Getting the Most Out of Your Retirement Fund

Retirement should be enjoyed and surely would be a time to look forward to especially if you have set up quite a sizable retirement fund for yourself. With a retirement fund saved and ready to work for you, you will have provided yourself with a means of having some income to take care of the cost of living expenses that you incur during retirement. These expenses and a whole lot of other essential spending would still be a constant concern even after you hit retirement, hence the need for a retirement fund to provide you with income to address them.

But of course, just because you already have a sizable retirement fund all set up doesn’t mean that you can proceed on spending without caution. Surely, you have this need to enjoy in your retirement years, but it would still be wise to continue handling your retirement fund wisely. Doing so would allow you to get more out of your retirement fund and prevent finding yourself suddenly short of cash later on.

In order to give you the best chance of stretching the benefits that you can get out of your retirement fund, most financial experts suggest that you limit yourself withdrawing only about four to five percent of your fund each year. This way, you can still have your money earn for you for extended stretches during your retirement.

Another way of getting the most out of your retirement fund is to try to get you initial retirement income from your taxable accounts. A good idea of managing your retirement fund is by trying to pay the lowest taxes on your withdrawals during retirement. By initially getting your retirement income from your taxable accounts, you are enabling your tax-deferred accounts to generate more money for you tax-free. In the same process, you are also beginning to decrease the amounts of your taxable accounts, thereby allowing you to pay less and less taxes on them gradually.

But if you find yourself not having a nest egg large enough for your needs when you do retire, there are still other things that you can do in order to stretch what retirement fund that you do have and make it work for you. You might want to consider getting a job after retirement, if you think that you still have what it takes. You can either take a part time job or indulge in something that you enjoy doing and at the same time getting paid for it. With such a job, you can still provide for yourself a bit of income stability as well as further stretch the income that you do get from your retirement fund.

If you own a house, you may also consider getting additional funds from it. When you reach the age of 62, you may be able to convert your home equity into a tax-free retirement fund by taking a reverse mortgage. Another option of stretching ones retirement fund is by relocating into a less expensive area. This could help lower the cost of living of the retiree and further stretch his or her retirement income.


Posted by Ardent Editor on Oct 10 2007 in Financial Planning

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