Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

Friday, October 11, 2013

The Top 5 Retirement No-No's

RetirementRecently, Morningstar published an article that was meant to help people work around the five most common retirement distribution pitfalls. They are described below:

  1. Having a fixed withdrawal rate. Although the 4% rule is a good starting point it is not realistic to believe that you will not need to spend more some years and less others. Make sure to plan as much anticipated and unanticipated costs as possible.
  2. Not adjusting your distribution according to the market. The better strategy is to make sure you maintain a diversified portfolio.
  3. Not reinvesting the retirement funds that you do not use. There is nothing forcing you to spend the distribution, so reinvesting the funds in a taxable account is the best way to keep money  invested in the market.
  4. Only using income securities to meet income needs. A better strategy is to use a total return approach that relies on re- balancing to fund living expenses. 
  5. Failure to consider tax consequences. Try to consider the tax effects associated with the retirement distributions long term.

See Morningstar 5 Retirement Distribution Pitfalls (And How To Work Around Them), IStockAnalyast,  Oct. 9, 2013.

Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.


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