Bad News On The Required Minimum Distribution RMD Front For IRA And 401K Owners


There is no question that this has been a terrible year in the stock market.  If you have the majority of your holdings in stocks, this can cause big problems as you may have to sell stocks at a loss in order to pay your RMD.  In addition, many seniors believe that since the stock market went down significantly this year, so too will their RMD.  This is not necessarily true.  Your RMD for this year is based on the retirement account balances at the end of 2022, not 2023.  That’s why it is always a good idea to have some cash or money market funds in your retirement accounts so that you don’t have to liquidate stocks at an inconvenient time.  If you have cash outside of your IRA, one way to avoid selling stocks is to transfer stocks equivalent in value to the RMD from the retirement account to a regular brokerage account.  That way, you can hang onto the stocks and hopefully they will recover.

Monterey, CA Many Retirees Not Prepared For A Financial Shock

A jar of coins with the word retirement written on it.


A new study which was published by the Society of Actuaries Research Institute’s Aging and Retirement Strategic Research Program found that many retirees and pre-retirees aren’t prepared for a financial shock, and the likelihood of that happening is increasing.  Many economists are saying that the odds are increasing that we will soon enter a recession, and Russia’s attack on Ukraine is likely to wreak havoc on the stock market.  According to the study, about half of pre-retirees report that they already experienced a financial shock, along with 4 in 10 retirees.  These shocks have reduced the assets of pre-retirees by 25% or more and their spending by 10% or more.  Experts urge retirees to build a reserve fund.  Half of pre-retirees could only afford to spend $10K or less on an emergency while retirees reported they could afford no more than $25K.  There are plenty of great financial advisors on the Monterey Peninsula and you should consult with one yearly.

https://www.usatoday.com/story/money/personalfinance/retirement/2022/03/25/retirement-prepare-sudden-financial-hardship/7157673001/