retirement income, 401k plan, Enjoying Retirement, Converting your Retirement Savings into Cash

Enjoying Retirement

You’ve spent the past several decades saving. Now that you’re retired, however, you face an entirely different conundrum: What’s the best way to turn that savings into a retirement income?

This is an important question because life expectancies are rising. Longer life expectancies mean longer retirements. According to the Social Security Administration, a 65-year-old American male in good health has a 50 percent chance of living to 84 and a 65-year-old female has a 50 percent chance that she will live to 86. Based on these findings, you’ll need a reliable income for a longer period of time than previous generations—for almost as many years as you spent working. A successful retirement income plan can help you feel confident that your assets will last through your extended lifetime.

It takes some smart planning to make sure you use your savings in the most efficient way possible, while still ensuring that you’ll have enough income to last a lifetime. A SunTrust Investment Services, Inc. advisor can help you take a comprehensive look at all sources of retirement income, such as your savings, investments, employer-sponsored 401(k) plans, Social Security, pension, annuities and insurance. Then your SunTrust advisor can help you devise a tax-efficient strategy for converting these savings into retirement income.

You can begin withdrawing income from your qualified retirement accounts after age 59½ without penalty, through periodic distributions, lump-sum distributions or required minimum distributions.

Periodic distributions: The rate at which you withdraw income from your qualified assets is a key to determining how long your savings will last. Factors that affect your distribution rate include your age, health, spending habits, lifestyle, gifting goals and the potential impact of inflation. As a reference point, most retirees typically liquidate no more than five percent of their principal each year.

Lump-sum distributions: You have the option of withdrawing income from a qualified retirement plan in one lump sum. There are tax advantages to this method, but there can be many caveats as well. A SunTrust Investment Services advisor can help you determine whether you qualify for such a distribution and under what circumstances it makes sense.

Required minimum distributions: For Traditional IRAs, you must generally begin taking required minimum distributions (RMDs) no later than April 1st following the year you turn 70½. RMDs are determined by the IRS and based on your age and a percentage of your account balance. The same generally holds for 401(k) plans and other qualified retirement plans, with some exceptions. It’s worth noting that Roth IRAs have no such minimum distributions.

To speak with a SunTrust advisor call 844.206.8900.

Surprising facts about retirement saving habits

How do your plans compare with others?

  • More than half of U.S. workers have saved less than $25,000 for retirement.1
  • Social Security accounts for less than 40 percent of an average wage earner's income after retiring.2
  • Approximately 4 in 10 Baby Boomers have nothing saved for retirement.3

Get details about healthcare costs in retirement

Many retirees underestimate their healthcare costs, so remember:

  • Most Americans are not eligible for Medicare until age 65.
  • Medicare can assist with benefits and health insurance.
  • Basic Medicare doesn’t cover prescription drugs and many other medical costs.
  • Supplementary insurance plans can help cover healthcare costs.

1 2014
2 2015
3 Insured Retirement Institute

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