When your required minimum distribution (RMD) is larger than the amount of income you need for expenses, you have many options for handling the excess. We find it is helpful to manage the extra amounts wisely in order to avoid spending more than you had planned.
We recommended establishing a new savings account to deposit all of your income and distributions. Pension payments, Social Security, dividend checks, RMDs from IRAs, etc… could be collected into a savings account. Then an automatic withdrawal would be set up to fund your checking accounts on a monthly basis, similar to a paycheck.
The amount of the deposit to your checking account would be based on your spending plan for typical monthly expenses. For expenses that do not occur monthly, one-time transfers could be used.
Amounts in the savings account at the end of the year would represent excess income. These amounts could be moved to a regular brokerage account and allocated according to your long-term investment plan.
A lot of people may feel the urge to impulse buy when they have large amounts of cash in their checking accounts. By having a structured system in place to manage excess income in retirement you can keep your spending plan on track. A little planning now can help ensure you have the retirement you envisioned!
Want to learn more about these and other ways to realize your financial objectives? That’s exactly where Guidepost Financial Planning can help. Please visit our website or give us a call at 970.419.8212 so that we can discuss your financial goals in a no-charge, no-obligation initial meeting.