How to Manage 401k Monies When After Retirement. 401k is a growth-oriented retirement plan but lack of knowledge about managing it, especially after retirement, can lead to losses. However, managing your 401k money effectively during retirement is fairly simple.
Have a plan for your investments. Remember, you have retired from your job, not your investments.
Be as involved in your money management as you were before retirement. Asset allocation and periodic evaluation are rules you will need all your life.
Study all the options you have before you make a choice.
Choose a beneficiary and an alternative beneficiary for your money.
Hire a professional money manager to help you with your options.
Leave your money in the 401k itself if you are happy with your investment options
Rollover your money directly into an IRA which will help you avoid the 20% withholding to pay off income taxes.
You can choose to invest in annuities, which will give you a fixed payment all your life. The demerit of this option is that your payment will be fixed and won't be able to combat inflation.
The least preferable option is to liquidate your 401k. This will not only invite huge taxes but also push you into a higher tax bracket for the year. You will also be liable to pay taxes n them in successive years.
Ineffective management of your 401k may lead you to exhaust all your savings in your lifetime itself.