Even if your buildup to retirement has gone according to plan, there is still more work to be done. A major change in retirement can come in the form of income and expenses shifting drastically from the norms established during your working days. This doesn’t have to be a cause for concern but does need to be considered with the same attentiveness and care taken while building up your retirement nest egg¹.

Transitioning from the accumulation stage of retirement planning to the distribution phase marks a significant shift in financial strategy and mindset. During the accumulation stage, the primary focus is on saving and investing. As you move into the distribution phase, the emphasis shifts from growing your assets to managing and preserving them while generating a steady income stream.

One of the key changes is the need to develop a withdrawal strategy. This involves determining how much money you can withdraw each year without depleting your savings too quickly.

Another important consideration is the tax implications of withdrawals. During the accumulation phase, contributions to retirement accounts may have provided advantages, such as tax deferrals. However, in the distribution phase, withdrawals from traditional retirement accounts are typically subject to income tax. It’s crucial to plan for these taxes and consider the order in which you withdraw funds from different accounts to minimize your tax burden.

Healthcare costs also become a more prominent concern during the distribution phase. It’s essential to plan for potential medical expenses, including long-term care, which can be significant. This might involve purchasing health insurance or long-term care insurance to preserve your savings.

Just as you worked hard on a plan to build and save for retirement, a similar strategy is important to build the confidence to enjoy that retirement once it has begun. Our team of experienced professionals is available at 678-539-9518 and we can help you with any questions – whether you’re currently dealing with a sudden change or just looking to confirm that your plan is still aligned with your goals.

1. https://accountinginsights.org/accumulation-vs-distribution-phase-key-differences-and-financial-strategies/

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This blog is intended for informational purposes only. It is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual’s situation.