Where do you actually get your money in retirement?

[jebmke]

We took out of taxable until my pension started; some SS kicked in at 67. The rest of SS will kick in at 70. To the extent SS+Pension is < expenses I take from taxable.

 

[RockyMtn]

Pension deposited to checking first of month. Dividends in after tax accounts are paid in cash and swept into MM account. MM account automatically transfers a set $$$ into checking account the first of the month to cover those expenses that the Pension doesn't.

 

[RunningBum]

No SS or pension yet. I just hit 59.5 almost a year ago but haven't taken from my tIRA or Roth yet. My sources are:

1. Checking, which I replenish as needed
2. Online savings accts, which don't have much when interest rates dropped
3. Dividends (which are not reinvested)
4. Maturing CDs (1 set next month, 2 more each of the following 2 years)
5. Short term bonds or treasuries in my taxable account

Along with having enough spending money, my goal was get an ACA subsidy most years. To do that I had to sacrifice a year and sell off some less tax-efficient funds, which also gave me some cash to set aside in the above accounts with little risk and low income to hopefully get me to age 65, all while maintaining my AA goal. If I have to I can tap my HSA then my Roth without recognizing more income, but I think I can at least keep away from my Roth. After 65 I'll be more willing to sell more funds in taxable, trying to watch for IRMAA. And at 65 I'll have a small pension, and SS probably starting at 70. If interest rates get more attractive I buy some SPIAs for some income.

 

[NW-Bound]

I do not hold a lot of bonds and instead have a lot of cash in our retirement accounts. Stock dividends also accumulate in the cash balance.

Because of the cash AA, I never need to think about what to sell when I need cash. My cash AA varies with market conditions, as I practice tactical AA.

When I need to refill our checking account, just a few clicks and some of that cash jumps from a selected IRA account to the checking account, minus the tax withholding. If the source and destination accounts are at two different institutions, it takes a couple of days for the transfer. If the two accounts are at the same institution, the money transfer is instantaneous.

I do the transfer when the checking account balance drops to a few $K, and transfer enough each time so that I only need to do it 3 or 4 times a year. After my wife started her IRA, the amount I need to transfer gets reduced.

 

[Car-Guy]

Primary checking and SS... Someday I'll need to add to my primary checking from my 401k and IRA's...

 

[kgtest]

For us..we are still in accumulation. But depending on how early we retire will dictate where we get our funds.

First, we will live off of cash until its depleted to about 3-6month core expenses (healthcare, taxes, food, bills).

Then, We will leverage rent checks from investment properties. If there is any extra, we will invest that rent money into a taxable brokerage account

We would keep the short term fund in a money market.

We would utilize our HSA for healthcare expenses, and 529 for college costs.

Then, we start digging into taxable broker. That hopefully doesn't start until before 55.

Then at 55, I start taking money from the Roth IRA, assuming taxable has been depleted. If not, I let the Roth ride.

However, at 55, my DF and DM will be 85 and DFIL and DMIL will be 90. We will likely inherit some form of cash as they sell their homes and downsize their living situations. We will inherit an RMD from Inherited Roth, IRA and Broker between the 4 parents. My guess is this will come anywhere between us being age 55 to 70... and before than we will be completing Roth conversions to lessen our own tax torpedo.

At 59.5 IF we need to, we will start drawing down from our IRA, taking the dividends first to avoid any STCG and LTCG tax of our growth.

At 65 I have a small pension that will kick in (if the company doesn't cash me out before then...that would be 25 yrs from now and pensions are all but a thing of the past, plus Mega has been in the middle of fending off a sale of the company battling their board to stave that off). Then again at 69 we receive a raise with SS, and DW when I turn 70. Provided we both live that long.

At 70 our folks would be 100 and DW 105, and for sure would have an inherited RMD Tax Torpedo problem on top of our own income from pension, Social Security, and Rent Checks.

That is our plan. We will protect the Roth at all costs since that seems to be the best multi-generational vessel outside of Real Estate. We are looking at the sale of at least 5 properties occuring before or after both our parents pass. So we will likely keep that re-invested in real estate investments kicking off rent checks.

Best case scenario, we live off the dividends of our Taxable, and our rent checks and cash until we get the SS raise at 69/70. That means if I ER at 55 I need enough in the taxable, and cash and pension to put wind in our sails for approx 15 years. I doubt I will spend what I am at 50-55 when I am 70 to 80 yrs old. I look at my folks and there spending has decreased considerably as they aged. I look at my Grandma who is 95 and she lives on basically 40k, thankfully inflation adjusted when I am that age I will have more to live on, but likely wouldn't require much more seeing her lifestyle. People's health starts declining from 60 onwards if you are lucky, maybe it starts happening in your late 70s.

 

[grasshopper]

We were blessed with Ms G being a HCE, so even though we started tIRA's 30 some years ago, we were restricted in retirement planning. Good news is we had a large taxable account at our retirement 17 years ago.

Our plan today is SS goes to one checking account that covers medical and taxes. Than I take $2500 or so out of a savings that has 2 years of expenses in it. Lumpy expenses just get paid out of our taxable brokerage account.

We have only converted tIRA to roths, so the nut has stayed intact. RMD's for me next year, that I hope to spend on more and better travel.

 

[Palmtree]

We've been retired a few years now. Over half of our spending money comes from a pension. The rest comes from our investments. Periodically I will sell investments and transfer that into a money market account. There's no Rhyme or Reason when I do this. If it's getting a little low I will do it. Sometimes if the market is seems to be a bit frothy, I will sell off some equities to boost us back up to another year or two in reserves. Every month there is an automatic transfer from our money market account into our normal checking account. If after a few months I noticed that too much money is building up into our checking account, I'll transfer excess money back into the money market account.

 

[N02L84ER]

We plan to always have at least 1 yrs worth of expenses in checking+savings with monthly transfers from savings to checking. The first set of "new" money was having taxable Div+CG deposited to checking. After that,

Age 52 - 60, sold taxable as needed to checking, did Roth conversions

Age 61 - 66, inherited IRA distributions, stopped selling from taxable and doing conversions because of ACA limits and inheritance. We are currently at this stage.

Age 67 - 72, inherited IRA distributions, empty HSAs, Roth conversions, SS starts
Age 72+, SS, RMDs, may still do some Roth conversions

 

[LRDave]

DW has a modest COLA'd retired teachers pension (but also includes retirees health coverage) and I have a mega-corp micro-pension (annuity non-COLA'd). DW has an inherited IRA (old rules) that kicks in a few thou each year.

Anything expenses above that, we get from Lotto ticket winnings and Amway sales income....

 

[donheff]

Ours is pretty simple. We have pensions and Social Security that goes into checking. That covers most essential day to day expenses. I have started RMDs and they too go to checking. We periodically liquidate equities in a joint taxable account to make up the delta. We keep that in a MMF at Vanguard and transfer enough to checking to meet needs.

 

[MRG]

I turn 65 this month and retired almost 9 years ago so I just completed the phase you are in. DW gets 1k monthly from SS and that's easy-to-use. For the prior years I was trying to manage our income to take advantage of ACA subsidies. The first few years we had a fair amount of post tax CDs that we lived off, later our brokerage accounts. In 2020 we overdrew from our IRA, the subsidies were not impacted but IRMMA is. Oh well.

I realize reading this thread I really should automate more but right now I manually move rebalance things once a quarter and make a final tax payment at the end of the year. Turn off reinvesting divs and I generate some option premiums that spend nicely.

 

[harllee]

We retired at age 50. Small pension and we had about equal amounts in taxable and nontaxable and a big house. For the first few years we lived exclusively on taxable assets, selling and paying low capital gains. At age 55 we sold the big house and moved to a smaller house and lived for a few years on the proceeds of the sale of the large house. Around age 60 we started drawing down some of our IRAs and continued to draw down our taxable assets. At age 62 DH took SS, about $2000 per month. At age 66 I started drawing half of DH's SS (we were able to do that because we were born in 1951, this option is not available for younger folks.). At age 70 I took my SS, getting $3,400 per month. Between SS and small pensions and a little draw down from IRAs we have enough to live on. IRAs are much larger now than when we retired even though we draw down some every year and did some Roth rollovers. We now make charitable gifts from DH's IRA. At age 72 we will have to do RMDs and our income will be too large but we will probably reduce it by larger charitable gifts from IRAs. A good problem to have.

 

[rk911]

three pension "checks" and two SS "checks" auto deposit into our checking account. most routine bills are auto-debited from the same account. virtually all out-of-pocket expenses are on credit card which also is auto-paid. we have no long-term debt and a positive monthly cash flow. there are a few regular bills requiring a paper check or cash. i do reconcile all bank accounts and credit cards. my wife has been getting RMDs from inherited IRAs and we both will start taking our own RMDs. we will be sending all of them to a QAF. life is simple and good.

 

[disneysteve]

Thank you to all who have weighed in. This group is fantastic.


We will be aiming for ACA subsidies, so starting with a healthy cash position (2-3 years of expenses) and a substantial taxable portfolio ($1.5M or so) will be very helpful as depending on when I actually pull the plug, we'll have 6-7 years until Medicare (DW gets there 9 months ahead of me).

 

[Retired Expat]

I understand the big picture side of funding my retirement but I'd love if some of you could walk through the actual day to day nuts and bolts of how/when/where you draw your money from to pay your expenses in retirement. I realize it will vary person to person. It will depend on if you have a pension, if you're already taking SS, etc. So let's focus on a 57-year-old guy with no pension and not collecting SS yet. Wife is 58, also no pension or SS. We have cash accounts, taxable mutual funds, traditional and Roth IRAs, a small SEP IRA, a 401k, and an inherited traditional and Roth IRA. The inherited t-IRA has an annual RMD starting this year of so that piece is already handled. Assume that the portfolio is about 50% taxable, 50% retirement accounts.

How do we approach accessing our accounts beyond that? Do you start by drawing out income (interest, dividends, capital gains)? Or do you still reinvest all of that and just sell shares as needed? How do you draw from your cash accounts, if at all? What sort of schedule do you follow?

I hope my question makes sense. Basically, we have this 7-figure portfolio ready to go and I'm just trying to wrap my head around what happens when I actually retire and need to start spending from that portfolio. When the bills start coming in, where do I reach to get the money to pay them?

Thanks in advance.

Like you no SS or pensions for wife or I. We have 2.5 sources of income. Rental properties, stock/bond portfolio, and the half is the AirBnB rental of our vacation home.

Income from rentals all goes into one account and monthly we draw out money to our general checking account but leave enough to build up a fund for taxes and insurance for end of year. Rebalance rarely actually.

All interest and dividends go into a cash account at the brokerage. Sales get reinvested. As needed transfer to general checking. At the end on the year I reduce brokerage cash if surplus has grown beyond the 1 year of expenses cushion I want.

The wild card is the AirBnB rentals which all depend how much time we want to or can use the house so I consider it a half source. Sometimes it is real money and other years not so much but it pays for the house! It really isn’t very much work actually as virtually everything on both houses is on autopay.

 

[skyking1]

We are 15 months away from retiring as of today ( yay ).
Our plan is a bit lumpy. I have a pension with no COLA, that will equal about our current spend. 10 months into retirement we will have to start paying ~$1100 for medical, for both of us. 20 months in, a ~$2K annuity starts up.
We'll have to pay out some cash for that 10 month period before the annuity.
@65 I will get a small no COLA pension from another trade.
Two years later DW will take SS. This will be a COLA of sorts.
When the annuity expires I will be 70 and draw the maximum SS.
Lumpy yes, but The spice must flow!

Except for covering the medical for those 10 months, all that is slated to come out of the nest egg is travel or other discretionary expenses.

 

[PointBreeze]

I am 62. I retired at 58 from a full-time position and then did just enough consulting for two years to cover my cash needs. Fully retired at 60. I set up a small 10-year fixed income annuity to start then. That, plus some $ from my IRA gives me enough income to qualify for the ACA with a large subsidy. The rest of my spending money comes from taxable accounts.

In December I make the budget for the coming year and in January I move funds from my IRA to my brokerage. On the first of every month I have an automatic transfer from the brokerage account to my cash management account, which feels like a paycheck. I have taxes withheld from my once-per-year annuity payment so that I don’t have to make quarterly estimated tax payments.

Like others have mentioned, I don’t reinvest dividends in my taxable accounts. I keep enough cash in the IRA and taxable accounts to cover the next 3 years (minus anticipated dividends and annuity payments) so I won’t have to sell something when I don’t want to. I live below my means, so that cash isn’t too much of a drag on my portfolio.

 

[2017ish]

As others have indicated, this is a highly variable question.

We retired at 57/56, no pensions, minimal Roths (although started Roth clocks 5+ years before retirement), and grossly disproportionate tIRAs. Had enough in taxable to make it to 59.5, along with a HELOC standing by, just in case.

We withdrew from taxable as needed to sustain spending, and aggressively converted to Roths--paying taxes from taxable. In 3 years, we exhausted the taxable accounts, and started withdrawing as needed from tIRAs, whilst continuing Roth conversions (now doing so to top of 32% bracket, paying taxes out of the tIRAs). Beginning last year, we set up an automatic monthly withdrawal from tIRAs that equates to about 3/4 of allowed spending. Every 6 months, we sell from whatever we are heavy in to fund 6 months of withdrawals. To the extent we spend more than 3/4 of our allowed amount, we sell an overweighted position as needed.

ACA subsidies were never an option, nor is completely avoiding IRMAA. Plan to keep on this path at least until DW hits 70. If we are lucky, we won't get our Roths equal to our tIRAs by then--although we'll try our damnedest!

 

[Scuba]

No pension. No SS yet.

I only draw from taxable account-so far. I do not reinvest dividends (but then never have in taxable as it is too messy).

I maintain 1.5 - 2 years of cash in a saving account yielding 1 percent. I have automatic withdrawals from that account twice monthly tied to a generous estimate of my expected spending. That funds my checking account.

I replenish the cash account via stock sales (taxable account is 100 pct dividend paying stocks). As an active stock investor, I may at any given time be selling something and use some of those proceeds to replenish cash.

I do not balance once annually. I do it more tactically since I am active.

All seems to work so far.

Our approach is similar except that our monthly spending varies quite a bit depending on what we’re doing, so we just transfer cash out when we need it. Sometimes a couple of months go by before we need another infusion, sometimes we have to do it twice in one month.

I do keep track of our annual spending after the fact. While we don’t really manage to a budget, I do create one and at year end I compare actual spending to budget. I think being able to at least roughly anticipate your spending is very helpful to cash management in retirement.

 

[shortstop14]

From retirement at age 56 to current age of 65, we've lived off our taxable brokerage account. I've generally kept a years worth of expenses in cash from dividends and by selling equities periodically. We've kept income low in order to maximize ACA subsidies - which has become harder as the remaining equities are far more capital gains than basis. Mechanically, I transfer cash from the brokerage account to a checking account in $10,000 increments when needed, and all outbound expenses are paid from the checking account.


Next year everything changes as we both will have moved to Medicare, so the ACA income limits aren't an issue. We'll start up a small pension and the smaller Social Security payment, and begin IRA withdrawals, as well as Roth conversions. The taxable account will be pretty much gone at that point, so the timing worked out well.

 

[FLSUnFIRE]

I'm very similar to pb4uski. I have a MMSA at my CU, retired with 1.5-2 years anticipated expenses initial seed to get me through 2022, at the end of the year will refresh from investment accounts to cover next year's spending plus a cushion ($10-15K). At the beginning of each month I have an automatic transfer to my checking account for recurring expenses and do an extra transfer for my property taxes and any other anomalies from the usual burn rate. Any distributions from investment accounts get deposited in the MMSA along with any other money received (CC rewards, rebates, etc).


ETA: Mid-term, somewhere between age 49 and 55?, I will start a SEPP from my TSP using life expectancy method withdrawn on a monthly basis. I will likely still put the funds into MMSA and transfer over my "allowance." There is a good chance my SEPP withdrawal will exceed my expenses (if the market is kind, and me getting closer to my appointment with the reaper will reduce the divisor in the calculation); if so, I will either invest the difference in taxable accounts or start to BTD once I'm out of the SORR danger zone.

 

[Dtail]

No pension until a smallish lump sum at 65.
DGF gets a monthly SSDI payment directly into the checking a/c.
Partial funding from the tIRA yearly in Jan to our Ally account. Taxable monies in Ally also.
Fund monthly from Ally savings to our checking a/c and all bills are paid from there.

 

[TheWizard]

When I retired at age 63, I had pension/annuity income on the 1st of each month plus regular withdrawals from tax deferred portfolio on the 15th.

Now at age 72, I still have the pension/annuity on the 1st, plus (age70) SS on the 8th-14th, plus RMDs around the 20th.
Excess income after all bills are paid and checking account brought up to $10k gets moved into my taxable investment account (stock funds)...

 

[ShokWaveRider]

No Pensions, waiting till 70 for my SS.

Monthly cash comes from our post tax checking account (our X months of expenses stash) and from DW's SS that she took at 62 as per "open security's" recommendation for our situation, which is deposited into checking. Do not touch IRAs.