When to Access Retirement Savings

The best time to access retirement savings is once you have retired, and do not have a regular paycheck that would otherwise support you. Retirement savings are meant to serve as a main source of income when you are done working.

But even if you don’t need to start withdrawing funds once you have retired, there are rules that require you to do so. You must start withdrawing from employer retirement plans, traditional IRAs, and 401(ks) at the age of 70 ½, and you must take a minimum amount each year. There are no restrictions on when you withdraw funds from a Roth IRA. For an overview of how this works, check out WaletPop’s article on “Taking IRA Distributions.”

http://www.walletpop.com/retirement/article/taking-ira-distributions/92725 Keep in mind that for employer retirement plans, traditional IRAs and 401(k)s, the earliest you can start withdrawing funds without incurring a penalty is age 59 ½.

How much money should you access? Successful retirements are not just about when to access savings, but how much of the savings to access. You’ll want to take enough to live on, while at the same time preserving assets for growth. You may decide to take more in years you’ve planned travel and gifts, and less in years you’ve planned to live leaner. You’ll want to plan for inflation and increases in the cost of living, and also for the growth of your savings over time. In other words, many factors go into determining your withdrawal rate from your retirement savings.

In general, a retirement withdrawal rate somewhere between 4% and 6% is a widely used target.