IRA distributions / Boring CD's..

[almost there]

I plan to start taking IRA distributions mid 2023. (finally)
Am going to keep it simple. After years or Roth conversions , will have $530k in my IRA. Plan to have a 5 CD ladder and will pull about $2600 a month for about 25 years. To stay in my desired tax bracket.

Have had both credit union CD's and Brokered CD's. And don't see any real advantage with one over the other. If held to maturity. Brokered CD's do react quicker to rates. Up and down. That might be a factor. Plan on having (5) 5 yr CD's. Take the interest and pull a small balance at maturity each year. To reach the monthly goal.

Am thinking about just going with brokered CD's to keep it simple and in one spot. Rather than having the funds in 2 or 3 places. Currently have a Charles Schwab brokerage account. But am guessing brokered CD's are probably all very close, regardless of brokerage. Or is there a stand out?

Anyone have anything to add? Advice etc.? Thanks...

 

[foxfirev5]

Same here. My tIRA CD ladder had been stretched out to 7 years when CD rates got over 3.5% in 2018. Recently I've begun to add Treasury Strips to match match my future withdrawals. Currently I have about 5 years in the CD ladder. As these mature I'm buying a 25k Treas Strip to mature in a future year, starting in 2029. Each year I'll buy two or three with the rest of the maturing CD's going to pre RMD Roth conversions as well as my annual withdrawal.

The goal is to have a base income of 25k for 15+ years when RMD's start. ETF Dividends from the rest of the tIRA should cover the rest of the RMD. Set it and forget it is the plan. I don't want to burden DW with a CD ladder or bond funds that would require duration matching and withdrawal management.

Caveat - As long as interest rates stay reasonable. For example if the 10 year treas drops below 1.5% I will probably suspend Strip purchases and live with the number years in place.

 

[Koolau]

Whatever works is fine, of course. I wonder why not just pull out the money you need to spend and leave the rest. Putting money into CDs does tie it up a bit and rates are not now very good and will trail inflation for a while.

How does this fit with your other income like SS/Pension/annuities? It sounds like you're doing it for tax purposes which is fine. But, you might cost yourself more than the taxes (due at RMD time??) by inflation losses.

No advice or even suggestion here. Sounds like you know what you're doing even if I don't (and it's none of my business) Best luck and YMMV.

 

[OldShooter]

Boring is good. Simplicity is good.

... Set it and forget it is the plan. ...

Warren BuffettL "Lethargy, bordering on sloth should remain the cornerstone of an investment style."

 

[almost there]

My goal is to have an income around 120k yr.
And will re adjust for inflation as needed.
I dont need 120k per year. And some of it will just be saved / reinvested.
Kind of creating my own paycheck. With 4 main sources of income.
Cash and Roth accounts will just be used an an emergency fund.
If needed. But will probably just be passed on.

 

[foxfirev5]

Yeah my goal is to keep around the 12-15% Fed tax bracket. 120k or so. Cash flow is important if not critical. My kids will probably appreciate my efforts with Roth conversions, which I hope will not be assed on.

 

[almost there]

The "P" didn't make it, initially. I fixed it.

 

[foxfirev5]

Sorry for the silly remark. It's a slow day around here. I really think your plan is solid. I've spent the last decade coming to a similar conclusion. All the best.

 

[almost there]

No worries, looking forward to SS in 18 months at 62.
And have planned my retirement on a "worse case" zero % return. LOL LOL.