For the DINKs

[bmcgonig]

How about subtracting a "pad" (10 years is probably fairly conservative, many people might prefer 5 years) from your age, and taking the IRS RMD for the resulting age? Keep adjusting every year. The RMD is calculated to run you out of money over the average expected remaining lifespan for a person your age, and subtracting the "pad" makes the withdrawal rate less aggressive, so it is highly likely the money will outlast you. It still will leave money on the table, but it will be a lot less than a straight 2% (or 4%), etc.

Using a 10 year "pad":
Actual age Approx Yearly "take"
80............. 3.7%
90. . . . . .. 5.3%
100. . .. . . . 8.8%

According to this article that I read the RMD is already 10 yrs more conservative than the average life span. So in fact maybe one could use that as a pad?

http://www.marketwatch.com/story/pu...hdrawals-on-autopilot-2013-07-24?pagenumber=1


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[samclem]

According to this article that I read the RMD is already 10 yrs more conservative than the average life span. So in fact maybe one could use that as a pad?

Put retirement savings withdrawals on autopilot - MarketWatch

Thanks. Yes, a good article, it might be just what the OP is looking for. It notes that the IRS RMD pad (years added to the average life expectancy for someone that age) is about 10 years for those in their 60s, going down to about 3 years for those aged 100. That seems fairly conservative in itself. At 80 years old the IRS RMD still uses a baseline of 19 more years of life, and only has folks taking withdrawals of 5.3%. The "Life Tables" from CDC indicate that a US person (avg male and female) age 80 should expect to live just slightly less than 9 years.

 

[dallas27]

Thanks. Yes, a good article, it might be just what the OP is looking for. It notes that the IRS RMD pad (years added to the average life expectancy for someone that age) is about 10 years for those in their 60s, going down to about 3 years for those aged 100. That seems fairly conservative in itself. At 80 years old the IRS RMD still uses a baseline of 19 more years of life, and only has folks taking withdrawals of 5.3%. The "Life Tables" from CDC indicate that a US person (avg male and female) age 80 should expect to live just slightly less than 9 years.

That's interesting. So if you are old enough to have RMD, you should probably be spending at RMD if you aim to maximize consumption before death. Pad built in.


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[meierlde]

Thanks. Yes, a good article, it might be just what the OP is looking for. It notes that the IRS RMD pad (years added to the average life expectancy for someone that age) is about 10 years for those in their 60s, going down to about 3 years for those aged 100. That seems fairly conservative in itself. At 80 years old the IRS RMD still uses a baseline of 19 more years of life, and only has folks taking withdrawals of 5.3%. The "Life Tables" from CDC indicate that a US person (avg male and female) age 80 should expect to live just slightly less than 9 years.

If you look at IRS pub 590 you find that table 3 which is used for unmarried account holders and married folks where the spouses are within 10 years of the same age, goes to 115, where the table says that you should distribute 53% per year. It hits 10% at about age 92. Look at table 3 here.
So I would agree that there is padding. In fact if you look at table 1 for beneficiaries it says 17.0 at age 70 while table 3 says 27.4 years, thus about a 10 year pad is built in, for the account owner.

 

[Totoro]

Also SINK here.

At my current age I'll statistically have 40 to 60 years to go. A big variability, but my focus should be on getting through the 40 years first

At 70 (or 80) that becomes 5 to 30 years. Almost all variable. At that point it makes sense to pool my longevity 'risk' with others. (so strange to call living long a 'risk').

Current plan is therefore to convert a portion of my assets to a single premium immediate inflation-adjusted lifetime annuity at that age, with no survivor benefits. I should get a high monthly income for the capital I put in (8% per year?), and thus have some left over (maybe half or more?).

The rest I'll either giveaway to family, charity, foundation, thinktank or to create my own themepark with blackjack and hookers.