Today’s Smart Money Question:
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Here Are Just A Handful Of Things You’ll Learn:
We received an interesting question from Tom in South Carolina. We get this question a lot, so we wanted to address it.
Tom says he only needs about $5,000 a month to live on in his retirement. His social security and pension totals $5,300, so does that mean he can leave his entire 401k to his son?
Many times, in the first 5-7 years, people spend more in the bucket list years of retirement. Right now your expenses are $5,000, but you want to be aware of inflation. It’s not going to be $5,000 forever. Inflation is going to happen automatically.
We want to be aware, is a 401k or Roth IRA the most tax-efficient vehicle to go to your heirs? Somebody is going to pay the tax on all of that deferred and contributed money.
When you get to the age of 72, you have to take distributions whether you need the money or not.
Definitely consider inflation for yourself long term. You also need to look at where and how to move those monies out of a 401k. There are different strategies you can implement.
UPDATE: Since recording the podcast, the IRS moved the deadline to contribute to individual retirement accounts and health savings accounts is May 17, the same day that individual federal income tax returns are due
Listen to the full episode or use the timestamps below to jump to a specific section.
4:13 – Leave 401k to son?
11:53 – Should I rent or sell my aunt’s house?
“Somebody is going to pay the tax on all of that deferred and contributed money.”
-Matt Hausman
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