Saving For Retirement–Using Retirement Accounts And Withdrawals To Extend Retirement Income

Saving for retirement is different for every individual and investors often use a variety of methods to ensure they have enough funds to meet their financial needs later in life. However, there is concern that individuals who are currently in the workforce or who may be nearing retirement have simply not done enough to save what they need to meet financial costs that may arise or basic living costs that will be required for their retirement years, and as a result, the way that retirement accounts are structured and withdrawals made could be beneficial in helping retired men and women extend their retirement income.

According to a report on, “…a full 27 percent of Americans have less than $1,000 squirreled away for their retirement years.” Obviously, the level of savings that individuals have will vary depending on their position, types of retirement accounts, and age, there are still methods that investors have been advised to use that may help them extend the life of their retirement when limited income or various costs may require a sizable financial safety net for one’s later years.

Roth IRAs and annuities are just two of the retirement vehicles that investors use outside of traditional 401(k)s, but there are numerous methods that retirees have used as a way to save and current employees are using in order to build up enough money that will help them avoid financial stress later in life. While annuities can offer lifetime payouts, which could be helpful as they can provide a stable income, the size of these payments will vary and simply may not be enough alone, but when coupled with another retirement account, like a Roth IRA, more advantages may be gained and a higher amount of retirement savings could be used for the investor’s needs.

Also, in cases where an investor has a retirement account that will require taxes be paid on withdrawals and other accounts that will allow for tax-free withdrawals, many advisers have suggested that consumers withdraw funds from taxable accounts before, for instance, a Roth IRA, as this too could extend the investor’s retirement portfolio. Obviously, an investor’s individual position and financial needs will depend on what forms of retirement investing are best for their situation, investors need to also look at what their tax situation may be when they retire, as well as, needs that may require additional income, like medical costs, for those who are later in life.

Essentially, when it comes to planning for retirement, individuals will benefit more so from planning in a way that allows them to extend their retirement income in such a way that allows for them to use funding from retirement accounts, like a 401(k), early and defer receiving withdrawals from tax-free retirement accounts, like a Roth IRA, later as this can be more helpful in certain situations. Yet, retirement planning is highly individualized and while general rules may be applicable and beneficial for some, investors have been advised by many retirement planners to simply look at what their current goals and needs may be after retirement, review their retirement plans, and make sure they understand how withdrawals from these plans will be most beneficial for their particular situation when it comes to financial needs later in life.