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I am retired and am making withdrawals from my taxable retirement accounts. At my last meeting with my advisor they claimed I should still be putting money into investments. Aside from rebalancing accounts, it doesn’t make sense to me to be putting money in at the same time I am taking money out.
Thoughts?
At 62 years of age, working part time and my wife fully retired age 57 we are still re-investing in stocks and bonds. We will be looking to do some Roth conversions over the next few years. I could see a scenario where future withdrawals from IRA’s which are not earmarked for spending or gifting would be reinvested in taxable accounts and utilize tax efficient ETFs, municipal bonds etc.
If you’re taking RMDs and not spending all of that money, it can make sense to reinvest in a taxable account.
That’s what I do. First QCDs, then tax withholding, then gifts to children, then reinvest what’s left.
I get where you’re coming from. Once you’re retired, adding money and taking money out at the same time feels odd.
In my case, the only time I “add” to an account now is when I’m trying to keep my allocation from drifting too far after withdrawals. It’s less about growing the pot and more about keeping the risk level where I want it.
It might be worth asking your advisor what specific goal they’re trying to achieve. If they can’t explain it clearly, then the advice probably isn’t tailored to you.
That gave no reason for their suggestion, no proposed strategy?
Withdrawing funds only to reinvest the very same cash does seem like strange circular logic. Being uncharitable about it, you could argue it sounds suspiciously like churning for fee improvement — though I suspect that’s unlikely. I don’t know the US tax system well enough to say for certain, but could this be a strategy to shift money from taxable accounts into tax-free ones ahead of your RMDs? Or perhaps some other tax-advantaged manoeuvre? Either way, the reasoning isn’t obvious, and your advisor should be able to explain it clearly. If I were in your position, that’s the first question I’d be asking.