IRA RMD render SWR moot?

[bosco]

Bosco, that's what it is pointing to for me as well. I have the option to take my pension over a 10 year period and that looks to be the best option of the scenarios I've looked at that take RMD into account.

Another thing to consider is that it would allow you to leave your investments alone, or draw from them less while you tapped the pension. You avoid the pitfall of nuking your portfolio early on in the event of a bear market right after you retire.

As for Roth conversions, don't know. Am retiring in Canada and they don't recognize Roths.

I don't care what SWR I use as long as it doesn't exceed the "safe area" of 3-4%. I disagree with the idea that you decide on an SWR, and then consider your tax burden an "expense." I think you look at your cash flow = take-home income, and then see what gross income you need to attain it. Then check on what SWR that requires, and if it is a reasonable and safe level.

What matters is the money you have to use, not some abstract percentage. IMHO

 

[rs0460a]

you could easily be withdrawing more than 4% of the then current portfolio

Just to add my 2-cents on this statement.  According to our retirement plan (thru Fidelity) we (DW/me) will be withdrawing anywhere from 6-12% of our combined portfolio at ages 59-66.  When we start SS at 66 (we're both the same age), our withdrawl rate drops to 3% and does not exceed 4% till age 80.  86 is the age that we exceed 6% and by age 94 we are at 30%.

Assuming we're "not in the ground" by our mid-90's  it seems our plan has periods when the "4% rule" will be "violated" with no significant impact.

- Ron

 

[samclem]

86 is the age that we exceed 6% and by age 94 we are at 30%.

Assuming we're "not in the ground" by our mid-90's it seems our plan has periods when the "4% rule" will be "violated" with no significant impact.

- Ron

Ron,
Fast forward a few years. You and your bride have both made it to 96 years old. Let's say your portfolio has 8 times the amount of annual spending you need to spend to be comfortable. Would you really sell off 1/3 of your pot for use the next year? As a wag, I think I'd be comfortable spending 20%, but probably not much more. I'd hate to win out over the mortality tables just to find myself without enough money for denture paste.

 

[rs0460a]

Ron,
Would you really sell off 1/3 of your pot for use the next year? 

In answer to your question, we have resources beyond our investments exclusively for retirement.  For example, our home is paid for (current value - $300K+).  This could be tapped for a reverse mortgage.  In addition, we have "non-retirement" investments that currently can give us more than a few years of income, if need be.

The forecast longetivity dates for DW/me (94/92) in the plan are set to a 25% rate (in other words, 75% of the folks of the same age will be "in the ground").   There is quite a good chance we will be with them  : !

Like others have said on this board, "you adjust your lifestyle to your income".  Since our plan is set at 100% of current net income (adjusted for inflation) during our retirement, we do have an "opportunity to spend less" if needed.

One last point.  Since our residual estate is going to charity (no surviving family members), I'm hoping to make sure that some lawyer is able to get our residual (rather than our named charity).  There is no reason to plan for a legacy for a future generation.

A little long-winded in the response, but it needed to be to be able to explain "our situation"...

- Ron