Join Early Retirement Today
Thread Tools Search this Thread Display Modes
Monthly or Annually
Old 11-04-2011, 09:05 AM   #1
Full time employment: Posting here.
Join Date: Mar 2010
Location: Chicago
Posts: 823
Monthly or Annually

I withdrawal from my retirement accounts monthly. Is there an advantage to withdrawing annually into a savings account and then drawing 1/12th each month into a checking account. It would seem to me to be more beneficial to do it monthly because the rest of the money has more time to build. Any thoughts?

ripper1 is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 11-04-2011, 09:40 AM   #2
Recycles dryer sheets
l2ridehd's Avatar
Join Date: Sep 2011
Location: PWC VA
Posts: 126
The problem with monthly withdrawal is having to sell on a schedule. Works OK when market is rising, but remember 2008. Would you want to be selling every month to fund your spending back then? I take 2 years of expenses, put 1 year in a CD and 1 year in savings. At the end of one year I draw another year. This way I have a 24 month window to pick when to sell. Allows me to ride out a down market.

l2ridehd is offline   Reply With Quote
Old 11-04-2011, 09:43 AM   #3
Dryer sheet aficionado
RHLnFLA's Avatar
Join Date: Mar 2007
Posts: 35
In October I do a confirming projected cash flow for November and December as well as a preliminary expected tax burden for the year. I then adjust my retirement distributions accordingly. With the annual disbursement you give up the flexibility to adjust if the need arises.
RHLnFLA is offline   Reply With Quote
Old 11-04-2011, 10:20 AM   #4
Recycles dryer sheets
Join Date: Nov 2003
Location: Charlotte
Posts: 360
We withdraw from IRA money market monthly. We route all dividends in IRA to this money market and review quarterly if we need to add to money market via liquidation.
WilliamG is offline   Reply With Quote
Old 11-04-2011, 11:11 AM   #5
Thinks s/he gets paid by the post
Join Date: Jul 2005
Posts: 3,801
Again, back to 2008, IRA RMD's are based on the previous year's end of year value. So you probably want to have the RMD amount in something stable before the start of the new year, cash, short-term bonds, stable value fund.

If you're just selling off short-term stable assets, no problem withdrawing monthly.

If you're selling equities, you will on average do better waiting as long as possible (since the market rises on average). And you should be withdrawing enough times to make that average out to your favor. Just beware of commisions if you intend to make lots of small sales instead of one big one.

I'm nominally 100% equities, but I raise cash when my portfolio is ahead of projections and reinvest cash in bear markets. I have had a couple of times in the past where I have sold equity MF shares monthly (at zero cost) to meet expenses. That's probably how I'll continue once my current cash runs out, until RMD's hit or the economy looks to be heading one way or the other. I have to say that with the current economy I'm happy to play it safe and have excess cash on hand to either spend or reinvest.
Animorph is offline   Reply With Quote
Old 11-04-2011, 11:23 AM   #6
Alan's Avatar
Join Date: Jul 2005
Location: Eee Bah Gum
Posts: 18,882
I'm only 2 years into ER and haven't had to sell equities so far. Quarterly dividends have made up ~70% of withdrawal needs, with top ups from cash (maturing CD's so far, and for 2012).

Once I start selling equities I'm not sure what the best strategy will be for us. I only have a limited number of mutual funds and won't have access to IRA's for 3 years yet, and have enough in cash & short term bond funds to easily carry us through to them.
Retired in Jan, 2010 at 55
Now it's adventure before dementia
Alan is online now   Reply With Quote
Old 11-04-2011, 11:37 AM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Ed_The_Gypsy's Avatar
Join Date: Dec 2004
Location: the City of Subdued Excitement
Posts: 5,247
You are asking me?

I figure to take it once a year and husband the distribution over 12 months, but sh*t, I might want to buy that Viper...or a heart transplant.

Man plans, God laughs.
my bumpersticker:
"I am not in a hurry.
I am retired.
And I don't care how big your truck is."
Ed_The_Gypsy is offline   Reply With Quote
Old 11-04-2011, 01:03 PM   #8
gone traveling
Join Date: Apr 2009
Location: Eastern PA
Posts: 3,855
No pension, pre-SS, and currently withdraw monthly from a taxed deferred (e.g. IRA) MM account which receives almost no income; in fact, if I withdrew from a taxable or deferred, the short-term yield would be the same.

The only reason I do this is simply that I was paid (along with paying taxes - from my paycheck) monthly, before retirement.

I could withdraw on any cycle (daily, weekly, monthly, annually, whatever) but it would really make no difference IMHO. However, bening that I'm anal in nature as related to budget/taxes, these do change over a period of time, without my input for change.

Utility costs (I'm on a budget plan) change several times per year (up/down). RE taxes change (usually increase) various times a year, depending on the tax. Other budget items may change (such as increased costs for an elderly dog - as an example) over a period of time.

That means that the monthly budget changes over the year, and the amount withdrawn (along with taxes due) also change over time (did I mention I'm anal on budgets ). I withdraw only what I need to cover expenses for the next month.

Additonally, since DW is yet to retire, our tax situation is not the same year to year. During Jan through Nov, I also pay FIT on my withdrawls. In late November, I'll receive my current year's initial release of Turbo Tax and plug in the numbers to do a "guesstimate" of FIT due, with the taxes already paid by DW/me during the year. For the last four years of retirement, I have skipped having FIT tax taken from my December withdrawl since we have already paid enough taxes (along with DW's anticipated FIT for December yet to be paid) to ensure a $0 FIT refund/due.

BTW, I only pay FIT. No local/state income taxes are due on retirement withdrawls (if you fit the requirements) in my state.

That's what I do (since you asked) ...

As far as selling anything from my portfolio (be it equity or bonds)? It does not enter into consideration since DW (in anticipation for her retirement)/me have more than a few years in MM funds.

We sell and add to our cash reserve whenever an "up period" occurs - be it from GNMA funds last year, or from equity funds earlier this year. We never sell equity/bonds just to provide current income. While we may lose a bit on yield on holding the cash in short-term MM accounts, it makes us (financially conserative) much more able to absorb the bumps in the market...
rescueme is offline   Reply With Quote
Old 11-04-2011, 01:21 PM   #9
Thinks s/he gets paid by the post
GregLee's Avatar
Join Date: Oct 2010
Location: Waimanalo, HI
Posts: 1,881
Originally Posted by ripper1 View Post
It would seem to me to be more beneficial to do it monthly because the rest of the money has more time to build.
That makes sense to me.
Greg (retired in 2010 at age 68, state pension)
GregLee is offline   Reply With Quote
Old 11-04-2011, 04:20 PM   #10
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Moemg's Avatar
Join Date: Jan 2007
Location: Sarasota,fl.
Posts: 9,471
I look at my investments and transfer the money to a Money Market account on Jan.1 unless I still have enough in the account . I then transfer a small amount monthly to my checking account to supplement my pension and SS amounts . The rest is basically for big ticket items during the year . Anything left over is transferred to the next year's budget .
Moemg is offline   Reply With Quote
Old 11-07-2011, 06:58 AM   #11
Recycles dryer sheets
Join Date: Dec 2010
Location: Tequesta
Posts: 279
Why wouldn't it work the same as dollar cost averaging investing, only backwards? If you try to time your withdrawals, it seems it would be like trying to time your investments; very difficult. If you invested regularly because of the theory of dollar cost averaging, why wouldn't withdrawals work the same way?


My, as you call them "DW" is retired and I'm going to hopefully work part time next year. Whatever I make will be primarily saved so we can experiment with living off the retirement assets. We have about a year, or a little more, of expenses in liquid investments. We have some assets that generate monthly and quarterly income. We plan to live off the monthly and quarterly income and not touch savings. The quarterly income runs out in a little over 7 years, but the untouched retirement accounts and savings should continue to grow at about 5% per year. As we learn what we really need, the liquid assets can be adjusted up or down, but I do intend to keep a year's worth of living expenses in liquid assets. That number will be adjusted from time to time.
67walkon is offline   Reply With Quote
Old 11-07-2011, 10:38 AM   #12
Thinks s/he gets paid by the post
walkinwood's Avatar
Join Date: Jul 2006
Location: Denver
Posts: 2,433
Originally Posted by ripper1 View Post
I withdrawal from my retirement accounts monthly. Is there an advantage to withdrawing annually into a savings account and then drawing 1/12th each month into a checking account. It would seem to me to be more beneficial to do it monthly because the rest of the money has more time to build. Any thoughts?
If you assume that stock markets rise over the long term, you'll probably be better off taking a withdrawal every month rather than once a year. On the other hand, who knows!

I withdraw monthly from a Short Term bond fund (VFSTX) (in a taxable account) and it works for me.

walkinwood is offline   Reply With Quote

Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off

Similar Threads
Thread Thread Starter Forum Replies Last Post
Monthly budget, am I a Scrooge, careful or living it up IYHO? nun FIRE and Money 23 11-02-2011 08:21 AM
How much would it cost annually to live simply in Middlesex County (Central) New Jers nico08 FIRE and Money 8 07-21-2011 09:58 AM


All times are GMT -6. The time now is 01:45 PM.
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2016, vBulletin Solutions, Inc.