Investing in Your Future
How should you use retirement plan distributions?
During your working years, you are (hopefully) putting money into your IRA and your 401(k) or similar employer-sponsored retirement plan. But once you have retired, how can you maximize the benefits you get from these plans?
First of all, you need to be aware of the rules governing withdrawals from your retirement plans. If you are older than 59-1/2, you can withdraw money from your traditional IRA without paying penalties, though the withdrawals will typically be taxable. But once you reach 70-1/2, you generally must start taking “required minimum distributions” (RMDs) from these accounts, with the annual amount determined by your age, the account balance and other factors. (The situation is different with a Roth IRA. If you are the original account holder, you are not required to withdraw funds from your Roth IRA at any age. You can choose to withdraw your contributions at any time, tax and penalty free. To withdraw your earnings tax and penalty free, you generally must have owned the account for at least five years and have reached age 59-1/2.) So, assuming you do have a traditional IRA and a 401(k) or similar plan, what should you do with the RMDs? You will probably require at least some of these distributions for your living expenses, but if you do not need it all, what should you do with the “excess”? Here is one suggestion: As part of your overall retirement investment portfolio strategy, you can reinvest the money into these three “buckets”:
Near-term income bucket – For this bucket, you are not concerned with high returns – you just want the money to be there when you need it for expenses and unexpected costs, such as a major car repair, a new furnace, and so on. It is always a good idea to have an emergency fund containing three to six months’ worth of living expenses – and your short-term income bucket could be an ideal source to help build such a fund.
Medium-term income bucket – During retirement, you can probably never have too many sources of income, so you may want to fill a bucket with intermediate- and long-term bonds, which make regular interest payments.
Long-term income bucket — Even when you are retired, you will need some growth potential in your portfolio to help keep you ahead of inflation in the long run. So this bucket should be filled, not surprisingly, with growth-oriented investments. These investments can fluctuate in value, but as long as you do not need to tap into them in a hurry, you may be able to avoid taking withdrawals when the price is down.
In addition to this “bucket” approach, you do have other options for your RMDs. For example, you could give your grown children some financial assistance, possibly for help in funding their IRAs. Or, you could contribute to a college-savings vehicle, such as a 529 plan, for your grandchildren. And you can always make charitable contributions, which allow you to support worthwhile organizations and, by doing so, earn some potential tax benefits.
Clearly, you can do a lot with your RMDs. And you worked hard for them – so make sure they work just as hard for you.
This article was written by Edward Jones for use by your local Edward Jones Financial Advisor.
Carbon monoxide awareness
When power outages occur after severe weather, using alternative sources of power can cause carbon monoxide (CO) to build up in a home and poison the people and animals inside. Every year, at least 430 people die in the U.S. from accidental CO poisoning. Approximately 50,000 people in the U.S. visit the emergency department each year due to accidental CO poisoning.
CO is found in fumes produced by portable generators, stoves, lanterns, and gas ranges, or by burning charcoal and wood. CO from these sources can build up in enclosed or partially enclosed spaces. People and animals in these spaces can be poisoned and can die from breathing CO.
The most common symptoms of CO poisoning are headache, dizziness, weakness, nausea, vomiting, chest pain, and confusion. People who are sleeping or who have been drinking alcohol can die from CO poisoning before ever having symptoms.
There are steps you can take to help protect yourself and your household from CO poisoning.
Never use a gas range or oven to heat a home.
Never leave the motor running in a vehicle parked in an enclosed or partially enclosed space, such as a garage.
Never run a generator, pressure washer, or any gasoline-powered engine inside a basement, garage, or other enclosed structure, even if the doors or windows are open, unless the equipment is professionally installed and vented. Keep vents and flues free of debris, especially if winds are high.
Never use a charcoal grill, hibachi, lantern, or portable camping stove inside a home, tent, or camper.
CO poisoning is entirely preventable. You can protect yourself and your family by acting wisely in case of a power outage and learning the symptoms of CO poisoning.
If you do not have a battery-powered or battery back-up CO detector, buy one soon. Change the batteries in your CO detector every six months.
Honoring Michigan’s veterans
One of my greatest honors as your senator is taking part in Veterans Day tributes in Southwest Michigan to thank our veterans for their service.
While the enormous sacrifice of these heroes and their families is a debt we can never fully repay, I am proud that our state is doing all it can to show our appreciation in a meaningful way.
The Michigan Veterans Affairs Agency provides valuable services to our state’s more than 660,000 military veterans, which is the 11th largest veteran population in the nation.
I encourage all Southwest Michigan veterans to make sure that they are receiving the benefits they earned by visiting www.MichiganVeterans.com or by calling 1-800-MICH-VET.
Berrien County veterans can also contact the local veterans affairs office at (269) 983-7111, ext. 8224.
One of the many ways we can show our deep appreciation for our veterans is to adorn their graves with special markers — so that people will forever know of their service. Sadly, some people have sunken so low as to steal these markers and sell them to collectors or scrap metal dealers.
I will be introducing legislation soon to crack down hard on these thefts so we can give our veterans the honor and rest they have earned.
I want to thank former Sen. Ron Jelinek for bringing this issue to my attention. I look forward to working with him to stop these grave robbers the best way we can — by cutting off much of their ability to profit from stealing from the graves of our veterans.
American patriots have always answered the nation’s call to stand up for liberty. In heartfelt appreciation of our veterans, I urge all area residents to thank these heroes throughout the year for their sacrifice and service.
May God bless our veterans.
As always, I look forward to hearing your comments and feedback on the important issues facing Michigan. You can contact me at 517-373-6960.
World War II veteran receives overdue service medals
Oris Aldrich, of Buchanan, was only 17 years old when he joined the U.S. Navy in 1945. Following nine weeks at the Great Lakes Naval Training Center near Chicago, Oris was assigned to the U.S.S. Leo, an Adromeda-class attack cargo ship, where he served for 15 months in the Asiatic-Pacific Theater.
Now 89, Oris, who volunteers at Niles High School, recently contacted my office for help receiving a medal he believed he had earned. My team immediately got to work making sure this situation was rectified. Navy officials reviewed his request and found that he was eligible for several additional medals. Last week, we were able to surprise him with not one but with seven medals he had earned during his service.
It turns out Oris had earned the World War II Victory Medal, American Campaign Medal, Asiatic-Pacific Campaign Medal, Navy Occupation Service Medal with Asia Clasp, China Service Medal, Discharge Button, and Honorable Service Pin.
It was an emotional moment to surprise Oris with the medals he had earned so many years ago. And it was an honor to be able to thank Oris, and his family, personally for his service to our country.