How to Make Your Retirement Savings Last a Lifetime
How to Make Your Retirement Savings Last a Lifetime
No matter your current age, retirement is coming, at some point. For most people, the earlier that time comes the happier they are. In any case, whether you’re looking forward to that day or you want to work as long as you’re physically able, you will have to call it quits eventually. There are all kinds of ways to spend your retirement but the key to any comfortable retirement is having the right plan in pace, which includes having enough money to last as long as you do.
Making the Most of Your Retirement Saving
Therefore, no matter how close you are to actually hanging it up, you should start working on your retirement plan as soon as you can. That plan needs to include measures that will prevent you from running out of money too soon. Going broke in retirement is not a good way to spend your golden years. So how do you make sure that your retirement savings are going to last as long as you need them to?
Open a Qualified Longevity Annuity Contract
One way to ensure that your money lasts as long as you do is by opening up a qualified longevity annuity contract, or QLAC. This option allows you to invest as much as 25 percent of the total balance of your 401(k)s and IRAs, up to $125,000, into a QLAC. So how does it work? It’s rather simple actually. You start by paying a lump sum amount to an insurance company. At some point in the future the insurance company then starts to pay you a yearly income for the rest of your life. This happens between the ages of 70 1/2 and 85-years-old and the longer you wait to start taking the payout the larger your annual payment will be.
Lifetime Annuities Help Reduce Risks
According to a recent study by the Pension Research Council, putting a portion of your retirement savings into a lifetime annuity is an effective way to protect your savings from longevity risks. Lifetime annuities also help provide people with significantly higher consumption possibilities, especially when they get older.
Using Retirement Funds Saves on Taxes
Another advantage of a QLAC is the fact that you can use your IRA money to open one of these contracts. Any money you invest from an IRA or 401(k) does not count against your balance when you turn 70 1/2 and you have to start withdrawing minimum distributions from those accounts. On the down side, your QLAC payments will be taxed at regular income rates. Just be sure to shop around before you sign one of these contracts in order to get the best payout possible, as each company’s payout amounts will vary.
We hope you found this article about “How to Make Your Retirement Savings Last a Lifetime” helpful. If you have questions or need expert tax or family office advice that’s refreshingly objective (we never sell investments), please contact us or visit our Family office page or our website at www.GROCO.com. Unfortunately, we no longer give advice to other tax professionals gratis.
To receive our free newsletter, contact us here.
Subscribe to our YouTube Channel for more updates.
Alan Olsen, is the Host of the American Dreams Show and the Managing Partner of GROCO.com. GROCO is a premier family office and tax advisory firm located in the San Francisco Bay area serving clients all over the world.
Alan L. Olsen, CPA, Wikipedia Bio
GROCO.com is a proud sponsor of The American Dreams Show.
The American Dreams show was the brainchild of Alan Olsen, CPA, MBA. It was originally created to fill a specific need; often inexperienced entrepreneurs lacked basic information about raising capital and how to successfully start a business.
Alan sincerely wanted to respond to the many requests from aspiring entrepreneurs asking for the information and introductions they needed. But he had to find a way to help in which his venture capital clients and friends would not mind.
The American Dreams show became the solution, first as a radio show and now with YouTube videos as well. Always respectful of interview guest’s time, he’s able to give access to individuals information and inspiration previously inaccessible to the first-time entrepreneurs who need it most.
They can listen to venture capitalists and successful business people explain first-hand, how they got to where they are, how to start a company, how to overcome challenges, how they see the future evolving, opportunities, work-life balance and so much more..
American Dreams discusses many topics from some of the world’s most successful individuals about their secrets to life’s success. Topics from guest have included:
Creating purpose in life / Building a foundation for their life / Solving problems / Finding fulfillment through philanthropy and service / Becoming self-reliant / Enhancing effective leadership / Balancing family and work…
MyPaths.com (Also sponsored by GROCO) provides free access to content and world-class entrepreneurs, influencers and thought leaders’ personal success stories. To help you find your path in life to true, sustainable success & happiness. It’s mission statement:
In an increasingly complex and difficult world, we hope to help you find your personal path in life and build a strong foundation by learning how others found success and happiness. True and sustainable success and happiness are different for each one of us but possible, often despite significant challenges.
Our mission at MyPaths.com is to provide resources and firsthand accounts of how others found their paths in life, so you can do the same.
Tax Exemption Legislation Could Be Good News for Political Donors
The Republican lead Congress recently passed some new legislation – without garnering much attention at all – that could be a big boon for major donors of political organizations and groups. The bill could protect big donors from having to pay gift taxes on their large donations to these political groups. The bill, which is…
To Extend or Not to Extend, That Is the Question?
Have you looked at your calendar yet today? Have you noticed that April 15 has already come and gone? Of course, it’s pretty hard to miss tax day, but some people actually do. So should you file an extension now if you didn’t make it on time? Some people believe filing an extension is a…
What Do You Do When You Owe Taxes But Don’t Have the Funds?
For many people tax season brings the joy of a nice big refund to go out and splurge on something they’ve had your eye on for a long time. On the flip side of the equation are those people who surprisingly, or not, end up owing the IRS money. Not only do these people miss…
Startups Should Pay Heed to These Tax Tips
Tax season us winding down and there’s a good chance that most businesses have already filed their tax returns. If you’re a business owner and you still haven’t filed then contact us right away to get it done. In any case, now is a good time to review some tax tips for businesses, especially for…