The IRS is coming – eventually – for the money in your 401(K) or Traditional IRA.
As a result, people who think they have $500,000 or $1 million stashed away for retirement will learn they have less than they realized once they start withdrawing the money and have to pay taxes on those withdrawals.
The key to answer this question is to realize you are speaking about 'retirees' receiving this gift, or unexpected windfall or inheritance. We are not talking about someone in their 20’s, 30’s, or 40’s who have a different time horizon.
Annuities have been around for centuries – since Roman times. In Ancient Rome, people would make a single payment in return for annual lifetime payments. Even back then, retirement planning was a concern.
Life in retirement, which once conjured images of golf and sunsets at the beach, took on a drearier edge in recent years as more people realize they are unprepared financially to stop working. The Washington Post has called it “the new reality of old age” and quoted one 74-year-old man saying he will need to work until he dies. For those who have retired, a Fidelity study found that 55 percent are at risk of running out of money before their lives end. Think of this statistic—more than ½ of those surveyed aren’t prepared. Are you?
Preparing financially for retirement can be complicated for anyone, but for small business owners the process often poses even more challenges.
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