Simplified one-fund IRAs for RMD’ers?

[friar1610]

I’m curious how many folks in the RMD phase have simplified their T-IRAs to the extent that they are using only (or mostly) a single asset allocation fund such as (using Vanguard examples) Wellesley or a conservative Target Retirement Income or Life Strategy fund. If so, do you also maintain a MM or ST Bond fund within the IRA so you have someplace from which to take distributions when the core AA fund is down in a given year (such as this one)?

As I get older, I’m thinking that having just a single fund in the IRA would be attractive and simpler for my spouse to deal with if I check out before she does. But I worry that I’d lose the flexibility I now have to take RMDs from whichever fund (of several in my IRA) makes the most sense at the time. (That’s where the idea of a second short-duration, relatively stable fund holding perhaps 3 years of RMDs comes in.)

How has an approach like this worked out for others who use it?

Thank you.

 

[audreyh1]

No, not necessarily a single fund approach, but I might set up proportional RMD withdrawal which I think brokerages already handle. That way it won’t even matter how many funds there are.

Will stick with the cheaper index funds anyway.

Thinking on it more, I’ll probably just have one fixed income fund in my IRAs by then anyway.

 

[W2R]

My RMDs only come from the TSP (=401K for federal employees, more or less).

I put my TSP entirely into the "G Fund", which is a TSP government bond fund that is guaranteed never to drop in share price. The G fund is sort of like cash with a slightly higher interest rate. So, I don't have to worry about which fund I'm taking my (small!) RMD from.

This worked out especially well when I was in the ICU for several weeks with severe Covid pneumonia. I had really bad "brain fog" and was suddenly completely incapable of making any financial decisions. But since my RMDs were "on autopilot", I didn't have to do anything.

 

[youbet]

I now have to take RMDs from whichever fund (of several in my IRA) makes the most sense at the time

That's how I do it. Since reaching RMD age, I've kept the same strategy for spreading my total AA across our regular brokerage and IRA accounts as before. Most interest bearing investments are in the IRA's. Most of the equity is in the brokerage account. The only difference is that I now let some cash accumulate in the IRA's preparing for RMD time. Any additional cash at the time is, as you say, from what "makes the most sense at the time."

I've yet to find a single fund to put in the IRA's that I felt would be as efficient as what I do in a few hours of fiddling around a year.

 

[rk911]

i'm taking my first RMD this year. my wife will take her first RMD from HER tIRA next year although she has been takin RMDs from inherited tIRAs (one since 2003 and another starting last year). Our IRAs were spread far and wide with a number of custodians. to simplify things we consolidated our IRAs with one custodian but in a number of investments. KISS.

 

[friar1610]

Thanks to those who responded. I think I’ve decided to hang loose with what we’ve got for now - it’s not one fund but it’s fairly close. Specifically, both my wife and I have a bit over half of our (very modest) IRAs in Vanguard Total Bond index. We each have 20-25% in a Total Stock index fund. Mine is in Total US and hers is Total World. (That way, between the two of us we have somewhere around 20% international equity in keeping with our desires.) Finally, we each have the remainder in not-quite-perfectly-laddered Treasurys and/or CDs. I need to do a better job of organizing them so the right amount matures each year at RMD time. Over time I might replace the bonds/CDs with a ST Treasury fund but time will tell. I’ll probably also leave instructions for my wife to consolidate the Total Stock and Total Bond funds into an asset allocation fund and a ST Treasury fund if the multiple funds are more than she wants to deal with when she’s running things.

The rest of our portfolio (taxable and Roth) is not as conservative as what we have in the IRAs.