![]() The rules for Roth accounts are different, which follows the same logic - you paid taxes on that money before you contributed it to the account, so the government already got its due. So even if you don’t need it, you have to take it and calculate it into your taxable income. Why? Because you put off paying taxes on that money for years - those withdrawals are when the government finally gets some tax income. There are also rules that require annual withdrawals at given percentages from certain retirement accounts, including your 401(k), 403(b), 457(b), and traditional IRA accounts. If your retirement plan is light on income-producing assets, you’ll probably need to withdraw from your retirement accounts or sell a few securities along the way. What are income-producing assets? They’re investments that produce ongoing income streams, such as stocks that pay dividends, real estate you own and rent out, private business income, and so on. A large portfolio that’s heavy on income-producing assets might fund most or even all of your monthly living expenses without any need for withdrawals. Ideally, you want to take minimal withdrawals and leave your portfolio as intact as possible - so it can keep producing income for you during retirement. Add some retirement income in the Retirement (Optional) section to see how that changes the picture! Choosing a tax-advantaged withdrawal strategy If you want to start playing with actual numbers, Quicken’s retirement calculator can help you explore your options. While 67 is technically “full” retirement age, you can increase your benefits up to 24% just by waiting until you’re 70 to collect. But when you start taking benefits matters. ![]() Social Security replaces about 40% of the average person’s pre-retirement paycheck. While some retirees can thrive on $50,000 a year, others require much more. But your exact savings goal will depend on the lifestyle you want. Typically, experts say you should expect to spend about 70-90% of what you were making before you retired. You’ll also want a bit of a cushion for medical expenses and long-term care. That depends on 2 things - how much you want to spend each month during retirement and how much you expect to bring in through a pension, Social Security, or private income streams. Retirement planning starts by working out how much you’ll need to save by the time you retire. Figuring out how much you’ll need to save for retirement Let’s take a look at how these steps impact your financial goals. Balancing profits with financial security.Choosing a tax-advantaged withdrawal strategy. ![]()
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