If you're retiring soon, your 2020 resolutions should help you accomplish that, our columnist writes.
New Year’s resolutions are made to be broken. If there was an ETF tracking unused gym memberships and digital scales gathering dust, it would easily beat the S&P SPX, +0.35%.
There are a lot of hypotheticals here. Depending on your family situation—whether you have children, how old they are, etc.— some expenses change dramatically in retirement, while others don’t. When will you finish paying for your kids’ college or grad school? When will the mortgage on your house or condo be paid off? Costs of work clothes and commuting will drop, but travel expenses may go up, especially if you have kids or grandchildren who live far away.
Then, calculate your projected income. Start with your estimated Social Security benefits, which are on those paper statements the government sends you or by opening an account at ssa.gov. Then, take 4% of your total traditional IRA or 401 assets to roughly figure out required minimum distributions and add in expected income from any annuities you’ve purchased. Throw in any other obvious income streams and voilà! You now have a general picture of your annual income and spending.
A quick rule of thumb: The least complicated, most efficient way to allocate your assets is to use traditional IRA and 401 accounts to leave money to your spouse or charities while leaving your kids or other nonspouses money from your nonretirement assets or Roth IRA accounts. And think about setting up a living trust, with an accompanying will, for your nonretirement assets, but for that you should use a qualified attorney specializing in trusts and estates.3.
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