A reader of NJ Money Help approaching retirement asked how to position a portfolio to generate enough income in their retirement years. The reader had approximately $1.3 million in IRAs, $100,000 in cash, planned to retire in two years, and wanted guidance on both retirement income and Social Security claiming strategies.
In his response, Howard Hook, CFP®, CPA, CAP®, said that based on the information provided, the reader appeared to be in a position to support their current lifestyle through a combination of retirement savings and Social Security income, assuming the portfolio was well-diversified and protections were in place against major risks such as significant medical expenses, long-term care needs, and liability claims.
Hook explained that he generally recommends maintaining three years’ worth of cash needs in cash and short-term bonds or bond funds. These assets can be used to meet spending needs while allowing stock investments to remain untouched during periods of market decline. As those funds are used, they can be replenished to maintain the three-year reserve.
He also discussed the importance of considering taxes when deciding whether to draw from IRAs or begin collecting Social Security. Depending on a retiree’s tax situation, it may make sense to access IRA assets earlier or delay those withdrawals.
Regarding Social Security, Hook noted that waiting until full retirement age or even age 70 can result in a larger monthly benefit. While claiming benefits early and saving them may seem attractive, he emphasized that delaying benefits can provide a higher income later in retirement.
To read Howard’s full response, visit the original article on NJMoneyHelp.com: I’m Going to Retire. What’s the Best Strategy to Have Enough Income?
Putting It Into Perspective
Retirement income planning often involves coordinating multiple sources of income, including investment accounts, Social Security benefits, pensions, and cash reserves. Because tax rules, market conditions, and spending needs can change over time, we recommend retirees periodically review their withdrawal strategy to ensure it continues to align with their goals and circumstances.
To learn more about retirement planning and income strategies, explore our collection of Retirement Planning Articles.
Learn more about Howard Hook and how he helps clients build financial plans they can rely on throughout every chapter of their lives.
