Special supplement to The Anoka County Shopper & Blaine / Spring Lake Park Life Senior Lifestyles
August 2025 | Page 7
Tips to grow wealth after retirement
The need to build wealth even after retiring reflects a trend that has seen people spend more time in retirement over the last half century than in the decades prior. According to the Organization for Economic Co-operation and Development, men could expect to spend just under 13 years in retirement and women 16.6 years in retirement in 1970. By 2020, the expected retirement length had reached 18.6 years for men and 21.3 years for women. That means modern professionals will spend a half decade more in retirement than people did in 1970. Those extra five years require more money for living expenses, which is why it can be so important for modern professionals to consider various ways to grow their wealth even after they call it a career.
• Avoid early withdrawals. Withdrawals from a 401( k) are taxed like regular income because such accounts are built up with pre-tax contributions. But there are
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ways to minimize your tax burden, and thus save money, when withdrawing from a 401( k). Avoiding early withdrawals, which are those taken before age 591 ⁄ 2, is one easy way to avoid a higher tax burden. Early withdrawals can trigger a 10 percent tax on top of the income taxes account holders will have to pay. By avoiding early withdrawals, retirees are building wealth by lowering their tax burden.
• Take the required minimum distribution when you must. Another way to avoid a tax burden that can diminish your wealth in retirement is to take your required minimum distribution( RMD) when you need to. The Internal Revenue Services reports that account owners who fail to withdraw the full amount of the RMD by the due date are subject to a 25 percent excise tax on the amount not withdrawn( the tax burden is 10 percent if timely corrected within two years). The IRS notes account owners must take their
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first RMD for the year in which they turn 73.
• Explore new ways to invest. The increase in expected retirement length underscores the fact that many retirees may need to abandon conventional wisdom related to retirement and risk. Though it’ s still best for retirees to avoid particularly risky investments, they might need to accept a degree of risk that retirees did not have to take on decades ago. Simply put, longer retirements may require longer engagements with risk. Retirees can work with a financial advisor and conduct their own research to identify vehicles to grow their wealth without making themselves and their nest eggs highly vulnerable to market fluctuations. With expected retirement lengths on the rise, retirees are encouraged to find ways to grow their nest eggs so they can enjoy retirement to the fullest.
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