Your IRA May Need Restructuring When Your RMDs Start
Meet Robin, a 60-year-old client with $1,000,000 in her IRA who is seeking a balanced approach to managing growth and volatility in her investment portfolio.
Her concern centers around the Required Minimum Distributions (RMDs) that she’ll start at age 73, potentially during market downturns, which could jeopardize her retirement security.
Robin turned to us for guidance.
Robin’s IRA Portfolio
Robin structured her portfolio with 60% in stocks for growth and 40% in bonds for stability.
However, the impending RMDs pose challenges:
- Withdrawals from stocks risk diminishing growth
- Withdrawals from bonds could increase exposure to market volatility
- A combination of both might compromise growth more than desired
The Solution Based on a Guaranteed Lifetime Income Strategy
Our Guaranteed Lifetime Income Strategy works like this:
- Allocate $400,000 from Robin’s current bond allocation into a Fixed Index Annuity (FIA)
- Starting at age 73, the FIA will provide Robin with a guaranteed annual income of $75,362
- This income will cover her RMDs so she does not need to sell equities, thus safeguarding her portfolio’s growth potential
It guarantees a her lifetime income stream, ensuring financial security throughout her retirement.
Benefits of a Guaranteed Lifetime Income Strategy
- Robin retains 60% of her portfolio in equities, preserving growth opportunities
- She has mitigated the need to sell stocks in market downturns to meet her RMD obligations
- She has procured a stable income source which continues to her spouse after her passing
Managing RMDs Effectively is Crucial
This strategy aims to enhance Robin’s retirement income while balancing risk and maintaining long-term growth potential. Implementing the Guaranteed Lifetime Income Strategy ensures Robin’s financial peace of mind and maximizes the enjoyment of her retirement years.
- Ensures Robin’s income needs are met while optimizing portfolio growth
- Eliminates her fear of outliving her savings due to Longevity & Sequence of Returns Risks
