Ask Terry Questions IRA withdrawals

IRA withdrawals

By Terry Savage on May 09, 2017 | Financial Planning / Retirement

In our working days my husband and I put almost all of our savings into IRA accounts. Now that we're retired whenever we need cash for monthly bills or large purchases such as a car, we have to take money out or our IRA and end up paying quite a bit in taxes. Husband age 77 I'm 75..Is there anything we can do to alleviate this problem aside from converting some of the IRA into a Roth? (don't know if that would help)

Terry Says

Well, converting to a Roth would definitely NOT help --as you'd owe taxes on all that money you convert, and you would have to pay those taxes next year.  It seems to me that you need some forecasting tools to figure out whether you are invested wisely, and how much you can withdraw safely to make your money last as long as you do!  That's called "monte carlo" modeling.  Why not contact Fidelity or Vanguard to ask them to go through this process with you, so you can see where you stand.  If you have accounts with them, they don't charge for this advice. That doesn't mean you have to shift your investments -- but you might try to consider how you or your husband could earn a bit of extra money so you can make fewer withdrawals.  This process is as important to retirement planning as saving up was when you were working.

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