Planning your distribution strategy is as important as planning for retirement.
Suppose you had an orchard with various fruit bearing trees and they were your only source of food supply. If they all ripen at the same time, it would be a disaster as you could not eat all of the fruit at the same time without running out of food for the future.
Typically physicians and dentists have more than one source of income for retirement: Social Security, Partial Employment, Qualified Plans, Real Estate, Sale of Practice and after tax dollar investments.
- Between now and retirement we will more than likely see a change in capital gains as our deficit keeps increasing (opinion only).
- Tax planning is between you and your tax adviser.
- There are a myriad of distribution possibilities. They can be determined as your current situation changes.
- Dividends on stocks are taxable as ordinary income as declared unless they are inside of a qualified plan.
- There are typically no closing costs, brokerage fees, or yearly administration fees for Life Insurance.
- Keep in mind that if retirement distribution starts before age 59 1/2 with qualified assets, you will be subject to a 10% tax penalty from the IRS. If distribution is needed prior to age 59 1/2, use non qualified assets first to avoid age restriction and IRS early distribution penalty.
- Many retirement plans are disrupted by investments going "south" just prior to distribution.
- The closer one gets to retirement, the more the emphasis should be on asset safety and retention no high risk investments.
