The New Retirement Savings Time Bomb summary

Let’s say you’ve been working at the same company for two decades. A lumberyard, for example, or a law firm; the actual job doesn’t matter. What does matter is that you’ve been regularly depositing money into a company retirement plan the whole time. By now, you’ve got a hefty sum saved up.

When you leave the company, whether you’re retiring, getting fired, or just taking a new job elsewhere, you’ve got to decide how to handle that nest egg you’ve accumulated over the years. What should you do? 

Meet Robert. Robert just ended a long career as a high school math teacher. Now, at the ripe old age of 72, he’s going to retire. Congratulations, Robert, you’ll never have to work your way through a knotty set of complex equations ever again.

If only that were true! Now that Robert is retired, he won’t be receiving a salary. Instead, he’s going to pay his living expenses by making regular withdrawals from his IRA savings account. And, unfortunately, the laws passed by congress make this process a bit confusing.

There’s one unpleasant fact that everyone has to face: Sooner or later, we’re all going to shuffle off this mortal coil. When your time inevitably comes, you won’t be able to bring anything with you, so it’s important to decide what happens to your estate when you're gone.

With physical objects, passing on your inheritance is easy. Simply state in your will who gets what. Maybe your house stays with your spouse, your car goes to your daughter, and your priceless antiques go to your art-collecting lifelong friend. But what about your IRA?

Imagine you’ve retired. Finally free from the drudgery of work, you spend each day doing exactly as you please. You sleep in each morning, go golfing in the afternoon, and have drinks with your pals in the evening. Your leisurely life is funded by your IRA distributions, and overall, it’s pretty great. 

Still, it could be even better. Imagine you’re receiving your regular IRA distributions but with fewer strings attached. Imagine having no required minimum distributions, and more importantly, imagine paying no income tax on your withdrawals.

Bill Buckner was one of the best baseball players of all time. He competed in an astounding 22 major league seasons, more than nearly any other player. That’s not all. Over his illustrious career, he had more hits than champs like Mickey Mantle, Reggie Jackson, and Joe DiMaggio.

But in 1986, he made a blunder. In game six of the World Series, he fumbled an easy catch, letting the ball roll between his legs. The error cost his team the game and eventually the title. Just like that, his illustrious career was forgotten. Most people only remember him for this one mistake.

Dan Duncan chose a good year to die, or at least, his ultimate end came at an opportune time for his heirs.

You see, Duncan was a very successful Texas oilman. At the time of his death in 2010, he was worth somewhere close to $10 billion. Back then, Congress had just eliminated the estate tax, letting Duncan’s lucky children inherit his fortune in full. Now, however, the estate tax is back. If Duncan died today, his children would need to fork over about $4 billion to the US government.

In the previous blinks, we’ve outlined five points essential to securing an ideal retirement and protecting the future of your savings. You should keep an eye on IRA distribution requirements, designate your heirs, look into Roth IRAs, buy life insurance, and learn the basics of estate planning.

In a perfect world, you’d be able to successfully follow each of these suggestions to a T. Though in a truly perfect world, you’d also win the lottery and never have to worry about money at all.