[Nords]

Welcome to the board, BestWife.

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Originally Posted by Bestwifeever Do typical retirement funds (not funds for saving for retirement, but for using in retirement) generate dividends that are sent to you periodically?

Yes, you could buy into a mutual fund (or ETF or individual stocks or bonds) producing dividends that are distributed, not reinvested. It doesn't have to be a "retirement" fund-- there are many types of "income" or "dividend" or "blend" funds.

When you're older than 59.5 you can also stop reinvesting the dividends in your tax-deferred retirement accounts and take those as distributions.

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Originally Posted by Bestwifeever Or do you have to sell holdings to generate income?

You could do that too. You could also mix the two methods... your choice.

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Originally Posted by Bestwifeever If you start out with a couple of years' worth of $ in a money market fund, how do you replenish that?

Most people sell off other fund assets to refill the money-market fund, and they typically do it by annual rebalancing. This tends to sell off the winners and let the "losers" recover but you could also liquidate a loser if you're ready to replace it with another asset-- or to remove it from your asset allocation.

We've started keeping a year's cash in a money market and a second year's cash in CDs. A CD matures and is dumped into the money market account while we look around for a good replacement CD (typically from a credit union like PenFed or NFCU). We've been moving toward a long-term CD ladder (say, five years) but we keep the individual CD amounts small enough that if we need more than what's maturing then the penalties for breaking an extra CD or two are small.

You may also want to keep more than a couple years' expenses in a money market. It's a personal choice.

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Originally Posted by Bestwifeever And in terms of taxes--are they withheld as or do you make quarterly payments?

Yeah, good luck with that. I guess some brokerages or fund companies could withold taxes but I bet it'd be awfully hard to adjust it to the correct amount every year.

You could have taxes withheld from a pension and maybe even from a regular distribution (like a 401(k) or an IRA RMD). Personally we find it more convenient to pay quarterly estimated taxes-- see IRS Pub 505 (http://www.irs.gov/pub/irs-pdf/p505.pdf) and the EFTPS website (https://www.eftps.gov/eftps/).

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Originally Posted by Bestwifeever Are taxes due only on withdrawals as we take them?

Generally yes.* There may be complaints from tax preparers (or tax-prep software) but the "annualized installment income" method of calculating the tax payments will eliminate penalties/interest. However Form 2210AI is not exactly the most stimulating exercise and some people would elect to pay the penalty rather than fill in all its blanks.

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Originally Posted by Bestwifeever Is there a book you could recommend about how to access your retirement $?

Ed Slott's IRA books, especially his Retirement Savings Time Bomb.

*I'm not going to get into the subject of "imputed interest" or "phantom taxes", but this is why advisors recommend holding TIPS in tax-deferred accounts. So don't put TIPS in a taxable account and you won't have to worry about this.