A lot of folks that come to be either have old 401Ks, old pensions, and now this is their primary income source, and they are trying to balance that out with social security or any other retirement income sources they may have. The question I often get from these people is, “How do I get a paycheck? How do I actually draw money from my retirement accounts?” I want to address those questions and demonstrate real quickly how that works.
If you have a pension then you know that typically you are going to get automatic deposit, maybe the first of each month, like your social security. Whenever you take a pension or 401K and you roll it to an IRA, it is that simple. You are in complete control as far as when you get that money, how often you get that money, or how frequently you get that money.
Rolling Into an IRA
Let me give you a quick example of how that might work. When a client retires and they roll their retirement accounts into an IRA, most typically we will set up an automatic distribution from the IRA into their, most typically, checking account. You can have the deposit on the first of the month. You can have the deposit on the 15th of the month. You can have the deposit on the 23rd of the each month. There is no specific day or any requirement to do so. I even have a client that also wants to have it deposited every two weeks so it mimics how it was when he was working to where he is now getting two paychecks per month. That is how simple it is to get that set up.
Do you have to have it automatically deposited in your checking account? Absolutely not. You can actually get a physical check a mailed directly to your home record. Get it in the mail, take it to the bank, deposit it, and your good to go.
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Pick Up the Phone
The other method you can do is to where you can actually just call whenever you need it, and we can liquidate some investments to get you a check. We would have that mailed directly out to you, or automatically deposited in your checking account. Let me give you an example how that situation might work. I have a lot of clients that will set up that monthly distribution to go out on the first of the month, and then on top of that if they ever need some additional cash flow at some point in time during that month they can call me up and say, “Hey Jeff, I need an extra 500 bucks, extra $1000. Can you send it to me?” As long as we have a cash balance available we can send that out via ACH, and it will be in your checking account in about two or three business days. It is that simple.
Meet Mr. Banker
I tell a lot of my clients, “I am now your bank. Anytime you need money, I'm the man to call that is going to get you your funds.” That's how simple it is. It is that simple. A lot of people don't realize how easy that is. The only thing I do want to stress is the fact that it is so simple; don't let that give you the freedom to think that you can just take an extra distribution whenever you need it because one of the most important things is not running out of retirement income. You don't want to tap it too quick. I always tell my clients, “Listen, it's your money. You're the boss of the money. I am just the order taker. You tell me. I am just here to give you some guidance, my professional opinion. Are you depleting your retirement accounts too quickly?” That is my role as your financial planner.
I just wanted to take a quick minute to address how you set up distributions from your IRA or your retirement accounts. It is that simple. Just a few forms to sign, and you're good to go. If you have any more questions, feel free to hit me up on the blog, goodfinancialcents.com. Thanks for stopping by, and we will see you next time.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing.