QUESTION: WHAT IS THE “DISTRIBUTION PHASE” OF RETIREMENT PLANNING?
As we grow older, we leave a period of relativecomplacency about money and transition into a more
critical period of anxiety and fear during the distribution phase. It is at this point in our lives that we are faced with important choices that could help defer or mitigate taxes. Our choices will ultimately dictate the kind of lifestyle we can enjoy when we leave the workforce. Successful tax planning means understanding the challenges, opportunities and risks associated with this critical time.
A research study by Prudential Insurance confirmed that investors knew that this was a different time for them and 72% recognized that the financial risks were unlike any that they have previously faced. The Prudential survey revealed some ambivalence about risk, with about half of the respondents favoring a conservative strategy, while the other half opted to seek capital gains by investing more aggressively.
Two main fears were revealed:
1) VOLATILITY
An aversion to investments that threatened their principal and exposed them to risk.
2) RUNNING OUT OF MONEY
Fear of outliving assets and consequently choosing an aggressive investment strategy.
The good news is that despite the increased anxiety,
choices for investors approaching retirement are
greater than ever. Investors can protect principal, lock in gains and generate a stream of income that they can’t outlive. Your America’s Tax Solutions retirement distribution specialist will work with you to determine the right options for you and your family.
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