Keeping Money In Your 401(k) After You Retire Can Make Your Savings Last Longer

It is not possible to make detailed financial plans about your retirement until you decide what age you plan to retire and when you plan to begin drawing Social Security benefits.  If you have an employer provided 401(k) retirement account, then between this and your Social Security retirement income, you can probably afford a comfortable retirement.  Most people with 401(k) accounts move the money from the 401(k) to an individual retirement account IRA once they retire.  One common motivation for moving the money to an IRA is that you have more control over how it is invested and how much money to withdraw on what schedule.  Keeping your retirement savings in your 401(k) account even after you retire is an underrated strategy, though.  It makes sense from the perspective of simplifying your plans as well as potentially making the money last longer.  A Tampa estate planning lawyer can help you make wise decisions about your retirement savings.

Leave Your 401(k) Undisturbed, Move the Money to an IRA, or Cash It Out?

Much like your liver or your web browser, your 401(k) account quietly does its job in the background while you go about your business.  When you got hired, you signed paperwork to enroll in the 401(k) plan, and then you never thought about it again, except when the quarterly statements arrived in the mail to tell you how much was in your account or when you increased your contribution as you got closer to retirement.  With a 401(k) account, your employer is managing the investments of many employees.  As such, your employer has a fiduciary duty to the employees participating in the 401(k) program.  When the funds in which your employer has invested begin to lose money, your employer moves them to less risky funds.  You have probably seen this reflected on your 401(k) statements.  Your employer pays money to have financial managers manage the 401(k) accounts, but the employees do not bear this cost or this responsibility individually.

With an IRA account, on the other hand, you decide where to invest the money.  That means that you must either research your investment choices and move the money to different funds when appropriate or pay a financial advisor to do so.  Even though a lot of people move their retirement savings from a 401(k) account to an IRA when they retire, this is not the only option.  It is simpler and less risky to keep the money in the 401(k).  You also have the option to withdraw all of the money from your 401(k) as a lump sum when you retire.  If you do this, you will have to pay taxes on it all at once, but after that, the money will be yours to spend as you choose.

Contact David Toback About Using Your Retirement Savings Strategically

A Central Florida estate planning lawyer can help you strategize about how to invest your retirement savings.  Contact David Toback in Tampa, Florida to set up a consultation.

Source:

knowledge.wharton.upenn.edu/article/why-staying-in-your-401k-after-retirement-makes-sense/