Today, we explain how distribution rates and contribution rates differ.
Think of it this way:
Distribution Rate: Money Out
Distribution rates show how much money you’re withdrawing from your accounts during retirement. So, if you have $350,000 of retirement savings, and withdraw $14,000 during 2019, your distribution rate is 4%. For retirees, we recommend an annual distribution rate of 4% or less.
Contribution Rate: Money In
While working, you contribute money toward retirement. Contribution rates represent the percentage of income that you put toward retirement. So, if you earn $75,000 annually, and save $7,500 for retirement, your contribution rate is 10%. For those working/saving for retirement, we recommend saving 15% of your gross income towards retirement.
Call today and we’ll help you calculate and evaluate your rates.
Until next week!
This information is provided for general information purposes only and is not intended to provide specific investment advice. The information in the articles should not be relied on for tax reporting, accounting, or valuation purposes. Past performance is not a guarantee of future performance. It is not possible to invest directly in an index.
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