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WD $ just around the corner
Old 04-17-2018, 11:18 AM   #1
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WD $ just around the corner

Having not touched savings yet and DW might be done earlier than originally planned. How are you arranging your WD $ ? Currently thinking approx 50% of yrly needs from interest and 50% approx from savings. First year, thinking 6 mths $ in MM. Next 6 mths $ CD. Continue this into the future so a yr of funds are always accessible?? TIA
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Old 04-17-2018, 11:30 AM   #2
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Are you referring to RMD $?
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Old 04-17-2018, 11:35 AM   #3
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"WD" = withdrawal?
I plan to take x% (about 3.5%) of our year-end balance of our total portfolio each year to support that year's spending. Whether the money in the portfolio came from interest earned, original contributions, dividends, cap gains--it doesn't matter (for this purpose). The annual withdrawal will probably go into a "high-interest" (ha!) savings account or MM account (might need a chunk or two during the year for a big purchase, so no CD). Monthly transfers to the daily use checking account.
At least that's the plan.
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Old 04-17-2018, 11:42 AM   #4
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I'm confused as to what you mean, also.

If you are asking about how we withdraw money to live on in retirement, here's how I do it.

My dividends and capital gains are sent to a money market account at Vanguard.

During the first week in January, I withdraw my spending money for the entire year. For me it has to be less than 3.5%, but usually I don't need that much for normal daily living, and withdraw less than my dividends the year before. I move the money that I am withdrawing, from the money market account to my checking account in a local bricks and mortar bank. Then I don't take any more out of my portfolio until the next January.

After withdrawing each January, I rebalance my portfolio.

I also have SS and a mini-pension to rely on during the year, as well as the money I withdraw.

Since interest rates are so low, I don't bother trying to figure out where to keep this year's money. It is convenient earning about nothing in Vanguard's MM or in my local bank. I just spend it as needed.
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Old 04-17-2018, 01:51 PM   #5
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Thank you. Yes withdraw money for that yr of retirement. I've been way over thinking it trying to get the most out of returns.
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Old 04-17-2018, 01:56 PM   #6
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We withdraw as needed throughout the year (just making sure we aren't overdoing it).
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Old 04-17-2018, 02:07 PM   #7
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Withdraw the annual amount needed. And, put all but what is needed for the current quarter into a high yield savings account. Most high yield accounts yield more than what you could earn with 6-month or 9-month CDs. Not a lot more, but more, and no hassle with re-depositing the expiring CD before they renew.

Transfer what you need from the High Yield account to your checking for monthly/quarterly needs.

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Old 04-17-2018, 02:12 PM   #8
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I shared these links on another post - I'm getting ready to need this information, and these gave me more food for thought:



Our Retirement Investment Drawdown Strategy - The Retirement Manifesto


The Retirement Manifesto Money Map - The Retirement Manifesto


How to Build A Retirement Paycheck From Your Investments - The Retirement Manifesto
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Old 04-17-2018, 02:19 PM   #9
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Quote:
Originally Posted by W2R View Post
My dividends and capital gains are sent to a money market account at Vanguard.

During the first week in January, I withdraw my spending money for the entire year. For me it has to be less than 3.5%, but usually I don't need that much for normal daily living, and withdraw less than my dividends the year before. I move the money that I am withdrawing, from the money market account to my checking account in a local bricks and mortar bank. Then I don't take any more out of my portfolio until the next January.

After withdrawing each January, I rebalance my portfolio.
+1 This is pretty much what we do except I might do it in 2 or 3 steps throughout the year. For some irrational reason it just 'feels' better.

A negligible amount also earns a few bucks in the MM (actually short bond) until October or so; mostly because I don't want to pay tax on an IRA W/D if I don't need the money.
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Old 04-18-2018, 04:21 PM   #10
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I will withdraw what I need as time goes by. I do not plan to every decrease my estate though. My withdrawal rate will allow my total Net Worth to continue to grow.
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Old 04-19-2018, 07:17 AM   #11
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We currently have about 5 years of our expected withdrawals in cash so that we are not forced to sell equities. It might seem a bit excessive to some, but it is what lets us sleep at night.

We planned to use dividends/capital gains from our taxable accounts for any adjustments. I have a pension but it is non-COLA, so we planned to use dividends and capital gains as a "COLA" to supplement it. However, I am now seeing that I better draw down my Megacorp 401K to avoid high RMDs should I make it to 70.5. So now I am analyzing drawing down the 401K to provide the "COLA" aspect of my pension, and continuing to reinvest our taxable accounts dividends and capital gains.
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Old 04-19-2018, 07:39 AM   #12
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We live on an (immediate) annuity, SS, a small Swiss pension, and dividends from an after tax stock portfolio. The latter comprises 40% of our income. We devise an annual budget and set it in stone, pretty much, by mid-December for the following year (and then track it monthly throughout the year against expenditures in a spreadsheet). The bulk of our income is in US dollars and we move funds from the US to Switzerland quarterly, so that we average out exchange rate variability over four points in the year. That said, I know more than I ever want to know about the CHF/$ currency pair.

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Old 04-19-2018, 08:11 AM   #13
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Since I am starting RMDs next year, my current plan is to keep 2 yrs of RMDs in FZDXX and replenish that with int/div/cg or maturing $s from my CD/bond ladder, so as to avoid liquidating any equity/bond shares for as long as possible. I am also drawing SS. Plus DW's small pension starts next year and SS the year after that. My challenge is 90% of my investments are before tax, so the IRS boogie man will be reaching into my pocketbook in the future.
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Old 04-19-2018, 12:56 PM   #14
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We live on earnings, SS and pensions. We take RMD near the end of the year and reinvest it so that it will continue to generate earnings.
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Old 04-19-2018, 01:05 PM   #15
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Over the first few years we evolved to this process.

During the year we live off my small pension and automatic monthly transfers from the online savings account (my monthly "payheck").

Our AA target is 60/35/5. Taxable accounts are all the 5 in cash in an 1.5% online savings account and the rest domestic and international equities (no bonds) and dividends go into the online savings account.. Tax-deferred holds all bonds and some equities and all income reinvested. Roths are all equities and all income reinvested.

I rebalance opportunisicallyduring the year and near year end... first sell taxable stocks to relenish the cash to 5%... then buy or sell within tax-deferred as needed to rebalance.

It is very simple and works well for us.
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Old 04-19-2018, 03:41 PM   #16
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RE end of 2015, so we are early in our third year, with 8 years to go before RMD's. About 1/3 of our funds are in after tax accounts. We haven't perfected an "auto pilot" plan yet but we are getting there. The past two years I manually took Int/div/cap gains from the after tax account, supplemented with IRA disbursements, and then filled up the tax bracket with Roth Conversions. Starting this year, we will take a monthly paycheck by automatically selling portions of an after tax bond fund (with very low unrealized cap gains) and having that sent to our checking account. That, combined with the year end cap gains from last year will cover most, if not all, of our needs. Any extra will come out of available cash.

To keep the AA in order, we are buying CD's in the IRA with those distributions, instead of re-investing.

This will leave more room for Roth conversions, before we start SS at FRA. Plan is to convert all of DW's smaller IRA, and then work in mine. We will not avoid the tax torpedo, but may lessen it a bit. We could change our mind on SS, and wait til 70, but I doubt it. At FRA, with SS, our WR will be 1-1.5% of today's assets. If the SHTF in the market, we could start earlier.

Like any plan, it is all subject to change.

YMMV
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Old 04-20-2018, 03:59 PM   #17
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This is my second year of RE. I take dividends and cap gains in cash. As needed, I also hold back on reinvesting matured bond principle. So far have not needed to sell any equities, but I do rebalance in a tax sheltered account as I use bond money in the taxable one. Toward the end of the year, I build up a year's cash in a MM fund.
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