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Tom Meaglia, ChFC®, AEP®,
CLU®, CRPC®, MSFS
Chartered Financial Consultant
Investment Advisor Representative
Chartered Retirement Planning Counselor
CA Insurance Lic. #0567507
Meaglia Financial Consulting
2105 Foothill Blvd., #B140, La Verne, CA 91750
Toll Free: 800-386-3700
Bus: 909-593-6105
Cell: 818-681-8600
Fax: 909-593-6120
Email: tom@meagliafinancialconsulting.com
Website: www.meagliafinancialconsulting.com
November/December 2018
Ready, Set, Spend
After a lifetime of saving, you’re ready to retire. Now it’s time to do something some retirees find hard to do: Shift from a saving to a spending mindset.
Big Transition
This transition is harder than you might imagine, and it’s no wonder why. If you’re like most people, you spent a lifetime preparing financially for this time of your life. And maybe you were as frugal as possible during some portion of your saving years. The idea of draining your retirement funds after spending years building them up can be an initially scary thought.This is understandable, but it’s time to spend your savings on things you couldn’t do while you worked full-time: Spend more time with grandchildren, take an extra vacation or two and take up other activities you like that may cost you money. Remember, though, this time of your life still involves planning – just a different type than before.
Strategy Shift
One of the first things you should do even before retiring is to forecast all of your expected income from retirement plans, annuity payments, Social Security and other sources. You can expect Social Security and possibly annuity payments (if you have the lifetime income option) to last a lifetime, but your other income is finite and requires a distribution plan.Working closely with an advisor, determine how long your 401(k) and other investments need to last, and then create a distribution strategy that results in a regular income stream. This strategy should also take taxes into account. For example, cashing in your retirement plan balance and not reinvesting it in a similar tax-qualified investment promptly can create a big one-time tax event, so plan accordingly.
Distribution Strategies
Generally, experts recommend that retirees draw from their taxable investments first, letting tax-deferred accounts potentially grow. Using this strategy, however, can trip you up later. You must begin taking 401(k) and traditional IRA withdrawals in the year after reaching age 70 ½ or face a penalty on the required amount not withdrawn. These “required minimum distribution” rules don’t affect Roth IRAs.Even in retirement, you may want to invest a portion of your portfolio for growth because annual inflation is likely. Talk to your advisor to learn more.
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Investment advisory services are offered through Fusion Capital Management, an SEC Registered Investment Advisor. The firm only transacts business in states where it is properly registered, or is excluded or exempted from registration requirements. SEC registration is not an endorsement of the firm by the commission and does not mean that the advisor has attained a specific level of skill or ability. All investment strategies have the potential for profit or loss.
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