Originally Posted by hogwild
Nice job. How are you planning to handle the RMDs at age 70?
Ain't got that far yet. But I think the basic idea is to live mainly off IRA money in
between turning 59 (or even before under Rule 72) and starting SS and CREF payouts.
Thus limiting "other income" once SS starts and reducing taxability of SS.
As far as how the chart works ... well, horizontal axis is time, and vertical axis
is annual income. So, for example, since the "annuitization of TIAA" block runs
all the way across horizontally, it means I'll start that now (i.e. 54yo) and continue
it indefinitely, and it'll provide $3K/yr of income (today's dollars, grown to match
inflation of course). The block labeled "$235,000 of portfolio self-annuitized" means
I'll start taking $25K annually from that, and time the annuitization for 10yrs,
so that chunks runs out at age 64; at that point I'll begin SS and the CREF payout,
and shown by the blocks that run from 64yo til 95yo.
Here is the latest version (I can't seem to get it to include the expanded drawing, so
you'll have to click on the plan_payout.png link at the bottom), which I think shows
the utility of this graph approach a little more. The dotted lines in the uppermost
block indicate the fact that the decision about taking my CREF as an annuity can
be deferred until 64yo. If I choose to annuitize, then the dotted lines are drawn in
and I have a $515K portfolio withdrawn at 3.75%, a $103K self-annuity to makeup
CREF until I'm 64yo, and the CREF annuity from 64yo onwards; if I choose not to
annuitize (and take the CREF as a lump-sum), then the dotted lines go away and
I view it as a single $750K portfolio withdrawn at 4%. (This makes it seem that
the CREF annuitization is the way to go, since it requires only a 3.75% WR from the
bulk of my porfolio and the portion that's not guaranteed to last as long as I do).
Either way, regardless of which way I view that block (as a single one, or broken
up by drawing in the dotted lines), for now I withdraw $30K/yr from that chunk