Retirement Planning | RMD’s and Social Security

Retirement Planning: A considerable part of portfolio planning is always the question of retirement—how much is actually needed? What are your goals and plans to live freely in your retirement? This simple chart certainly simplifies the conversation a bit:

If you remember from last week, we wrote a bit about thinking about the things you can control vs. those that are out of your control. You’ll notice with this graphic, we’re thinking similarly. What decisions can you make today to benefit your retirement planning that are within your control, knowing there are also things that are outside your control?

Required Retirement Withdrawals: If you’re already well into the retirement planning process, you’re fully aware of the required withdrawals each year. This year, the annual requirement might feel particularly painful. With the S&P 500 down nearly 25% for the last year through September, many retirees will need to withdraw and pay taxes on a bigger percentage of their nest eggs than they might prefer. The Required Minimum Distribution (RMD) is based on the account’s balance at the end of last December—before the markets sagged. The required withdrawals in down markets are frustrating. Still, there are a few ways to lessen the blow—among them are to consider donating money, taking monthly distributions, or taking the distributions “in kind.” Reach out to your advisor today to discuss your options.

On the upside: One last note on RMDs. On October 7th, the IRS waived the 50% penalty on missed 2021 and 2022 inherited retirement accounts for beneficiaries subjected to the SECURE Act 10-year payout period. If you inherited an account in these years, reach out to your advisor to find out what it means for you.

Business Briefing

• Social Security: On Thursday, the Social Security Administration confirmed that millions of Social Security recipients will receive an 8.7 percent cost-of-living adjustment to their benefits in 2023. The hike, the largest in more than 40 years, will boost the average monthly benefit by $140 starting in January. The adjustment was calculated according to the most recent quarterly inflation figure. (The Associated Press)
• Extended High Rates: Federal Reserve officials indicated at their September meeting that inflation had exceeded their expectations and that they anticipated keeping interest rates high for an extended period to bring increases down, according to meeting minutes released on Wednesday. Members of the central bank’s Federal Open Market Committee decided they “needed to move to, and then maintain, a more restrictive policy stance in order to meet the committee’s legislative mandate to promote maximum employment and price stability,” the meeting summary said. (CNBC)

And Just When You Think You’ve Seen It All: A plant dating pop-up has appeared in London, and the purpose is to help Brits find their perfect “plantner.” The ‘Lonely Plant Club’ match-making service has been set up to “marry” the public with the perfect houseplants to suit their lifestyles and personalities. The new company says, “Finding a new plant to love isn’t all that different to finding a new partner. It takes a lot of research, some trial, and error, and a sprinkle of chemistry to find ‘the one.'” We might push back a bit on that comparison but hope you, too, find your one true plantner.