Insights
Have you ever wondered whether paying taxes now could potentially help reduce taxes later? It's a conversation worth having as part of a broader retirement income strategy.
Tax planning can involve paying taxes when it may be most advantageous to do so, whether that's because you expect to be in a higher tax bracket later in life or because of other factors such as Required Minimum Distributions (RMDs), IRMAA surcharges, or changes to your income sources.
Whether a Roth conversion makes sense is highly dependent on your individual situation. Factors that may come into play include your age, current and future income, living expenses, retirement goals, available assets, and how much tax you're willing to pay today in exchange for potential benefits in the future.
If you're nearing retirement or have recently experienced a significant change in income, it may be a good time to sit down with a financial professional and discuss whether a Roth conversion strategy aligns with your overall financial plan.
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Did you know that some retirement plans may allow you to access your 401(k) savings before age 59½ without the 10% early withdrawal penalty?
Normally, withdrawals from qualified retirement plans before age 59½ may be subject to a 10% early withdrawal penalty in addition to any applicable taxes.
However, some employer-sponsored retirement plans may allow penalty-free withdrawals beginning at age 55 under a provision commonly referred to as the Rule of 55.
The Rule of 55 generally applies to individuals who separate from service during or after the year they turn age 55, and eligibility depends on the specific provisions of the retirement plan.
Many people accumulate a significant portion of their retirement savings in workplace retirement plans and may not be aware of the options available to them.
Understanding how your retirement plan works can be an important part of evaluating your overall retirement strategy.
If you're curious whether your plan allows Rule of 55 distributions, consider contacting your retirement plan provider for details and discussing with an advisor how it may fit into your broader financial picture.
See thrivent.com/social for important disclosure information.
“How much do I actually need to retire?”
Most people expect a number… but that’s not really how retirement works.
Two people can both have $1,000,000 saved— and have completely different retirement outcomes.
Why?
It comes down to things like taxes, income strategy, and when you take Social Security.
Retirement isn’t just about how much you have… it’s about how your plan works.
If you’re getting close to retirement, now is the time to make sure everything is aligned.
See thrivent.com/social for important disclosure information.
