The Millstone Times March 2020

FAMILY MATTERS

Increasing longevity is a practical reason you may want to develop an income plan to cover your expenses. To help you enjoy a long and comfortable retirement, using many different types of income streams can help balance your need for both growth and income while providing options to help minimize taxes throughout your retirement. Retirement accounts — Your IRA and your employer-sponsored retirement plan, such as a 401(k), can be essential sources of retirement income. Distributions from a traditional IRA or employer-sponsored plan are taxable, and distributions from a Roth IRA or employer-sponsored plan are tax-free. So you may want to consider allocating assets to both types of retirement accounts. Dividend income — Some stocks have regularly increased their dividends for years. These “dividend kings” can provide you with a source of rising income, which could help you stay ahead of inflation during your retirement years. (Companies can lower or discontinue their dividends at any time.) Because of the preferential tax treatment of dividend income, these types of stocks may be beneficial in taxable (non-IRA) accounts. Bond income — Consider building a “ladder” of short-, intermediate- and long-term bonds. You can reinvest the proceeds of the maturing short- term bonds into new ones, issued at a potentially higher rate, while you continue to receive income from your long-term bonds, which typically pay more than shorter-term ones. Bond mutual funds and exchange-traded funds may also provide interest income. Sale or conversion of investment assets — Once you reach age 72, you will need to take required minimum distributions from your 401(k) and your traditional IRA. But you may need to sell investments outside these accounts as well, or at least convert some investments into income- producing vehicles. Be aware of the tax consequences. Social Security benefits — Although the rules have recently changed, a good way to maximize Social Security benefits may still be to wait as long as possible before taking benefits, especially for the higher-earning spouse. You can start receiving benefits at age 62; however, benefits received before your “full” retirement age (currently age 66 or 67) will be permanently reduced. If you delay taking benefits past full retirement age, the amount you receive will increase every year until age 70. Annuity income — Annuities are insurance company products that may provide a predictable lifetime income. Similar to creating a “personal pension,” they come in a variety of forms and can provide a guaranteed income stream for as long as you live. Be sure you understand the objectives, risks, charges and expenses before purchasing an annuity. By taking full advantage of these sources of income, you can go a long way toward enjoying the retirement you have envisioned. So plan ahead, learn all your options and make those choices that are right for you. Enjoy a long retirement with multiple income streams

Christopher J. Estevez Sr., AWM, CFP ® Senior Vice President – Financial Advisor 328 Newman Springs Road | Red Bank, NJ 07701 Phone: (732) 576-4622 | Fax: (732) 576-4601 chris.estevez@rbc.com | www.chrisestevez.com

Investment and insurance products offered through RBC Wealth Management are not insured by the FDIC or any other federal government agency, are not deposits or other obligations of, or guaranteed by, a bank or any bank affiliate, and are subject to investment risks, including possible loss of the principal amount invested. Christopher J. Estevez, NMLS #1663158 through City National Bank, may receive compensation from RBC Wealth Management for referring customers to City National Bank. RBC Wealth Management does not provide tax or legal advice. All decisions regarding the tax or legal implications of your investments should be made in consultation with your independent tax or legal advisor. Bond investors should carefully consider risks such as interest rate, credit, repurchase and reverse repurchase transaction risks. Annuities are designed to be long-term investments and frequently involve substantial charges such as administrative fees, annual contract fees, mortality & risk expense charges and surrender charges. Early withdrawals may impact annuity cash values and death benefits. Taxes are payable upon withdrawal of funds. An additional 10 percent IRS penalty may apply to withdrawals prior to age 59-1/2. Annuities are not guaranteed by FDIC or any other governmental agency and are not deposits or other obligations of, or guaranteed or endorsed by any bank or savings association. With fixed annuities, both the money you invest and the interest paid out are guaranteed by the claims-paying ability of the insurer. Investments in variable products will fluctuate and values upon redemption may be less than the original amount invested. Investors should consider the investment objectives, risks, and charges and expenses of an annuity carefully before investing. Prospectuses containing this and other information about the annuity are available by contacting your RBC Wealth Management Financial Advisor. Please read the prospectus carefully before investing to make sure that the annuity is appropriate for your goals and risk tolerance. © 2020 RBC Wealth Management, a division of RBC Capital Markets, LLC, Member NYSE/FINRA/SIPC. All rights reserved. 20-FN-0825 (01/20)

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