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CALL US: (888) 440-2468

have an annuity question?
have an annuity question?

Will required minimum distributions drain your portfolio?

Thanks to the SECURE Act that took effect in early 2020, those who have money in traditional IRAs and retirement plans are now able to wait until age 72 before their required minimum distributions must begin. (Previously, the age for taking RMDs was 70 ½.)

But even given a slightly longer time period before accessing this money, it is still possible that taking required minimum distributions may drain your portfolio. With that in mind, it is essential that you have a plan in place for keeping these funds intact.

How to Keep Your RMD Money Working for You

Unless you require the funds from your required minimum distribution(s) to pay living expenses, it is recommended that you come up with a strategy for keeping some or all of the money in case it is needed down the road.

Some of the best options may include:

  • Investing the money in a savings or investment account
  • Purchasing an annuity

If you invest your RMD funds in a savings or investment account, you’ll have the opportunity to increase the value. This, in turn, can be beneficial if you have to use them in the future for paying your living expenses or for other financial obligations.

Based on the financial vehicles that you choose to have in the savings or investment account, you may be able to increase the assets, which in turn, could provide you with a larger “base” for generating additional retirement income in the future.

If you would rather know the dollar amount of income that you can count on in the future – and you also want to ensure that cash flow will arrive for the remainder of your lifetime (regardless of how long that may be) – a fixed or fixed indexed annuity could be an option.

In addition, if the annuity you purchase is deferred – meaning that it will not generate income right away, but rather at a time in the future – you can also take advantage of tax-deferred growth. Further, unlike traditional IRAs and retirement accounts, personal annuities do not impose required minimum distributions at any age. Therefore, you could leave the money in an annuity for an indefinite period of time.

Will Your Portfolio Remain Intact as Long as You Need It?

Taking any type of withdrawals from a retirement account or IRA can negatively impact the value of the portfolio. With that in mind, if you must take required minimum distributions from a traditional IRA, 401(k), or another type of account, it is imperative that you have a strategy in place for protecting some or all of these funds. Talking with a retirement income specialist can help.

At Annuity Gator, our professionals specialize in creating income plans for consumers, while at the same time ensuring that money remains safe in any type of market conditions. So, if you would like to schedule a time to talk with a retirement income expert, please feel free to call us toll-free at (888) 440-2468 or send us an email by going to our secure online contact form. We look forward to helping you protect what you’ve earned so it will be there when you need it.

Will required minimum distributions drain your portfolio?

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