Now what?

Congratulations - you've finally reached retirement age!

You've saved diligently for many years to build your retirement nest egg, and now you're ready to reap the rewards of all your hard work. But how? For a successful retirement, you'll need a clear strategy for living off of your savings without depleting your assets prematurely.

Cushion your portfolio with cash
In retirement, it's important to maintain a portion of your portfolio in liquid assets so you can access money quickly, if needed, without being forced to sell securities at an inopportune time.

Understand the importance of balance
Fixed income investments will likely be a key part of your retirement strategy. Although fixed income investments may fluctuate in value, a diversified portfolio of fixed income securities typically offers a reliable income stream to meet your "needs" - regular, necessary expenses. However, fixed income investments don't offer much potential for growth. Because you may spend 25 years or more in retirement, you will need some growth in your portfolio to combat the effects of inflation over time. Equity investments can provide this growth, but they also present the risk of loss of principal. By balancing these components in your portfolio, you will be able to develop a strategy to help your money last throughout your retirement years.

Prioritize between "needs" and "wants"
When making withdrawals from your retirement nest egg, you should plan to take two different types:

  • "Needs" are those things you cannot live without, such as food and housing. For these expenses, consider fixed-dollar withdrawals - a set amount of money taken at fixed intervals to meet fixed, necessary expenses, or "needs."
  • "Wants" are those things you would like to have, but that are not necessary, like vacations and entertainment. So, for these expenses, consider fixed-percentage withdrawals - a dollar amount that varies based on the balance of your account. Because the amount you withdraw depends on how much money you have, you will take less when the value of your portfolio is down, thereby helping to avoid depleting your nest egg prematurely.

For example, you may need $2,500 each month to cover your fixed expenses, and would take that amount as a fixed-dollar withdrawal. At the same time, you may decide to take 2% of your balance to meet discretionary expenses, such as travel or gifts. The amount of money that 2% provides will fluctuate with the value of your account, allowing you to spend more on those little extras when your account balance is higher.

Take some good advice
You may have worked with a financial advisor to plan your retirement savings strategy. Now it's just as important to get professional advice on how to allocate and withdraw your accumulated assets during retirement. An experienced financial advisor can help you avoid costly mistakes, so you make the most of your well-deserved retirement.

PRE-RETIREMENT TIPS

  • Catch up! If you're age 50 or over this year, you're eligible to make extra "catch-up" contributions to your retirement plan and personal IRA, above the normal limits
  • Contact your local Social Security Administration office several months before you intend to retire - they can help you decide the optimal date for you to apply for benefits
  • Consider consolidating assets from former employers' retirement plans and/or multiple IRAs into one easy-to-manage Rollover IRA

This information is for general educational purposes only.
Seligman and its representatives do not provide tax, accounting, or legal advice. Any tax statements contained herein were not intended or written to be used, and cannot be used, for the purpose of avoiding US federal, state, or local tax penalties. Please consult your own independent advisor as to any tax, accounting, or legal statements made herein. Retirement plan withdrawals made prior to age 59½ may be subject to taxes and a 10% penalty.

This information is authorized for use only in the case of concurrent or prior delivery of the offering prospectus of the Fund. You should consider the investment objectives, risks, charges, and expenses of a Fund carefully before investing. A prospectus containing information about a Fund (including its investment objectives, risks, charges, expenses, and other information about the Fund) may be obtained here. The prospectus should be read carefully before investing in a Fund.

The Seligman Funds are managed by J. & W. Seligman & Co. Incorporated (Seligman). The Seligman Mutual Funds are distributed by Seligman Advisors, Inc. Seligman Services, Inc. provides client services to Fund shareholders. Seligman Advisors, Inc. and Seligman Services, Inc. are wholly-owned subsidiaries of Seligman.

Distributed by Seligman Advisors, Inc.