IRAs in your 40s, 50s, 60s, and 70s |
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IRAs in your 60s
Now, you can begin to withdraw money from your IRA. But most experts advise that you spend your personal, non-sheltered dollars first and allow your tax-deferred investments to continue to grow as long as possible. By the same reasoning, it's wise to continue to invest in your IRA, if possible, relying upon other sources of income such as pensions and Social Security to meet living expenses. Remember you have to have income from a job to invest in an IRA.
Now is also a good time to assess the earning power of your investments. Today's longer lifespans argue against the conservative approach of past generations. You may need to continue growth-producing investments, both to build your nest egg and as a hedge against inflation. To estimate how much your retirement savings will grow, see our online calculator.
How much can you spend in retirement? This is the time to make a spending as well as a saving plan. By one popular theory, you should limit the withdrawals from your nest egg to 4 percent annually and adjust each year for inflation. So, if you have a $200,000 balance in your IRA and inflation is at 3 percent, you could withdraw $8,000 the first year and $8,240 the second year. Under that formula, your money should last about 30 years.
That's probably too conservative for most middle-income retirees. Other analysts suggest you withdraw 8 per cent per year during the early and most active part of your retirement, but expect to reduce your withdrawals and your spending in later retirement.
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