Approaching retirement

Getting ready to retire

You may be able to toss the alarm clock when you retire, but you need to be alert to changes to retirement account rules, benefits and financial plans.

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Know how the SECURE Act has changed retirement 

Revisit Required Minimum Distributions (RMDs)

Review your financial plan regularly

Rules for required retirement account withdrawals changed with the SECURE Act: If you turned 70 ½ in 2020 or later, you can wait to make these Required Minimum Distributions until you turn 72.

The rules for RMDS changed in 2020 – just for 2020 – when Congress passed the CARES Act. When considering 2021, be sure to ask your financial advisor about when you may need to make required withdrawals.

As a guideline for how much to plan on spending: Start with the 4% rule, which says to use 4% of your retirement savings during your first year of retirement. After year 1, continue to modify this amount to address inflation. 

 

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Know your government benefits

Take (or leave) your Roth IRA

Create an estate plan

Waiting to reach what the government calls “full retirement age,” for Social Security benefits as opposed to taking them when you’re eligible could provide some financial oomph. Also important: You may have to pay federal and state taxes on these benefits.

Roth IRAs are retirement accounts that have different rules than some other retirement accounts, including freedom from Required Minimum Distributions. You never have to withdraw your funds.

An estate plan gives you control over how you want material, personal and financial matters handled and can include things like assigning powers of attorney, advanced medical directives, and who gets stuck with the ugly (but much loved) couch.  

1

Know how the SECURE Act has changed retirement

Rules for required retirement account withdrawals changed with the SECURE Act: If you turned 70 ½ in 2020 or later, you can wait to make these Required Minimum Distributions until you turn 72.

2

Revisit Required Minimum Distributions (RMDs)

The rules for RMDS changed in 2020 – just for 2020 – when Congress passed the CARES Act. When considering 2021, be sure to ask your financial advisor about when you may need to make required withdrawals.

3

Review your financial plan regularly

As a guideline for how much to plan on spending: Start with the 4% rule, which says to use 4% of your retirement savings during your first year of retirement. After year 1, continue to modify this amount to address inflation.

4

Know your government benefits

Waiting to reach what the government calls “full retirement age,” for Social Security benefits as opposed to taking them when you’re eligible could provide some financial oomph. Also important: You may have to pay federal and state taxes on these benefits.

5

Take (or leave) your Roth IRA

Roth IRAs are retirement accounts that have different rules than some other retirement accounts, including freedom from Required Minimum Distributions. You never have to withdraw your funds.

6

Create an estate plan

An estate plan gives you control over how you want material, personal and financial matters handled and can include things like assigning powers of attorney, advanced medical directives, and who gets stuck with the ugly (but much loved) couch. 

of those who currently have a savings account contribute to their savings account every month.

The Financial Literacy 2020 Survey was conducted by Marcus by Goldman Sachs® in March 2020 among 2,516 Americans. Savings accounts defined as savings accounts, certificates of deposit (CDs) and money market accounts.

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This article is for informational purposes only and is not a substitute for individualized professional advice. Articles on this site were commissioned and approved by Marcus by Goldman Sachs® but may not reflect the institutional opinions of Goldman Sachs Group, Inc., Goldman Sachs Bank USA or any of their affiliates, subsidiaries or divisions.