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You’ve worked hard to build your savings. Plan to make it last.
Did you know:
In retirement, you’ll still have access to your account and the professional fund management, low fund fees and knowledgeable participant service representatives you’re used to. There’s no need to withdraw or transfer your Annuity account.
In fact, you may want to set up regular, periodic distributions of your account, like paychecks while you were working. You can do that monthly, quarterly or in another increment—helping ensure your money works for you and your family for as long as possible.
Should you take a lump-sum distribution?
A big payout can come at a big price. Let’s look at Joe’s hypothetical distribution. Joe is under age 59½.
Joe’s hypothetical distribution Topic Value Lump-sum payout $20,000 Mandatory 20% federal tax withholding minus ($4,000) Additional 8% federal tax due
(assuming a 28% federal tax bracket)
minus ($1,600) 10% federal penalty minus ($2,000) Amount remaining after taxes $12,400
This example is for illustrative purposes only. The effects that a lump-sum distribution would have on your account depend on various factors, including your age, account balance, tax bracket, income level and any state income taxes that might apply.
Withdrawals are generally taxed at ordinary income tax rates. Amounts withdrawn before age 59½ may be subject to a 10% federal income tax penalty, applicable taxes and plan restrictions.
The bottom line:
You have many more options for your money than taking it all at once. Consult with your financial professional for ideas that may make sense for you.
5+ years away
Things to consider:
When do you want to retire?
- What will your retirement look like? Will you continue to work part time?
- Cultivate healthy habits now
- Pay off personal debt
- Consider the availability of Medicare for you and your spouse based on your retirement date
- Will you need to purchase an individual health insurance policy?
Saving and distribution strategies
- Identify a strategy that addresses how to invest through your retirement, and start thinking about income.
- Consider how long you will live, factoring in that many people outlive their life expectancy.
- Find the right balance of investment risk that is likely to keep pace with inflation without exposing you to too much downside.
Social Security benefits
If you'll receive Social Security benefits, determine:
- How much you are projected to receive at different ages. Visit ssa.gov/mystatement and ssa.gov/retire/estimator.html for details.
- When to begin receiving benefits.
- How to maximize potential benefits over your and your spouse's lifetimes.
- Your reduced benefits if you worked in the public sector and didn't pay into Social Security during certain years. Learn more at ssa.gov/gpo-wep.
3-5 years away
Things to consider:
Retirement income needs
- Prepare a budget that includes ongoing retirement expenses as well as one-time, lump-sum purchases. Distinguish essential needs from optional wants. Use budgeting software, online tools or a simple spreadsheet.
- Log in to your account and use the Retirement Income Calculator! You'll find out if you're on your way to having the income you'll need in your retirement.
- Find out how much you're projected to receive, based on different retirement dates.
- What survivor benefit options are available for your spouse or other beneficiaries.
- Determine your payment options.
Estate planning and recordkeeping
Consider whether you wish to leave an inheritance for any family members or charities. If so, estate planning becomes especially important. A qualified estate planning attorney can help you:
- Name beneficiaries on your retirement accounts, annuity contracts and life insurance policies.
- Create a will to direct the distribution of other assets and determine who will care for your minor children or other dependents.
- Establish a living will and a medical power of attorney.
- Establish a financial/durable power of attorney to direct financial decisions if you become incapacitated.
- Decide if you'd benefit from a trust.
Participants using the Retirement Income Calculator should consider other assets, income and investments (e.g. equity in a home, Social Security benefits, individual retirement plan investments, etc.) when assessing the adequacy of the estimated income stream as provided by this tool. The Retirement Income Calculator is hypothetical and for illustrative purposes only and is not intended to represent performance of any specific investment, which may fluctuate. There is no assurance that retirement income objectives will be met. You can lose money by investing in securities.
12-18 months away
Things to consider:
Understand the options that may be available to you both before and after you become eligible for Medicare. Consider:
- Costs, including premiums, deductibles and coinsurance
- Supplemental coverage
The Health Care Savings Calculator at aarp.org can give you insight into potential medical costs in retirement.
Long-term care insurance
Begin thinking about how you'll cover the potential cost of long-term care—including help with daily life activities—which is generally not covered by Medicare. Visit longtermcare.gov for more information.
Know how your investments are taxed. Work with a qualified financial or tax professional to determine how to manage those taxes along with state income tax, property tax and sales tax. Don't forget to consider taxes you'll pay on income, like pension and Social Security benefits.
To learn more about taxes, visit irs.gov.
For state taxes, visit retirementliving.com/taxes-by-state.
60-90 days away
Things to do:
- Choose your retirement date and complete necessary paperwork
- Apply for your Boilermaker-Blacksmith National Pension and any other pension benefits you may have earned through former employers, if applicable
- Apply for Social Security and Medicare
- Keep in mind that trips or calls to the agencies may take some time, and processing times may involve long periods.
If you haven’t already, consider making a plan that can help sustain you through retirement. You’ll want to consult with a professional advisor to ensure all your needs and sources of income are taken into consideration and your family is covered.
Remember one important point though: You don’t need to rush into anything or withdraw the money in your Boilermaker National Annuity Trust account just because you’ve retired. Your account is yours and will remain accessible when you need it, so take the time to make a sound choice for your family.
Here are some facts to consider.
Fact: You can keep your money in the plan. Just because you’ve clocked out for the last time, your savings doesn’t have to. You’ll still maintain ownership of your account, log in to the same website, receive your statements, and be able to call the same knowledgeable participant service representatives and more.
Fact: Withdrawing your money gives you access to your savings, but there are also tax implications—including an IRS requirement that 20% of your withdrawal be withheld for tax purposes. Depending on your tax bracket, you may owe additional federal and state taxes. If you’re under age 59½, a 10% early-withdrawal penalty may apply too.
Fact: You can continue to take advantage of professional account assistance. Wondering about investing, what financial education resources might be useful to you, or how to make changes to your account? Your plan is administered by Prudential Retirement, whose representatives take the time to answer your questions.
How much retirement income might you need?
Only you can decide. Keep in mind, with life expectancy in the United States at a record high*Footnote: “Life expectancy in the USA hits a record high,” Larry Copeland, USA Today, October 9, 2014. End footnote, you may want to create an income stream that will last 30 years or more.
How long can you delay taking Social Security?
The earlier you begin, the less you lock in. The Annuity and your pension may be a financial bridge that could help you delay collecting Social Security.
How high will your healthcare expenses be?
They are likely to increase with time, possibly rising faster than inflation**Footnote: “U.S. Health Care Costs Rise Faster Than Inflation,” Mike Patton, Forbes, Print June 29, 2015; Web August 30, 2017. End footnote. And Medicare will only cover some of your expenses. To pay for co-payments, co-insurance, dental coverage or ancillary items like eyewear or hearing aids, plan ahead.
What will your “must-have” and “nice-to-have” expenses be?
Give careful thought when estimating how much you’ll need for items like food, housing, entertainment and travel.
Boilermakers National Annuity Trust Plan Resources & Quick Actions
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