audreyh1
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
No I don't. Once it's withdrawn, it stays withdrawn. It could be spent the next year. It could be used on a splurge within the next few years. I have very strong feelings about this. To me, the annual money withdrawn is money with which I've "won the game". I don't need to risk that money in the stock or intermediate bond markets any longer. If I invest it, it's outside the retirement portfolio and in short-term investments.Audrey:
A few questions, if you don't mind.
If you end up with more money after tax than you actually spend, where does it go? You still withdraw it, but do you include it as part of next year's portfolio?
What would you do if your tax bill increased your spending to be more than your safe withdrawal rate you established for the year?
How do you calculate your safe withdrawal rate each year? Is it a percentage of your portfolio?
So when I rebalance, it's with the funds left over in the retirement fund after my withdrawal. And my annual withdrawal is only calculated on the funds in the portfolio.
Yes, my annual withdrawal is a fixed % of remaining portfolio (Dec 31 value each year), so my withdrawal amount varies in dollar terms from year to year. After a bad market year, I take a "pay cut". After a good market year, I get a "raise".
Quite a few folks do return unspent funds to their retirement portfolio for long term investment in the interest of having a larger retirement portfolio later. That is not my goal. In fact, we hope not to leave "too much" when we go. We'd rather spend it now while we can. And I chose my safe withdrawal rate to be something that I think means we're not very likely to zero in our lifetimes. As we get older, I'll probably increase it.
My tax bill from the retirement fund has NEVER exceeded my annual "safe" withdrawal - not even close. And I never expect it to. Worst case ever has been almost 1% of portfolio value - that's very high. Best case 0.2% after a bad market year. I have to live with whatever after-tax funds I get each year. So far it has never dropped below my annual budget. If it ever did, I'd just have to draw some on those funds I had left over from last year!!!
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