AGES 55 TO 75: PLAN YOUR WITHDRAWALSAGES 55 TO 75: PLAN YOUR WITHDRAWALSYou're going from peak earning years Peak earning years refers to the time in life when workers earn the most money per year. US perspective Given their initial lack of experience, workers' earnings start out low. Earnings peak when workers hit middle age, then begin to fall as retirement approaches. to retirement, so create a withdrawal plan. As you begin to rely on your investments to meet living expenses, remember that your biggest enemy may be inflation--losing purchasing power Purchasing Power 1. The value of a currency expressed in terms of the amount of goods or services that one unit of money can buy. Purchasing power is important because, all else being equal, inflation decreases the amount of goods or services you'd be able to purchase. 2. . To test-drive your income strategy, try T. Rowe Price's retirement income calculator at troweprice.com. Dial back the risk and adjust your portfolio to generate more income. Reduce exposure to small and microcap stocks and such volatile areas as emerging markets. But don't shift predominantly to fixed income if that means cashing out stocks that could recover over the next few years. The market's swoon provides opportunities for estate planning Estate Planning The overall planning of a person's wealth, including the preparation of a will and the planning of taxes after the individual's death. Notes: Contrary to popular belief, estate planning involves much more than preparing a will, and it is not only for the , such as transferring assets--including family partnerships--to heirs at low values. And if you meet the income limits, convert taxable retirement accounts to a Roth IRA Roth IRA An individual retirement plan that bears many similarities to the Traditional IRA. Contributions are never deductible, and qualified distributions are tax-free. A qualified distribution is one that is taken at least five years after the taxpayer established his/her first to give your heirs a lifetime of tax-free distributions. Watch your mandatory distributions carefully. When you hit age 70 1/2, you must start taking money out of your retirement plans. That's painful right now, because you may have to sell stocks, bonds, or other assets other assets Assets of relatively small value. For financial reporting purposes, firms frequently combine small assets into a single category rather than listing each item separately. at depressed prices. (New legislation, however, will likely permit retirees to delay distributions in 2009.) Required distributions usually start at 4%, so to avoid being thrown into a higher tax bracket when the time comes Adv. 1. when the time comes - at the appropriate time; "we'll get to this question in due course" in due course, in due season, in due time, in good time , consider taking smaller withdrawals when you're younger. 
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