The best thing to smile about when you get old is receiving the fruits of your labor-getting money from your retirement plan. This has proven to be a daunting task for many people who are considering investing their income and choosing a retirement plan. Sometimes you have very few options to choose from, do you go for lump sum, lifetime annuity or the systematic payments?
- Lump sum
In this option, imagine you were to take the retirement plan offered to you by your employer, this means you would receive the entire amount at one particular payment. This leaves you with complete authority over the principal and you can use it however you would want.
Remember that when you choose the lump sum, you have to pay income taxes on the distribution. If the distribution is large, then you will a higher tax bracket. Our company often advises its clients to take partial lump-sum and then use the balance to other retirement plan options so as to maintain a good tax status. When you choose an IRA, you may be able to get different options to choose from while you choose how to invest the money.
Be on the lookout not to make any rashdecisions especially with your retirement plan distributions. It is necessary to research for a financial advisor atlanta GA. Be careful because the decision you make will be a lifetime decision that cannot be reversed and you may end up losing a lot of money if you did not take certain measures into consideration.
- Lifetime annuity
You may find yourself in a situation where your retirement plan allows you to have the lifetime annuity option. It may be that option that converts your account balance to monthly payments. The good thing is that when you live longer, you are guaranteed to get continuous payments.
What could be some of the advantages that are associated with this kind of method? When you choose this option, the temptation of spending your assets is not there.
For those that are married, you will have to select a survivor annuity or a joint annuity. The end result for this is that you will have a lower monthly retirement payment than when single though your spouse will continue to receive some amount of the retirement income especially after your death.
The disadvantage with this option is the reduction of the spending power over time. It becomes absurd sometimes because they are not indexed for inflation. These are some of the things that you will have to face especially when you choose such an option.
If you are considering having your retirement plan distribution right, then consider hiring the best financial advisor atlanta GA.
- Systematic payments
There are some retirement plans that would allow the client to take systematic payments/withdrawals. This is how it works; you may have a fixed dollar amount, a percentage of the account value on regular schedule or sometimes the total value of the account.