Retirement Savings Plans And Minimum Distributions–Why Some Investors Benefit From Different Accounts

We are seeing some consumers who are nearing retirement or simply early in their career and thinking about a retirement plan even now as certain options that may potentially offer them the opportunities they need to set and achieve specific financial goals for the future. Yet, there have also been concerns and even reports that, thanks to costs like rising health care expenses or even cost of living increases some consumers may not have saved enough for retirement and, as a result, are either attempting to reenter the workforce or adjust their retirement strategy if they have not left their job just yet. However, there are arguments being made for using different types of retirement accounts as required minimum distributions on some may deplete the amount that a particular investor has in a specific account, which could be earning money into their retirement years.

While stocks have always been one form of investment that consumers have used throughout their lives, many men and women are often hesitant to use stocks as a way to plan for or even earn money for retirement later in life as this is a high risk area. Because of this, some consumers opt for annuities, 401(k) plans, or Roth IRAs as these popular retirement vehicles can allow for investment strategies that may vary but also can help some consumers not only begin drawing retirement funds later in life but keep some funds in these accounts into their retirement years.

Financial planners have been used by consumers in dire situations or those who are simply cautious and want to start saving early, but they may be required for some consumers who are unsure of how certain retirement opportunities may work for their particular needs. Yet, when using a financial planner an investor needs to make sure that they understand whether this particular individual is working on commission, may be pressing a specific investment option, or if they simply work on a fee-based assistance plan.

Getting the right type of help will obviously go a long way when it comes to finding the right retirement options and planning strategies, but not all workers will use a financial planner. Yet, where research will have to come is in what particular types of retirement savings vehicles will be best so that these consumers will avoid making missteps that could lead to less earnings. In the end though, looking at the minimum distributions that are required of certain accounts may also help as there have been investors who will use a 401(k) plan, as an example, from their employer to save and set aside money, will begin drawing from this fund after retirement, but may also have an investment account like a Roth IRA as well that does not require these distributions at a certain age.

This could allow some investors to keep certain retirement accounts in place and earning money into their retirement years while getting funds from other plans where minimum distributions are required, but it comes down to a consumer looking at what their financial needs may be in the future, what fees or taxes may be associated with withdrawals after they retire, and which of these retirement investment accounts will be best for an investor’s particular situation, as the choice of where retirement funds should be invested will be an individual decision that only an investor can make.