Preparing to Retire Building an Income Strategy

Sustaining your income to afford your desired lifestyle is the ultimate goal of retirement savings. Determining when and how much you'll withdraw from your resources and how you'll continue to earn will help you achieve that.

Withdrawing Benefits

Individual Retirement Accounts (IRAs): You may take IRA distributions at any time; however, they're generally subject to federal income tax withholding. Once you reach age 72;, you're required to begin drawing from any Traditional or Simplified Employee Pension (SEP) IRAs you have. You're never required to withdraw from a Roth IRA.

Social Security: To receive complete benefits, you must wait until you reach the Social Security Administration's full retirement age, which varies based on the year in which you were born. You can start receiving partial benefits as early as age 62. However, if you continue to work full time beyond retirement age until age 70, you may be able to increase your benefits.

Pensions: Be aware that if you're in the military or work as a federal civil servant or for some state, local or foreign government, your disbursement may be reduced to compensate for the Social Security tax that these roles are exempt from.

Employer-Sponsored Plans: How and when you can withdraw depends on certain "triggering" events. Your plan's summary plan description will tell you when precisely you can access yours. You'll likely pay taxes on any withdrawals you make, and often the IRS requires the payer to automatically withhold 20% of the taxable amount as prepayment of federal tax liability.

Continue Growth

Once you hit retirement and begin drawing down your savings, you'll want to ensure there's some method of gains to avoid a shortfall. Stepping away from a full-time job to part-time work is one way to maintain a cash flow, but there are other ways to manage investments that are helpful, too.

Keep Your Stocks: Don't cash out all your stocks at once. Maintain your portfolio to continue earning, and gradually reduce risk by shifting to bonds and cash as you get further into retirement.

Live Off Your Interest: Preserve the principal of your investment and siphon off the interest, dividends and even capital gains, and live off those funds.

Shift Savings Vehicles: Consider opening or rolling over funds into a Roth IRA, where you can continue to make contributions beyond age 70½ and can leave money in the account for as long as you live. Another option to continue saving into retirement is certificates, which provide a guaranteed return on the money you invest.

Work with a financial advisor to more fully develop your income strategy and identify additional streams of income you may not have considered.

1For IRA owners who turn 70½ on or after 1/1/2020 Next: Create a Budget

Want to better manage your retirement savings?

Roll over your existing accounts into a Navy Federal IRA.

Not sure where to start? Contact a financial advisor at 1-877-221-8108.

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Investors should carefully consider the investment objectives, risks, and charges and expenses associated with municipal fund securities before investing. This and other information about municipal fund securities is available in the issuer's official statement which can be obtained directly from the issuer, or if distributed through a broker dealer, may be obtained from a financial adviser, and should be read carefully before investing.

An investor should consider, before investing, whether the investor's or designated beneficiary's home state offers any state tax or other benefits that are only available for investments in such state's qualified tuition program.

If a municipal fund security describes one or more of their investment options as having the characteristics of a money market fund, it is important to know that an investment in the security is not insured or guaranteed by the FDIC or any other government agency (unless such guarantee is specifically provided by or on behalf of such issuer) and, if the security is held out as maintaining a stable net asset value, that although the issuer seeks to preserve the value of the investment at $1.00 per share or such other applicable fixed share price, it is possible to lose money by investing in the security.