![]() ![]() That means checking, savings, money market, certificate of deposit, and so on. Then, go through the following steps.Įvery retiree should have at least six months’ to two years’ worth of portfolio withdrawals (cash flow needs not being supplied by Social Security, a pension, or some other nonportfolio source) set aside in highly liquid investments at all times. ![]() To put in place a system for tapping your retirement accounts, start with an estimate of your annual spending needs for the next one to two years and your most recent statements for all of your retirement accounts. That strategy also gives your stock assets, which have the potential for the highest long-term returns, more time to grow. The reason is pretty common-sensical: Doing so helps ensure that you’re taking money from your most stable pool of assets first and, therefore, you won’t have to withdraw from your higher-risk/higher-return accounts (for example, those that hold stocks or more risky bonds) when your account is at a low ebb. ![]() The money that you’ll draw upon first-to fund living expenses in the first years of retirement-should be invested in highly liquid securities like certificates of deposit, money markets, and short-term bonds. The sequence in which you tap your accounts will help you determine how to position each pool of money.
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