Retirement Distribution

  • Have you created a retirement plan and run it against scenarios to ensure you will not run out of money during retirement? 

  • Are you currently following the steps that plan requires? 

  • Have you made plans to create an “income stream” in retirement? 

  • Do you have a tax-optimized distribution strategy?

Things to consider

The first rule of retirement income planning is to never run out of money. The second rule is to never forget the first rule. Retirement distribution strategies are unique to each individual/couple, taking into account their goals, needs and ability to handle risk. Without a regular paycheck, you need to create a consistent, sustainable income stream at the lowest cost. You must make sure that your distribution strategy is tax-optimized to avoid paying unnecessary taxes.

What you need to know

Primary sources of income in retirement

  1. IRAs & Roth IRAs
  2. 401(k)s, 403(b)s & 457s
  3. Pensions
  4. Social Security
  5. Investments & savings

Distribution decisions

  1. What to use first
  2. How to optimize distributions
  3. Investment strategies (short- and long-term)
  4. Tax implications

Ideal retirement income

  1. Provide regular monthly payments
  2. Adapt to changing market conditions
  3. Guard against inflation

Required Minimum Distributions must be taken at age 70½.

What it means

Retirement distribution checklist

Assess your income needs

  • Estimate your living expenses for a year. Use our Budget Planner to
    create a detailed estimate.
  • Subtract your predictable retirement income (Social Security, pensions, etc.).
  • Get an estimate of your Social Security benefits from the Social Security
    Administration website (
  • The result is an estimate of income you need from your portfolio. Work
    with your advisor to determine the best strategy to cover the difference.

Allocate your money

  • Set aside at least one year’s worth of income.
    • Use a checking, savings, or brokerage account.
    • Arrange to have Social Security checks and other income
      automatically deposited into a bank account.
  • Work with your advisor to build an appropriate portfolio to invest your
    remaining assets. Maintain a short-term reserve within the portfolio.

Plan your withdrawals

  • Pay expenses from your checking account.
  • If needed, withdraw interest and dividends from your portfolios.
  • Set up a plan to withdraw principal from your short-term reserve
    to maintain sufficient cash in your checking account.
  • Replenish your short-term reserve with interest, dividends, and
    principal from maturing bonds.
  • Then, if needed, replenish your short-term reserve from
    proceeds of rebalancing.

Set up a meeting with your advisor to create a steady stream of income and to discuss various strategies to help reduce your taxes in retirement.

Contact an Advisor >>

1. Social Security Administration — Social Security Basic Facts, October 2015

2. Statistic Brain — Retirement Statistics, January 3, 2016

3. HelloWallet — Debt Savers in Defined Contribution Plans, October 2013

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