Ask Terry Questions Retirement Savings to cash?

Retirement Savings to cash?

By Terry Savage on July 12, 2019 | Investments

My wife and I are both retired, house paid off, combined Social Security of $3810/month . We have total of $340,000 in IRAs, no debt, $80,000 in the bank. IRAs are in growth stocks. Do we change what the IRAs are invested in? Should we take money out of the IRAs? What else do you recommend?

Terry Says

Well, once you’re age 70-1/2 each of you must start taking RMDs out of your IRAs.   Those are designed to reduce your account(s) to zero by the time you reach your actuarial life expectancy — around age 87.  That means you could be forced to sell some of your stocks — even in a market decline — to have the cash for withdrawals.  I don’t try to “time” the market — but if you’re close to that withdrawal point, I think you should have between 20-35 percent of your IRA portfolio in “cash” (a money market fund) so you aren’t forced to sell in a declining market.

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