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Retirement income stream
Old 04-29-2014, 10:00 PM   #1
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Retirement income stream

I'm sure this topic has been covered before, but suffer me revisiting in our current low interest rate environment.

We're aiming for retirement at the end of this year, and I've started building up one year's living expenses in a savings account. The plan is to retire then move a set amount with automatic transfers from this savings account into our checking account, probably twice a month almost like a paycheck. At end of year when is drained, repeat process while rebalancing investment portfolio, pulling out another year's worth of living expenses to restock the savings account.

What I'm wondering is if this what others commonly do? Maybe fill the account twice annually or even quarterly?

Any wisdom is appreciated, and as always thanks in advance for kind advice.
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Old 04-29-2014, 10:32 PM   #2
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I have a bond fund with a huge chunk of money in it which generates enough monthly dividends to cover my expenses. I have an automatic transfer from the brokerage account to my local bank's checking account. Tomorrow (April 30th) is the last business day of the month, my favorite day, when the monthly dividend is announced. Two business days later, the money magically appears in my local bank's checking acount so I begin drawing on it. I always leave a buffer, or cushion, in the checking account in case some small, unforeseen expenses arise.
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Old 04-29-2014, 10:33 PM   #3
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I do just about what you describe except my AA targets about 2 years worth of expenses and my auto transfer from investment cash to my checking account occurs only once a month.

My taxable account dividends also go directly to checking.
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Old 04-29-2014, 11:50 PM   #4
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We have been taking a monthly distribution from the IRA. Basically figuring out the amount for the year and dividing it by 12. The money for the distributions is usually in either a short term bond fund or a money market fund. This year we are actually spending down taxable money so we aren't taking any distributions. The taxable money had been in some index funds which we sold at the beginning of the year and we've been holding in a money market at Vanguard. We've been taking it on a monthly basis. There may be one or two times during the year that we will take one a little early as there are a couple of months that have non-typical expenses.
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Old 04-30-2014, 01:00 AM   #5
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This was a good thread on something close to what you're asking.

Systematic Withdrawals: a year at a time or monthly?
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Old 04-30-2014, 01:14 PM   #6
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This was a good thread on something close to what you're asking.

Systematic Withdrawals: a year at a time or monthly?
Awesome thanks! I had searched but seemed most of what i found was the hows of taking from taxable vs. deferred and the ensuing quaisi-wash-sale tap dance.
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Old 04-30-2014, 01:27 PM   #7
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From that other thread it seems a lot of people do the replenish their annual fund in January. I was leaning towards December because I suspect I'll be taking occasional contracting gigs and during the year and at end would have a better idea of how much (if any) I need to sell to fill the annual spending pile for the following year.
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Old 04-30-2014, 01:42 PM   #8
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My taxable account dividends also go directly to checking.
+1. This is another key for many to simplifying withdrawals for replenishing retirement income accounts. Makes it much easier...
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Old 04-30-2014, 02:34 PM   #9
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I do just about what you describe except my AA targets about 2 years worth of expenses and my auto transfer from investment cash to my checking account occurs only once a month.

My taxable account dividends also go directly to checking.
My plan exactly.
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Old 04-30-2014, 03:04 PM   #10
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Originally Posted by scrabbler1 View Post
I have a bond fund with a huge chunk of money in it which generates enough monthly dividends to cover my expenses. I have an automatic transfer from the brokerage account to my local bank's checking account. Tomorrow (April 30th) is the last business day of the month, my favorite day, when the monthly dividend is announced. Two business days later, the money magically appears in my local bank's checking acount so I begin drawing on it. I always leave a buffer, or cushion, in the checking account in case some small, unforeseen expenses arise.

Sounds good. Is it in an IRA now? How do you get around the penalty being under 59 1/2? 72t?
Thanks
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Old 04-30-2014, 03:47 PM   #11
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All accounts in taxable sweep to MM fund. We put most expenses on credit card and DD so by the end of the month, I pretty much know what the next month of cash requirement is. So then I wipe out the sweep account and if we need any more, I sell something.
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Old 04-30-2014, 03:52 PM   #12
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Been ERd about 12 years and our income streams (SS, DB etc) are enough to pay the monthly bills so far so we have not had to dip into our investments yet.

That will soon change. RMd is creeping up and I will have to begin extracting money form IRA in 2015. I will probably take 2015 RMD in December and begin monthly RMD distribution in January 2016. My general plan is to exchange IRA TSM funds to our taxable joint TSM account. Since we receive quarterly divs from our taxable account now, this will just increase dividend distributions each quarter.

It's a kind of a plan...
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Old 04-30-2014, 03:55 PM   #13
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Sounds good. Is it in an IRA now? How do you get around the penalty being under 59 1/2? 72t?
Thanks
It is not an IRA. It is a bond fund in my taxable account. I have an IRA but I do not need to tap into it unti I turn 59 1/2, or later.
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Retired in late 2008 at age 45. Cashed in company stock, bought a lot of shares in a big bond fund and am living nicely off its dividends. IRA, SS, and a pension await me at age 60 and later. No kids, no debts.

"I want my money working for me instead of me working for my money!"
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Old 04-30-2014, 08:56 PM   #14
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Not yet FIRE, but when I run the numbers in my calculations, I come out 'ahead' by a small but not insignificant amount by planning to do automatic monthly draw downs from the different assets I have at different times, instead of annual or multiple yrs worth.

Just a different approach.
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Old 04-30-2014, 10:07 PM   #15
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tuixiu - I've been withdrawing from my portfolio for just 3 years now and am planning to do the same thing that you said, with the exception that I'll keep between 1 and 2 years living expenses in savings. I have dividends from the fund in my taxable account paid directly into savings. The dividends cover almost half of my living expenses, so with the combination of dividends and money already in the savings account, I could go for up to 3 years, depending on how much is in savings. I don't yet have a plan for when I am going to sell equities or funds to top up the savings account. I may just do it as and when the need arises - not sure if there is a compelling argument for doing it at the same time every year.
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Old 05-01-2014, 11:45 AM   #16
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I will be retiring in the next year. Since I am a dividend growth investor, I know what my quarterly dividends will be. Since the dividend totals vary month to month, I keep at least 12 months expenses in my money market account at my IRA. I will transfer equal amounts to my checking account twice a month. Meanwhile the dividends will keep the money market account funded. Hopefully this will require a minimum of adjusting as long as I can live on my dividends. Also they should be increasing every year.
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