If you are nearing retirement and a pension is part of your retirement income, then you are likely considering how you might like to take that distribution. How you choose to receive your pension is a big decision, not only because it can have a big impact on your potential income, but it can impact your spouse and your family as well. If you have options when it comes to how you receive your pension, it is critical that you carefully weigh the pros and cons of taking a lump sum versus the annuity distribution option before you make a permanent and irreversible decision.
For many wealthy investors finding new avenues to increase the amount of assets they can leave to their loved ones is important to the goals that they have set in a wealth transfer plan. An interesting strategy for facilitating this is referred to as a “stretch IRA”. The method designates beneficiaries with the longest life expectancy so that that the Required Minimum Distribution (RMD) is lower. In implementing this strategy the base asset is larger for a longer period of time, which will help it grow more quickly.
Factors to Consider
It is imperative to consider vital components before settling on this sort of choice:
- If you need to withdraw more than the RMD amount, review how much the projected remainder of your IRA will be in the future.
- If you are married, you may still wish to implement this strategy, but list your spouse as the primary beneficiary and then, those in later generations as secondary beneficiaries.
Retirement can spark both stress and disagreement in an otherwise contented marriage. After years of happy, healthy wedded bliss, sometimes one or both spouses are surprised to find themselves unhappy once retirement comes.
Negotiation and compromise are key elements in a successful marriage—long-time spouses already know this and practice both well. Entering retirement doesn’t change this. It’s hard for two spouses to enjoy their later years if each wants to sail in their own direction.
What is Financial Success?
If we look at society and societal norms, a lot of weight is given to success when it comes to defining happiness. If we see a person who is successful, it is often assumed that they are happy. On an existential level we should consider what it all means. In reality, we actually have no idea whether or not that person is either happy or successful; for a couple of reasons: First of all, we can only measure someone else’s success or happiness by what we know about them. Secondly, and more importantly, we can only measure someone else’s success or happiness by how we define success and happiness. There is really no way of knowing whether their measures are even similar to our own.
For many, medical expenses can be an ongoing burden and hinder us from making other purchases, saving for retirement and improving our quality of life. In order to prevent these consequences it is important to have a solid understanding of what our medical coverage does and does not cover and to take steps to prepare for the unexpected. The following recommendations can help avoid and prevent paying more than you should for medical care.
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