Fidelity Planner Question

[bizlady]

We did the Fidelity RIP and I have a question about how the RMD is treated. I know that is not included with the % withdrawal shown on the chart.

But our percent withdrawal on savings on the planner appears to cover projected expenses. Does the planner assume you put RMD into savings for future use as savings money to withdraw?


We did the planner as significantly below market conditions, and showing future dollars. Ending dollars are almost as much as starting, but of course are inflation adjusted.

 

[braumeister]

RMDs are not spending. They are merely moving money from one account to another, and paying taxes on the amount moved.

 

[COcheesehead]

I "think" your RMD's are part of your withdrawal in the years when you are required to take them so they are included in the percentage.

Here is how Fidelity explains it.

The Tool assumes that, unless you are still working, after age 70½ you and your spouse will be required to withdraw the IRS required minimum distribution (RMD) annually from your traditional IRA, rollover IRA, SEP-IRA, SIMPLE IRA, Keogh, and employer-sponsored savings plan accounts [e.g., 401(k), 401(a), 403(b), and 457(b) plans]. The Tool does not enforce the greater than 5% ownership rule on starting RMDs. The Tool does not apply any RMD rules to deferred annuities. Income annuities purchased with pretax money automatically satisfy the RMD rules for the portion of your assets used to buy the income annuity. For each year beginning in the year you or your spouse reaches age 70½, the Tool calculates an estimated RMD amount needed to comply with the IRS requirements (for applicable retirement accounts indicated, or those accounts for which you have entered data).

 

[bizlady]

I "think" your RMD's are part of your withdrawal in the years when you are required to take them so they are included in the percentage.

When I calculate the withdrawal from savings as shown in the FIDO chart, it exactly matches the % and does not include the RMD.

 

[COcheesehead]

When I calculate the withdrawal from savings as shown in the FIDO chart, it exactly matches the % and does not include the RMD.

I am not sure what you mean.
If you look at the detailed chart, it shows a gross amount and what that equates to as a percentage. Fidelity says they include RMD's after 70.5 years of age.

 

[Huston55]

I "think" your RMD's are part of your withdrawal in the years when you are required to take them so they are included in the percentage.

Here is how Fidelity explains it.

The Tool assumes that, unless you are still working, after age 70½ you and your spouse will be required to withdraw the IRS required minimum distribution (RMD) annually from your traditional IRA, rollover IRA, SEP-IRA, SIMPLE IRA, Keogh, and employer-sponsored savings plan accounts [e.g., 401(k), 401(a), 403(b), and 457(b) plans]. The Tool does not enforce the greater than 5% ownership rule on starting RMDs. The Tool does not apply any RMD rules to deferred annuities. Income annuities purchased with pretax money automatically satisfy the RMD rules for the portion of your assets used to buy the income annuity. For each year beginning in the year you or your spouse reaches age 70½, the Tool calculates an estimated RMD amount needed to comply with the IRS requirements (for applicable retirement accounts indicated, or those accounts for which you have entered data).

OP-

If you’ve already input your data into the Fido RIP tool:
1. Go to “Review Analysis”
2. Select “Table” view (top right)
3. Select “Withdrawals+” @ top of table

You will see a “Minimum Required Distributions” column, which you can compare to the “Withdrawal from Savings” column (which is what’s required to meet your expenses). The RMD amount is not what the tool uses when it calculates your “Withdrawal from Savings”; you can, of course, choose the accounts from which you want to W/D the funds. But, the RMD column is VERY USEFUL for comparing to the W/Ds you need to meet expenses because, you can immediately see if RMDs are a big deal for you...or not.

Hope that helps.

 

[KenZ71]

What is the group consensus on the Fidelity Planner? I look at their "Significantly Below Average returns" vs "Below Average returns" vs "Average returns" and say wow, quite a difference.

DW only looks at the "Average Returns" and tells me to cue up 'Take this job & shove it' from Johny Paycheck but I keep telling her we can't / don't want to go back to work at 75 if the "Average Returns" don't pan out.

 

[COcheesehead]

What is the group consensus on the Fidelity Planner? I look at their "Significantly Below Average returns" vs "Below Average returns" vs "Average returns" and say wow, quite a difference.

DW only looks at the "Average Returns" and tells me to cue up 'Take this job & shove it' from Johny Paycheck but I keep telling her we can't / don't want to go back to work at 75 if the "Average Returns" don't pan out.

I am just the opposite, I took the significantly below average number, added a 33% buffer to that and then used that number to decide. Anything above that to me is just a bonus. Sh*t happens. I want to be covered.

 

[Dtail]

I am just the opposite, I took the significantly below average number, added a 33% buffer to that and then used that number to decide. Anything above that to me is just a bonus. Sh*t happens. I want to be covered.

+1
"Average Returns" is effectively using a 50% success rate. Would you accept a 50% success rate in Firecalc?