Planning a retirement withdrawal strategy is a fundamental step toward replacing a traditional paycheck with a long-term retirement “paycheck.”

Here are three questions you can ask yourself that will lay the groundwork for planning your long-term strategy.

1. What do you own, in what types of accounts?

Start by separating your assets into qualified (tax-deferred) and non-qualified (taxable) accounts.

  • Tax-qualified assets typically include 401 (k)s or individual retirement accounts (IRAs).
  • Non-qualified assets include assets like bank savings, individual equities, mutual funds, municipal bonds, and fixed  income investments.
  • Rental real estate, land, and business property should be cataloged separately because they may provide income and may be repurposed in the future.
  • Also identify any insurance policies that have large cash values.

2. Will you be in a higher tax bracket when you retire?

  • Employment income—whether it’s from full-time, part-time, or consulting work.
  • Income from Social Security, pensions, disability, insurance payments, or rental income.
  • Investment income from the assets listed under Question 1.
  • Annuities that include a guaranteed income benefit rider.

What changes are coming?

Next, determine how much income you currently generate each year. It helps to categorize your income into these buckets:

  • Determine whether you will start Social Security at the earliest age possible, or defer Social Security to get a permanently increased base.
  • Know whether your pension gets a cost-of-living adjustment (COLA), or if it has a survivor benefit for your spouse.
  • Determine approximately how much you will have to take at age 72, when required minimum distributions (RMDs) begin.1
  • Try to project if your expenses will materially change in the coming years for reasons such as a mortgage or college expenses being paid off, medical premiums going up or down due to Medicare, or medical premiums going up due to increased needs.

Once you know what you own, how much you generate in income, and how changes may affect you, you’re on your way to developing a solid withdrawal strategy. We can help you develop withdrawal strategies that align your investment portfolio with your income needs.

Working with Janney

Depending on your financial needs and personal preferences, you may opt to engage in a brokerage relationship, an advisory relationship or a combination of both. Each time you open an account, we will make recommendations on which type of relationship is in your best interest based on the information you provide when you complete or update your client profile.

When you engage in an advisory relationship, you will pay an asset-based fee which encompasses, among other things, a defined investment strategy, ongoing monitoring, and performance reporting. Your Financial Advisor will serve in a fiduciary capacity for your advisory accounts. For more information about Janney, please see Janney’s Relationship Summary (Form CRS) on www.janney.com/crs which details all material facts about the scope and terms of our relationship with you and any potential conflicts of interest.

By establishing a relationship with a Janney Financial Advisor, we can build a tailored financial plan and make recommendations about solutions that are aligned with your best interest and unique needs, goals, and preferences.

Contact us today to discuss how we can put a plan in place designed to help you reach your financial goals.

1Please note, RMDs from defined contribution plans under 401(a), plans described in 403(a) and 403(b), eligible (governmental) 457(b) plans,  and IRAs are waived for calendar year 2020 due to the CARES Act.

Janney Montgomery Scott LLC, its affiliates, and its employees are not in the business of providing tax, regulatory, accounting, or legal advice. These materials and any tax-related statements are not intended or written to be used, and cannot be used or relied upon, by any taxpayer for the purpose of avoiding tax penalties. Any such taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor.

About the author

Martin Schamis

Vice President & Head of Wealth Planning

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For more information about Janney, please see Janney’s Relationship Summary (Form CRS) on www.janney.com/crs which details all material facts about the scope and terms of our relationship with you and any potential conflicts of interest.

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