Similar to the limits placed on contributions to retirement savings plans when you are working, the IRS also has regulations for how to take money out.

Because contributions are made with pre-tax dollars, the government doesn’t get their bite until you withdraw funds in retirement. Required minimum distributions (RMDs) were created to ensure that the funds are withdrawn, so the taxes can be paid.

It’s a pretty simple concept, for the last several years it’s been a little extra complicated by new regulations that are often changed or even waived before going into effect.

You’ve figured out your budget, your retirement nest egg is substantial and you’re ready to make the transition to living on income from savings instead of income from work. But have you thought through the tax implications? It’s very common for tax planning to be overlooked, under the assumption that you’ll be in a lower tax bracket and Social Security payments aren’t fully taxed. In fact, a recent study found that 57% of Americans rarely consider the taxes they will pay/are paying in retirement.1 That can be an expensive mistake, and it has implications for other retirement benefits.

The cost of college has skyrocketed, and it raises the question of whether the cost/benefit assumptions of a college education should be revisited. The Federal Reserve did just that, with a web feature called "The Labor Market for Recent College Graduates." This is an interactive, consistently updated series of charts that look at 20 years of economic data for unemployment, underemployment, and wages and outcomes by major.

All measures show the benefit of attending college, with lower rates of unemployment and underemployment. But wage data is particularly compelling. As of 2023, the median salary for a high school graduate is $36,000. The median salary for a college graduate with a BA is $60,000. The Fed defined recent college graduates as those aged 22-27 years and compared the same age group of high school graduates.

When you think about building a financial plan that will help you meet your goals at every stage of your financial journey, from your younger working years through retirement, saving and investing are usually the first things that come to mind.

Starting early, saving as much as possible, and being thoughtful about how you allocate your portfolio to balance risk and return potential are the basics for most investors. As you begin to have more income, and your investments start to grow through the power of compounding, taxes begin to become more important.