Transition from saving to spending
 

Hi all. My husband and I are recent arrivals in TV. We’re looking for a professional to advise on taking withdrawals from our savings to fund retirement. We’ve always made our own investment decisions and feel pretty comfortable with that. But we have a few big-ticket items coming up with the house, as well as day-to-day expenses, and I’m struggling to figure out when and from which accounts to take money to minimize tax impacts. There seem to be plenty of people around that will sell you an annuity or manage money for an ongoing fee, but surely there must be people that specifically advise on the withdrawal side of things. Can anyone recommend a good fee-based advisor who can help guide us through this, or even identify the type of professional I'm looking for to better target my google search? Thanks.

If you've been comfortable managing your own investments, I'm pretty sure you can do this on your own too. You can find everything you need to know at Bogleheads Investing Advice and Info

Read the wiki to start. It will explain exactly what you are asking. Then post any questions you have. It's a wonderful resource. John Bogle was the founder of Vanguard.

Hope that helps.

BGirl, excellent question.
The answer needs to be customized to you and your portfolio make-up (pre-tax vs after tax dollars) and your age and your SS benefits and and and.
Good Luck on receiving some recommendations.

Agree on Bogleheads, a great place to start. You can do this on your own. Look for topics on laddering your investments. It is basically having funds you need in the first five years in safe investments and taking a little more risk as you move out (or up the ladder). On taxes the main thing is to know where you are in your marginal tax bracket and trying not to go above that marginal bracket. Breaking up big ticket items between two tax years is another way to try and reduce the tax burden. If you have Roth IRA’s that is a good place to look for big ticket items since there is no tax impact.

Financial advisors can look at your portfolio and provide withdrawal, investment, and tax advice but a good advisor can cost several thousand dollars for a complete review. Personally, I would try it on my own before I took this route.

Good luck. Find someone who gets you to do what the "rich" do. You borrow against your assets, leverage it and hold those assets in trusts for your kids or whoever you're passing it on to. When you go, the cost basis adjusts to the value at the time of death so no massive taxes for the inheritors. Its the Buy, Borrow, die strategy. You're past the Buy phase :).

Perhaps, projection from my thoughts. The first thing to face is we will not live forever.
That is a hard thing to face. Assuming you have an accountant they should be able to advise you.

Annuities are often pushed. Not because it make financial sense for all but because the commission is huge. For many I must have an income of ????? per week, per month.
My income was never like that, so I do not think that way. If, you have a brokerage account, you can instruct them to send you ?????? per month. There is no fee for doing that.

How much risk are you willing to take? Everyone has a high risk tolerance when things are up. That changes rapidly when things are down. There are investments with essentially zero risk. A ten year treasury pays last time I looked 1.6%. You pay your top federal tax rate on that. The CPI consumer price index has recently hit 5.6%. That too is paid after taxes.

Before seeking advice be sure to understand how that person is paid. Paid to manage your money? Would you trust anyone to do this? They will charge you a percentage of your portfolio. That is whether you make money or not. They will likely put your money into stock, bond funds and ETFs (exchange traded funds). You will pay the regular fund fees plus the manager fee. We went to a presentation for this. I could not believe people were filling out forms with their name address, phone, e-mail NET WORTH social security number etc. We had a nice lunch and turned in a blank form. If, I recall they charged .5%.

Major home expenses? What needs to be done now? If, roof is leaking, it needs to be done now. A pool? I neither have a pool or want one. I've had several boats. The old joke is a hole in the water that you pour money into. A pool is a hole in your backyard that you fill with water and pour money into it.

Mistakes happen when you allow others to rush you or you rush yourself.

I would suggest contacting Vanguard Investments. They have advisors who will design a retirement withdrawal strategy for you. I don't know where your investments are currently located, but you cannot do better than Vanguard in terms of cost and advice. If you have money in a 401K, I would suggest that you transfer it into an IRA account. But, I wouldn't spend much money for advice on how to withdraw your retirement funds. It's not rocket science. Typically, you want to withdraw money from taxable accounts first, and keep your money in tax deferred accounts for as long as possible. If you have stocks or stock funds with capital gains, you want to withdraw that money last. Do not buy an annuity.

Swap 'til you drop. Section 1031.

Welcome to TV.
You definitely came to the right place for advice...

:ho::bigbow::bigbow:

Biden’s myriad tax proposals include the elimination of this step up provision.

Well said! There are so many articles about changing the portfolio as we age to less risk and more bonds and all. Instead, I keep my retirement funds in a mid-cap growth fund that gets five stars from Morningstar for both growth and safety. Thanks to that, since fall of 2016 my investments have nearly doubled. Riding the 30% market crash last year was scary, but it came back up. If I had followed the standard advice I was given, I wouldn’t be here in The Villages because I wouldn’t be able to afford it. Now I’m worry free, and my retirement funds are up 15% for the year.

Speak with at least thee financial advisors.

If not allready, speak to an attorney about living will and trusts

You didn't say your ages, but assuming you are in your 60s, there are many questions you need to answer.

One is if you plan to leave money to your kids. If you do, then one thing to think about is converting any IRA (or 401K) to a ROTH account over time. Except for the spouse, any inherited IRA or ROTH has to be withdrawn within 10 years. The ROTH could be taken in the 10 year since there are no taxes. The IRA (or 401K) should be taken out every year to reduce the tax bite

Just something to think about.

Just spend it - that’s what they made vacations for…

Always keep the big picture of assets, taxes, longevity etc etc in mind, but good advice posted above to see at least 3 financial planners, if you don't want to go on this journey alone but appreciate professional advice - you also would do yourself a favor to include Parady Financial (no fee for consultation or management afterwards) among the three.