May 13, 2024
Question:
How do I know when to retire? What do I do with my 401K?
Answer:
This is one of those questions that is so dependent upon each individual’s situation, but a big piece of it comes down to four main components:
Health - sometimes we are forced to retire.
Economy - sometimes we delay because of the economy, or we are forced into retirement due to a reduction in workforce.
Emotion - some people say "they just know" it's time and they are emotionally ready.
Finances - does your cash flow match your spending desire?
As for what to do with your 401K, you also have options there:
You can leave it in your 401K and take distributions when needed - but your plan may have some limitations and added costs for this.
Roll it over into an IRA - this is a non-taxable event and generally gives you the greatest amount of flexibility.
Take a lump sum distribution - this would result in a taxable event, and you would need to count the distribution as income.
The right decision for every person is different and depends on other financial goals and events going on in your life.
Not to be vague in answering this question, but there are so many variables, that it is hard to give a general response.
Do your friends ask you financial questions?
Pass those questions on to us at AskRPG@rootedpg.com and we will feature them in our future newsletters.