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Re: IRA RMD render SWR moot?
Old 07-07-2006, 01:55 PM   #21
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Re: IRA RMD render SWR moot?

Quote:
Originally Posted by SteveR

According to annual 6% return projection....we would have a RMD income of over $300K/year at age 85.* That will buy a lot of Depends and Viagra.* *
SteveR:

I think I recall from another one of your posts that you are in your mid-fifties.* That would make 85 about 30 years away from now.* For my retirement budget, which just began last Friday, June 30, I project I will need a little over $300K annually in 30 years to lead a decent retirement lifestyle.* I assumed 4%inflation.* $300K sounds like a lot today, but 30 years from now it's what a retired couple will need to live a decent retirement lifestyle........... :P*

Don't ya feel for folks who don't account for inflation in their planning? If they live very long, they're in for a big surprise!
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Re: IRA RMD render SWR moot?
Old 07-07-2006, 02:11 PM   #22
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Re: IRA RMD render SWR moot?

Quote:
potential income from RMDs for these will put me in the 33% bracket in my early 70s and into the top bracket 10 years later
as "youbet" suggests, did you "inflate" the tax brackets?
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Re: IRA RMD render SWR moot?
Old 07-07-2006, 02:46 PM   #23
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Re: IRA RMD render SWR moot?

Right now I'm not too worrried about the RMD and being in the 33%+ tax bracket. Don't forget that the exemptions and standard deduction are indexed to CPI or something like that. By the time I need to withdraw $300K RMD, exemptions will be worth $100K each and the standard deduction will have grown to $1.5Million.
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Re: IRA RMD render SWR moot?
Old 07-07-2006, 03:01 PM   #24
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Re: IRA RMD render SWR moot?

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Originally Posted by d
as "youbet" suggests, did you "inflate" the tax brackets?
I just assumed that with universal healthcare, universal welfare, and universal elder daycare, we will have by then we will be paying taxes of at least 60% so inflating todays tax brackets will not be a useful exercise. The whole tax structure will have to change to pay for all the new stuff over the next 30 years. Anybody remember the Great Society programs and the taxes from that? I see another wave of that coming in the not so distant future.

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Re: IRA RMD render SWR moot?
Old 07-07-2006, 08:08 PM   #25
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Re: IRA RMD render SWR moot?

You could buy some houses and have the depreciation lower your tax basis.

Its interesting that since the goverment already has a killer debt problem how they can even think of all these new programs.
Most people keep saying the dollar will have to be deflated inorder for us to keep paying on the debt.
I think its scary trying to think of what things will cost or what taxes will be. Although maybe the next einstein has already been born that will solve out energy crisis and usher in a new golden age ?
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Re: IRA RMD render SWR moot?
Old 07-07-2006, 09:51 PM   #26
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Re: IRA RMD render SWR moot?

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Originally Posted by hogwild
Bosco, that's what it is pointing to for me as well. I have the option to take my pension over a 10 year period and that looks to be the best option of the scenarios I've looked at that take RMD into account.
Another thing to consider is that it would allow you to leave your investments alone, or draw from them less while you tapped the pension. You avoid the pitfall of nuking your portfolio early on in the event of a bear market right after you retire.

As for Roth conversions, don't know. Am retiring in Canada and they don't recognize Roths.

I don't care what SWR I use as long as it doesn't exceed the "safe area" of 3-4%. I disagree with the idea that you decide on an SWR, and then consider your tax burden an "expense." I think you look at your cash flow = take-home income, and then see what gross income you need to attain it. Then check on what SWR that requires, and if it is a reasonable and safe level.

What matters is the money you have to use, not some abstract percentage. IMHO
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Re: IRA RMD render SWR moot?
Old 07-08-2006, 08:28 AM   #27
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Re: IRA RMD render SWR moot?

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Originally Posted by donheff
you could easily be withdrawing more than 4% of the then current portfolio
Just to add my 2-cents on this statement.* According to our retirement plan (thru Fidelity) we (DW/me) will be withdrawing anywhere from 6-12% of our combined portfolio at ages 59-66.* When we start SS at 66 (we're both the same age), our withdrawl rate drops to 3% and does not exceed 4% till age 80.* 86 is the age that we exceed 6% and by age 94 we are at 30%.

Assuming we're "not in the ground" by our mid-90's* it seems our plan has periods when the "4% rule" will be "violated" with no significant impact.

- Ron
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Re: IRA RMD render SWR moot?
Old 07-08-2006, 02:42 PM   #28
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Re: IRA RMD render SWR moot?

Quote:
Originally Posted by Ron'Da
86 is the age that we exceed 6% and by age 94 we are at 30%.

Assuming we're "not in the ground" by our mid-90's it seems our plan has periods when the "4% rule" will be "violated" with no significant impact.

- Ron
Ron,
Fast forward a few years. You and your bride have both made it to 96 years old. Let's say your portfolio has 8 times the amount of annual spending you need to spend to be comfortable. Would you really sell off 1/3 of your pot for use the next year? As a wag, I think I'd be comfortable spending 20%, but probably not much more. I'd hate to win out over the mortality tables just to find myself without enough money for denture paste.

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Re: IRA RMD render SWR moot?
Old 07-08-2006, 03:39 PM   #29
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Re: IRA RMD render SWR moot?

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Originally Posted by samclem
Ron,
Would you really sell off 1/3 of your pot for use the next year?*
In answer to your question, we have resources beyond our investments exclusively for retirement.* For example, our home is paid for (current value - $300K+).* This could be tapped for a reverse mortgage.* In addition, we have "non-retirement" investments that currently can give us more than a few years of income, if need be.

The forecast longetivity dates for DW/me (94/92) in the plan are set to a 25% rate (in other words, 75% of the folks of the same age will be "in the ground").* *There is quite a good chance we will be with them* : !

Like others have said on this board, "you adjust your lifestyle to your income".* Since our plan is set at 100% of current net income (adjusted for inflation) during our retirement, we do have an "opportunity to spend less" if needed.

One last point.* Since our residual estate is going to charity (no surviving family members), I'm hoping to make sure that some lawyer is able to get our residual (rather than our named charity).* There is no reason to plan for a legacy for a future generation.

A little long-winded in the response, but it needed to be to be able to explain "our situation"...

- Ron
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