Do You Have Multiple 401(k)s? Problem Solved!January 17, 2019
By Jeremy Reif, CRPS®, Financial Advisor and Owner of Point Wealth Management
Gone are the days when Americans would stay in the same job for the majority of their working lives. The recent trend is to transition from job to job at an alarming rate. In fact, Americans change jobs an average of 12 times during their working years. (1) This becomes problematic when you factor in employer-sponsored retirement plans.
More than one-third of Americans have three or more retirement accounts. (2) If the majority of your previous employers offered a 401(k), that leaves you with a handful (or more) of separate accounts to manage, each with their own fees, asset allocation strategy, and rules. Not only is it a challenge to manage all of these accounts and simultaneously stay committed to a coherent investment strategy for your financial future, but what if the confusion makes it difficult for you to determine if you can retire?
The Solution To The Problem
I recently worked with a client who had worked several jobs throughout his career and wanted to know if he could retire at age 62. While this is a common question, his specific issue was that he had 14 different retirement accounts and was completely overwhelmed with trying to figure out how much he could draw from each account to maintain the income he needed for his ideal retirement lifestyle. Not to mention questions about what accounts to withdraw from first to minimize taxes, since some of his money was in traditional tax-deferred investments and the rest were in Roth or tax-free investments.
The Power Of A Plan
You can see what a headache this problem presents. This is where a personalized retirement and distribution plan can help. Here is a bare-bones breakdown of how I solved this problem for this particular client:
1. Calculate how much money is needed to pay the bills each week, month, or year.
2. Determine if the amount of savings available will cover those expenses.
3. Decide how and when to withdraw the money from each account.
Consolidation Is Key
Based on these three steps, we created a strategy for this client’s retirement. After giving careful consideration to the pros and cons, we consolidated all of his tax-deferred accounts into one, and all of the tax-free accounts into another, paring down his 14 accounts to 2.
This did several things for my client. First, it eliminated unnecessary costs from the various accounts. It also helped reduce his stress and anxiety levels and gave him a clearer view of his financial picture. Our plan removed overlap of investments, and, of course, reduced paperwork. This simple change cleared the clutter and added proper diversification, management, clarity, and risk tolerance to his nest egg. Problem solved.
Do You Need Help With Your 401(k) Accounts?
Retirement accounts can get complicated, especially when you have a lot of them to your name! Save yourself a headache and work with an experienced financial professional at Point Wealth Management to create a customized retirement plan and simplify your life. For a no-strings-attached conversation, schedule a call and meet me virtually. I am here to help point you in the right direction.
About Jeremy Reif, CRPS®
Jeremy Reif is an independent financial advisor with more than a decade of experience in the financial services industry. He is also the owner of Point Wealth, LLC, an independent financial planning and investment management firm. With advanced credentials and training in retirement planning and financial planning, Jeremy focuses on helping individuals and families pursue financial independence. Regardless of the services he’s providing, he focuses on talking openly about financial planning, the industry, common questions about retirement planning, and more to help everyday investors gain more confidence in their financial opportunities. Based in Wausau, Wisconsin, Jeremy serves clients throughout the state and can work virtually with clients throughout the country. To learn more, visit http://pointwealthmanagement.com and connect with Jeremy on LinkedIn.
Investment Advisory Services offered through Retirement Wealth Advisors, Inc. (RWA) a Registered Investment Advisor. Securities offered through TCM Securities, Inc. Members FINRA-SIPC. Point Wealth Management, TCM, and RWA are not affiliated. Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. Past performance does not guarantee future results. Consult your financial professional before making any investment decision.