US. Tax-Efficient Retirement Withdrawal Strategies
Earlier this year Fidelity reported that the number of 401K millionaires hit an all time high of 168,000 and the number of IRA millionaires hit 156,000. Now that the 76 million Baby Boomers are starting to retire and reach the age of Required Minimum Distributions – planning for tax efficiently drawing down their savings is becoming a bigger concern. Additionally many people believe we may be in a once in a generation window of low taxes , and that taxes will likely rise in the future to pay for programs like Obamacare (Affordable Care Act), Medicare and Social Security as we (hopefully) live longer.
Why RMDs (Required Minimum Distributions) Matter
Let’s say you’re a 60 year old married couple with $500,000 in retirement savings held in a Qualified account like a 401K or an IRA and through the miracle of medical advances you live to 100. To keep this simple let’s say you can live on a combination of Social Security and RMDs and that you can achieve a 7% rate of return (effectively doubling your money every 10 years) and are subject to a progressive effective tax rate. You can see below that your annual income tax bill starts to get pretty significant as RMDs increase over time.
Read more @Forbes
