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Senior Citizen's Guide to Southwest Ohio

A Financial Plan for the Golden Years

Retirement may close the book on some aspects of financial planning – but it will open the book on others. If you have assets in a qualified employer-sponsored retirement plan, such as a 401(k), you may face an important decision regarding the distribution of those assets. Your options may include receiving monthly payments from the plan for life, or electing a rollover of your plan to an IRA. Consider the pros and cons of each choice before you decide on your course of action.

Lifetime income

Some company retirement plans distribute retirement income in the form of an annuity that pays you in monthly installments over your lifetime, or perhaps over the joint lifetime of you and your spouse. A steady income stream for life may appeal to you if you are concerned about issues such as market volatility or outliving your retirement assets. However, fixed monthly income payments might not keep pace with your financial needs. Throughout retirement, you may need additional money for unexpected expenses or because of increases in the cost of living due to inflation. The limitations of fixed distributions may force you to tap other assets to make ends meet.

Greater flexibility

A rollover of a lump-sum retirement plan distribution to a traditional IRA may give you greater flexibility in handling your retirement assets. You determine how the money is invested, and when to withdraw funds as you need them.* Depending on the performance of the investments you choose, you may have the potential to generate enough to cover daily financial needs, unplanned expenses, and perhaps provide for your survivors. If you would like the enhanced security of an income stream you cannot outlive and the flexibility to invest and withdraw retirement funds as you wish, you may not have to choose one option over the other. Some employers may allow you to elect an IRA rollover for a portion of your plan balance and take annuitized distributions with the rest. Another possibility is to choose a rollover for the entire balance and purchase your own annuity within the IRA using a portion of the funds.

Explore the possibilities

If you explore your retirement distribution options and determine your course of action now, that’s one less decision you’ll need to make at retirement. Your financial advisor can help you examine your choices and make a sound decision. Contact your advisor today to arrange a consultation.

Investors should consider the investment objectives, risks, charges and expenses of a fund carefully before investing. For more information about mutual funds, call your financial advisor. Always read the prospectus carefully before investing. Please note that mutual funds will fluctuate in value and an investor can lose money by investing in mutual funds.

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