[USER]

My father is 77 and thinking of cashing out an IRA for a little more financial cushion given the economy.

What would you advise (given the economy and upcoming election)?

Without a political debate, just general guidance if possible please:)

Thank you

[Karl]

Economy is overall very good; stock market is in record territory, unemployment is low, real estate values are high, inflation is getting better.

Some segments are stronger than others but that is almost always the case.

What data suggests otherwise?

[Aaron]

Other than paying taxes on it, what does removing it from the IRA accomplish in creating a cushion?

And why would the state of the economy or election have anything to do with it?

[Julie]

You can sell the stocks and keep it in the IRA until you need it if he is really that concerned. If he takes it all out it’s big taxes.

[John]

You are leaving us guessing what ‘given the economy’ means. Fear of stock market crash, fear of another increase in inflation, etc?

Because the ‘economy’ on the whole is doing great for most (not for all), but that’s often true to varying degrees.

So, the only way your question makes much sense is you mean the economy and markets have been so hot that they are overdue for a correction downward.

That is something a 77 year old man with too much exposure to the stock market should be worried about (if he’s got too much stock exposure).

Me personally, if I were 77 and wasn’t wealthy, I’d want at least 50% of my money in conservative investments like bonds, t-bills, CDs, in order to be fine if the stock market tanks for several years.

[Rick]

that would not be a good idea. The economy is fine, not sure what you are worried about.

Yes, prices are high thanks to corp greed, but ironically that will help his IRA.

[Steve]

The major concern has shifted back to possible recession, so if that’s the worry then he should be able to verify he’s allocated properly, rebalance if needed, and move on.

The political concern would be if they approve some type of unrealized gains tax and go after IRAs.

The whole concept seems so bizarre and socialist it’s hard to believe it would be possible.

However, it would probably be easiest to implement against IRAs because it’s money that’s eventually getting taxed anyway, and forcing you to liquidate a few percent each year seems a lot simpler.

[Bruno]

Is he “cashing out” because the economy is good and his IRA has reached all time highs?

Why not a structured withdrawal at a set % over a period of time?

[David]

Your portfolio should be one where you don’t make any moves based on the “given economy”

[David]

It’s hard to say without more information. What are his expenses? How much cash or cash equivalents does he currently hold?

And then there are tax considerations.

There could possibly be more volatility or even an economic slowdown so it’s good to be prepared for that for a retired person.

You want to navigate so he stays invested in the market but has enough cash that he doesn’t have to sell equities in a down market.

[Jule]

Make no moves as the news likes to speculate a lot to draw attention. In the end, that’s how they generate revenue.

[Tom]

It sounds like he may be getting his news from political attack ads. It might be helpful if you help him see that inflation is now under control.

It was high a few years ago.

It might be helpful to show him that his Social Security was increased for inflation so he is getting more income to pay for the increase in prices.

If he wants to live a little bit more, then cash out the IRA, but I would not do it based on scare tactics.

The facts do not reflect a dire situation.

[Molly]

Is he thinking about cashing out a Roth IRA, or regular IRA? IF it’s regular, he’s supposed to be withdrawing a defined amount each year (RMD), or more, and paying taxes on it.

Either way, he can leave it in a regular brokerage account, after deduction for taxes, and keep it growing.

I like Tech ETFs because the world is still expanding their Tech usage.

He could also put it in various other options, if he’s invested thru the regular investment companies like Schwab, Fidelity, etc.

like money market accounts and CDs.

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[Author]

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