I’m 67 years old and have $917,000 in my 401(k) — what should I do with that money when I retire?

Retirement and Social Security

One of the first big decisions to make is when you plan to retire. This can have an impact on the peak size of your nest egg. At the same time, deciding when to start taking Social Security checks also impacts your retirement income.

If you’re 67 right now, you’re already past full retirement age in the eyes of the Social Security Administration and are eligible for full retirement benefits (and more). By delaying benefits, you're able to earn an increased amount of around 8% per year up until age 70.

But waiting for the maximum benefit would mean about three more years before you receive any checks. If you decide to retire now, you would need to rely more heavily on your savings during that time. On the other hand, choosing to work until you're 70 can provide you with steady income while potentially growing your retirement savings even further.

The decision, in the end, should come down to what works best for you. If you're ready to retire now, your savings and Social Security may provide you with a decent life. And if you're able and willing to keep working, you can delay retirement for a bit of an income boost. Either way, to get the most out of your retirement dollars, you may want to consider the services of a financial adviser to help decide what's right for you.

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Safe withdrawal rate

Once you've decided when to retire, an important next step is to determine a safe withdrawal rate of your retirement savings.

A nest egg of $917,000 is a good amount of money, however, you need to make it last. You need to take out enough to live while allowing the rest to keep earning returns. The 4% rule is a common technique — essentially, it involves taking out 4% of your account balance when you first retire, then adjusting up annually with inflation. The idea behind this concept was that it would allow your savings to last for 30 years or more.

With savings of that size, 4% would be a little over $36,600. The average monthly Social Security benefit for retired workers, as of November, was $1,925.46, over $23,000 annually.

You can decide on a different withdrawal rate that works better for you, but you should have some plan to ensure your money lasts. Add this to any further retirement income, and you might live well for a long time.

Be strategic

On top of everything above, you also need to make sure you're taking money out of appropriate accounts at the right times.

Once you turn 73, you're going to have to start taking required minimum distributions (RMDs) from your 401(k) account. This means you will have to take money out based on the IRS RMD tables whether you want to or not. Sometimes, this can push you into a higher tax bracket and can also make part of your Social Security benefits taxable.

Now, with this profile, you probably won't need to withdraw more than you already would have. However, if you're concerned, once again it may be prudent to consult a financial adviser to help you plan out your retirement.