One of the most important decisions you will make regarding retirement planning is how to fund your retirement. One popular option is to use an IRA. An IRA can be a great way to save for retirement, but it’s essential to ensure you plan, so your IRA will last as long as needed. This guide will discuss tips on making your IRA last a lifetime in retirement!
Understanding Individual Retirement Accounts (IRAs)
IRAs are investment vehicles designed to help you save for retirement in a tax-advantaged way. You’ve likely heard of the most common types: Traditional and Roth IRAs. Each has its own set of rules, benefits, and drawbacks, but the primary aim is the same: to help you achieve a secure and comfortable retirement.
How Long Will My IRA Last?
The short answer? An IRA can last a lifetime and potentially beyond. The longevity of your IRA depends on a few key factors: the amount you contribute, the rate of return on your investments, and the withdrawals you make during retirement. The good news is that there are no age restrictions for when you have to use up all your IRA funds.
Helpful Tool: IRA Withdrawal Calculator
What to Do with an IRA After Retirement
Once you’ve crossed the retirement finish line, you’re faced with an important question: “What now?” This is where your IRA strategy becomes essential.
Regular Withdrawals and the IRA Withdrawal Age
Ideally, you’ve contributed to your IRA throughout your working years, and now it’s time to reap the benefits. The IRS sets rules about when you can start taking money out of your IRA without penalty – this is known as the IRA withdrawal age. The standard IRA withdrawal age without penalty is 59 and a half.
Mandatory Distributions and Cashing Out IRA After Age 73
Once you reach age 72, the IRS requires you to take Required Minimum Distributions (RMDs) from your Traditional IRA. These are mandatory withdrawals that must be taken each year. The rules changed slightly with the SECURE Act, which increased the RMD age from 70 and a half to 72 and, most recently, to age 73. But what about cashing out IRA after age 73? You can indeed cash out your IRA completely after this age, but it’s essential to consider the tax implications and potential impact on your retirement income.
Annuities: A Guaranteed Lifetime Income Rider
Annuities are financial products that provide a steady stream of income in retirement. They are often used as a strategy to make an IRA last longer. An annuity with a guaranteed lifetime income rider can be a beneficial part of a retirement income strategy, as it can provide a steady income stream for as long as you live.
What Will Cause My IRA To Run Out Of Money?
A few things can cause your IRA to run out of money sooner than expected. One is inflation. As the cost of living goes up, the value of your IRA withdrawals will decrease if you don’t adjust for inflation.
Another thing that can impact how long your IRA lasts is market volatility. If the stock market crashes and you are invested in stocks, the value of your IRA will decrease. This is why it’s essential to have a diversified investment portfolio that includes both stocks and bonds.
Finally, how you withdraw money from your IRA can also impact how long it lasts. For example, if you withdraw largely or take out money too frequently, you may deplete your IRA faster than planned.
How To Make An IRA Last A Lifetime
To make an IRA last longer during retirement, people often use annuities. Annuities are financial products that offer a fixed amount of income. Choosing an annuity with a guaranteed lifetime income rider for a retirement income plan can be advantageous as it provides regular income for the rest of your life.
Next Steps
If you’re nearing retirement and are worried about how long your IRA will last, don’t panic. Many solutions can help ensure you have the income you need for as long as you live.
One option is to transfer your IRA into an IRA annuity. Annuities with a guaranteed lifetime income rider provide payments as long as you live, no matter how long, and can be an excellent way to protect yourself from longevity risk. Payments can also increase yearly to help keep up with inflation, so they’ll stay ahead of rising costs.
Contact us today for a quote on an annuity with a guaranteed lifetime income rider – we’ll help ensure you have the retirement you deserve.
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