Mid-Retirement

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Frequently Asked Questions

A: Not necessarily, there are two considerations. The first is your available emergency funding. If you could not sustain your income during a significant investment downturn, then getting more conservative makes sense. However, the second issue is that an average 65 year old man's life expectancy is almost 18 years. In other words, you have a lot of years left to make that money work for you.
Q: No, and the penalty is 50% of the "missed" distribution. A Roth Conversion strategy may help the situation though. There is no age or income restriction on Roth conversions (the conversion does not satisfy your RMD). Let's assume you have a $15,000 RMD this year. That is $15k that will end up in a taxable investment account. If you begin converting IRA to Roth, the new investment will be growing tax deferred, and the conversion is reducing the size of your IRA which will systematically reduce the amount of your future RMDs.
A: No. You can no longer contribute to a traditional IRA beginning with the year you turn age 70 1/2. You can make a Roth contribution, but that won't reduce your taxes this year.
Submit a question to  Matthew Hanshaw, CFP®, NSSA®

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