free access to retirement accounts, experts emphasize the need for retirees to maintain an emergency fund, recommending coverage for six to twelve months of living expenses.
- Financial prudence of keeping an emergency fund in cash to avoid potential losses from withdrawing from stock funds during market downturns.
- Keeping emergency funds in secure accounts, steer clear of investments susceptible to market fluctuations, and explore considerations for amounts exceeding FDIC insurance limits.
Read more about how much cash you should have on hand in retirement here.
Number 1:
Have You Heard About the “Rich Person’s Roth?”
A Roth IRA is an effective tax-minimization tool, but high earners may find an alternative in the “Rich Person’s Roth,” a cash-value life insurance policy offering tax-free earnings and withdrawals.
Key Highlights:
- Not a retirement account but a cash-value life insurance policy offering tax-free earnings and withdrawals.
- No annual contribution limits,
- Health considerations and interest rates on policy loans are important factors
Read more about Rich Person’s Roth here.
Honorable Mentions:
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Get StartedWelcome to our “Best of 2023” recap, highlighting some of this year’s most insightful articles. This recap will explore insightful topics such as retirement planning, mortgage payoff strategies, withdrawal rules, and required minimum distributions.
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