Vanguard: 90% of retirees misuse their savings — MarketWatch
About 90% of retirees may be making mistakes in how they use their savings by postponing spending from individual retirement accounts (IRAs) and 401(k) plans. MarketWatch reports this, citing a new Vanguard report.
Accounts are being saved for later
According to the publication, retirees may leave IRAs and 401(k)s untouched for a decade or longer. When they do eventually begin using these funds, they may spend them only to a limited extent.
As MarketWatch notes, this approach may lead people to restrict their budgets at the start of retirement. As a result, some people die with more money than they had when they retired.
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Sources of income and taxes
After finishing work, people can ideally have several sources of funds: pre-tax savings, Roth accounts, cash, and Social Security payments. This makes it possible to diversify sources of income and manage taxes better.
The order in which retirees spend funds from different sources matters for taxes and for how freely they can use their savings throughout their lives.
