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To do so, attach the following notices to the program. It is safest to attach them to the start of each source file to most effectively convey the exclusion of warranty; and each file should have at least the "copyright" line and a pointer to where the full notice is found. one line to give the program's name and an idea of what it does. Copyright (C) yyyy name of author This program is free software; you can redistribute it and/or modify it under the terms of the GNU General Public License as published by the Free Software Foundation; either version 2 of the License, or (at your option) any later version. This program is distributed in the hope that it will be useful, but WITHOUT ANY WARRANTY; without even the implied warranty of MERCHANTABILITY or FITNESS FOR A PARTICULAR PURPOSE. See the GNU General Public License for more details. You should have received a copy of the GNU General Public License along with this program; if not, write to the Free Software Foundation, Inc., 51 Franklin Street, Fifth Floor, Boston, MA 02110-1301, USA. Also add information on how to contact you by electronic and paper mail. If the program is interactive, make it output a short notice like this when it starts in an interactive mode: Gnomovision version 69, Copyright (C) year name of author Gnomovision comes with ABSOLUTELY NO WARRANTY; for details type `show w'. This is free software, and you are welcome to redistribute it under certain conditions; type `show c' for details. The hypothetical commands \`show w' and \`show c' should show the appropriate parts of the General Public License. Of course, the commands you use may be called something other than \`show w' and \`show c'; they could even be mouse-clicks or menu items--whatever suits your program. You should also get your employer (if you work as a programmer) or your school, if any, to sign a "copyright disclaimer" for the program, if necessary. Here is a sample; alter the names: Yoyodyne, Inc., hereby disclaims all copyright interest in the program `Gnomovision' (which makes passes at compilers) written by James Hacker. signature of Ty Coon, 1 April 1989 Ty Coon, President of Vice This General Public License does not permit incorporating your program into proprietary programs. If your program is a subroutine library, you may consider it more useful to permit linking proprietary applications with the library. If this is what you want to do, use the [GNU Lesser General Public License](http://www.gnu.org/licenses/lgpl.html) instead of this License. I'm 70 With $1 Million in an IRA. How Do I Make Sure This Money Lasts the Rest of My Life? - sinth.info

I’m 70 With $1 Million in an IRA. How Do I Make Sure This Money Lasts the Rest of My Life?

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Compared to many retirees, you are in an enviable position with $1 million socked away in your IRA at 70. Still, living a secure, comfortable retirement that can last two decades or more takes planning. Making sure your nest egg lasts requires assessing your personal situation, balancing risk, securing reliable income streams and understanding how required minimum distributions affect your finances.

A financial advisor can help analyze your income needs in retirement and build plans to make your savings last.

Basics of Making Savings Last

If your savings are going to provide lifetime financial security you have to pay attention to the basics. The keys to making your $1 million IRA last for the rest of your life are:

  1. Spend conservatively from your IRA. A 4% annual withdrawal rate can improve chances your savings won’t run out.

  2. Invest appropriately to generate solid returns while controlling risk. Consider an asset allocation of 60% stocks and 40% bonds utilizing low-fee index funds rather than shooting for maximum possible returns. This will help minimize the risk involved with a market downturn.

  3. Exploit other income sources first before tapping your IRA. Using Social Security benefits, earnings from part-time work and annuity payments all offer alternatives to spending your savings.

What’s Your Situation?

Your personal financial situation and retirement lifestyle wishes will determine the most appropriate ways to tap your $1 million IRA. To fill in the blanks of your future retirement, ask yourself the following questions:

  • How much will you budget for basic living expenses?

  • What large purchases, vacations or indulgences do you desire?

  • How risk averse are you?

  • Do you want to leave an inheritance?

  • Do you have health issues requiring significant care costs?

  • What are your expected income sources?

  • How will taxes affect your income in retirement?

  • What is your best estimate for returns on investments in your IRA?

Answers to questions like these help set your withdrawal rate, asset allocation, insurance needs and estate plans. Though $1 million sounds like a lot, it may not fund an extravagant, globe-trotting lifestyle. Create a realistic budget accounting for healthcare, taxes and inflation.

If your IRA must cover over half your costs, a more modest standard of living or delaying retirement may be prudent.

A financial advisor can help you answer these questions and build a retirement strategy.

Managing Risk in Retirement

Retirement at age 70 can last for twenty or more years. Uncertainty is inevitable when you are contemplating such lengthy time frames. Your retirement plan should address the following risks:

  • Investment risk is the hazard of portfolio losses from causes such as market volatility and rising interest rates. Mitigate investment risk by holding a mix of stocks for growth and bonds and cash for stability.

  • Longevity risk means outliving your savings. Accept some market risk – with a 20- to 30-year timeframe, stocks should appreciate over time. Within your stock allocation, diversify globally across capitalizations, sectors and regions. Use low-cost, tax-efficient index mutual funds or ETFs. Also consider an immediate annuity, which offers guaranteed lifetime income. Address longevity risk by being willing to adjust your withdrawals downward during market swoons.

Health costs can also be significant in retirement. Understand your Medicare benefits and shop for supplemental Medigap coverage as needed. Don’t neglect to consider possible long-term care insurance needs. Secure insurance to cover risks that may require tapping your IRA unexpectedly. Review your property and casualty and liability. You may be able to drop disability insurance.

Have questions about risk and insurance? Talk to a financial advisor today.

RMD Impact

Required minimum distributions (RMDs) dictate that you withdraw funds from tax-deferred retirement accounts annually starting at age 73.  In your situation, RMDs will likely total just over $40,000 per year.

Failure to take RMDs triggers 50% penalty taxes, so don’t neglect this. And RMDs are taxed as ordinary income, so plan for the tax hit when you do take them. For example, a 4% RMD withdrawal on a $1 million IRA could create a roughly $8,800 federal tax liability for someone in the 22% marginal tax bracket.

Using Trusts for Retirement Planning

Trusts are widely used in estate planning to help manage inheritance taxes and control distributions to heirs. They can also be useful for protecting retirement savings.

Retirement trusts are specifically designed to receive retirement account assets while maintaining tax-deferred status, protecting against legal liability and stretching withdrawals over time. Charitable remainder trusts employ retirement savings for income generation now while distributing principal to charity later.

Trusts require expertise to establish properly. But these instruments can structure retirement assets to last through your golden years while also planning your legacy. If you’re interested in setting up a trust, consider talking to a financial advisor.

Bottom Line

With prudent management, a $1-million IRA at age 70 can readily fund two decades or more of retirement. Using realistic earnings projections and conscious spending behaviors increases chances of success. Assess your personal situation, temper withdrawal expectations, control portfolio risk and utilize insured income streams before tapping your IRA. Account for taxes and RMDs in withdrawal planning. Be ready to adjust spending downward when markets decline. Trusts may help ease tax burdens for heirs while controlling distributions. With reasonable assumptions and balanced risk management, your IRA can provide lasting retirement security.

Tips

  • Speaking with a financial advisor now can help you create workable expense and income plans and structure retirement withdrawals to make your savings last. SmartAsset’s free tool matches you with up to three financial advisors in your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

  • Check out SmartAsset’s Asset Allocation Calculator to get an idea of how different portfolios perform over time.

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