Do RMDs Beat the 4% Rule as the Best Retirement Withdrawal Strategy?

[@rob_berger]

I've just published an article that goes with the video. It includes RMD calculations from ages 60 to 71: robberger.com/spend-safely-in-retirement-strategy/

[@jedwards1792]

There aren’t any RMDs from ages 60 to 71. By definition RMDs start at 73….that’s when Minimum Distributions become Required.

[@METVWETV]

​@jedwards1792 You're confusing mandatory IRS Publication RMDs with Utilizing RMD percentages as a guide as to how much in dispersments one can "safely" take during retirement. One is mandatory and is subject to law and designed for the sole purpose to demand people take money from their Tax Deferred accounts, so that they can pay ordinary income tax on the proceeds. The other is a commonly used strategy

[@krishnadevulapalli315]

This is exactly I have been planning to do once RMD kicks in 2 years. Having retired at 70 a year ago, have been living off of social security & taxable accounts while implementing Roth conversions. I will continue with Roth conversions maximizing the tax brackets & thereby limiting my RMD’s as I age solely for the legacy . QCD will be great reducing the tax burden. Hope to make the plan work.

[@christopherkeller5263]

That’s pretty impressive. Hopefully you are enjoying retirement though! Don’t forget to enjoy your time-you have earned it

[@soothingrelaxationandmedit68]

Sincerely My condolences to anyone retiring in this crisis, 30 years nonstop just for a crooked system to take all you worked for.

[@gabrielbruhnr]

I feel your pain mate, as a fellow retiree, I'd suggest you look into passive index fund investing and learn some more. For me I had my share of ups and downs when I started looking out for consistent passive income, so I hired an expert advisor for aid. And following his advice I poured 30k$ into value stocks and digital assets, I'm up to 200k$ so far, and I'm sure ready for whatever comes

[@benjamineprg4249]

Some of these advisors do so well and make great returns but charge so much your portfolio eventually gets drained, is that the case with you

[@gabrielbruhnr]

@@benjamineprg4249 nah I can't say I relate, Chris Ryan Stewart charge is one off, and pretty reasonable when compared to what I benefit in return.

[@michaelburns3906]

Rob, This is my first time posting. I am a 64 year old attorney and have paid attention to personal finance for the last dozen years. I watched this video last night. Great advice. I like your courage to go live. I am going to stop reading, watching and listening to other financial advisors. - Michael F. Burns

[@InterCity134]

Would love to see you work through a concrete example. Eg single person with 401k, social security, pension and a taxable investment account , say retire at 60. Just to see the full exercise of going through the computations from the IRS tables , to get the factor, how to use to get a withdrawal amount , how to apply that to the various accounts and what that makes your annual budget.

[@ivanvarykino8202]

Yes, same scenario I'm in. Based on other recommendations I'm using thw NewRetirement software. Haven't fully got it tweaked yet. But it really is a game changer. You can answer so many of your own questions. It's $120 a year. Dirt cheap for what it offers. And some financial planners even use it to answer your questions.

[@irenatrulove]

The combined growth of my retirement accounts is 3.84% in the past year. In this environment does investing under a brokerage account with a custodian/retirement-planner outweigh a 401k? should I seek a pro to grow my funds on brokerage acct or still hold? I have 5 years to retirement. Happy to discuss.

[@PurvisTwiggs]

the size of your retirement portfolio will overwhelmingly be a function of the performance of the stock and bond markets between now and when you start withdrawing from it.

[@irenatrulove]

Hi, who is this manager you use? I lost over 50000 already this year with Edward Jones. Im in need of guidance from a private financial-planner going forward.

[@irenatrulove]

@@user-tx8oh5or4c how can I reach out to this person if you don't mind and how much have you profited relative to fees?

[@DavidMontgomery1]

Live show is well done. Didn’t really seem any different from the regular one. 🤷🏻‍♂️. Either way, I liked it. Although I would have liked more explanation of the last strategy, the one you liked. As always, good stuff! Thanks,

[@rob_berger]

So if you want to frontload your spending in retirement, I like the idea of figuring out exactly what you want to spend it on and coming up with how much you'll need to spend. It seems to me that's better than just increasing annual spend by some factor. So, for example, maybe you want to spend $5,000 a year for the first 10 years of retirement on travel. So set aside $50,000 for that purpose and calculate your RMD (for spending purposes, not IRS purposes) on the rest. Keep in mind that for IRS purposes, you must follow the RMD calculations to avoid a penalty.

[@Nisie23]

Stop talking spouses only. Not everyone has one. This is so annoying! Talk single people too.

[@tedtassos3224]

Excellent & useful presentation. Thanks Rob. The live vs recorded format is irrelevant to me. But thanks for asking!

[@wilma6235]

I agree. I seldom watch the live when they are live.

[@docsam0302]

Great video, I didn’t see it live but it seemed as good as all the others! Seems from the comments that a hot topic is Roth conversions. Have you done a video dedicated to that topic? Thanks for all you do!

[@Lukionest]

Interesting. I made a table where I take a starting balance, say $1 million, add a conservative 5% annual growth, then subtracted the annual RMDs based on the Uniform Lifetime Table III, with the extrapolation back to my current age (70) per the way you described it, using Table II data. It took ten years before the percentage taken out due to RMDs was larger than the 5% growth rate I assumed. It then took another ten years of increasing RMDs before the balance dropped below my original $1 million starting point. I started with a 3.42% RMD at age 70 and ended with an 8.2% RMD at age 90. The starting balance can be any number and the percentages don't change. Only the dollar amounts do. Here are a few of the lines from this table. Of course, in the real world, I won't achieve a flat 5% annual growth every year: Age RMD Factor Balance 5% Growth RMD $ RMD % 70 29.2 $1,000,000 $50,000 $34,247 3.42% 73 26.5 $1,044,566 $52,228 $39,418 3.77% (When my forced RMDs will actually start) 80 20.2 $1,101,915 $55,096 $54,550 4.95% (RMD almost equals growth rate) 90 12.2 $976,823 $48,841 $80,067 8.20% Total RMD withdrawals: $1,167,843 Total decrease in IRA balance $23,177 at age 90

[@mere_cat]

“If I had heard about this six months ago I would have said this is not for me.” That is hilarious because I emailed you about it 6 months ago Rob.😂

[@rob_berger]

That's wild. Did you mention the Spend Safely in Retirement Strategy? If so, I can't find the email (and I save all of them).

[@miatafunrun3078]

Interesting and thanks for sharing. I like the idea of spending more in the go-go years. I see neighbors in their 85+ walking every day and many with a stroller. At the stage in life, you probably want to stay home and thus spending less. It's about enjoying life not how much you end up with at the end.

[@christopherkeller5263]

Totally right!

[@ivanvarykino8202]

Totally agree! I have a neighbor who hated his job and bailed right away at 62 and collected soc.sec. Now, less than 10 yrs later he's pushing the tennis ball walker as he never did a damn thing but have cocktail parties. I'd rather "waste" money on travel and hit the road now. We all know the walker will be there waiting for us. Move while we can 😄

[@smichener1]

Excellent video Rob. I will keep this one saved and refer back to it. Keep up the great work!

[@edwarddean1241]

Rob This was your best you tube video ever. I wish you could do more on this subject. This is very helpful with people who retire earlier than 64. Thanks again

[@teekay_1]

If most of your income is coming from annuities (social security, pensions, railroad retirement etc), then as you pull your RMD's you may have more than enough income. Consider giving it to your children every year and if you still have some left over, start putting it in broad market funds with little or no fees. That can be your legacy for your children if you have them.

[@drmitofit2673]

My wife and I have big pensions and a lot of emergency savings so we have high risk tolerance. Our 401k accounts are still 100% S&P 500, now a year into retirement. I predict a bond market crash, so I am avoiding bonds. I just started fixed monthly installments on my larger 401k at 6% of its current value divided by 12. Holding off on drawing from my wife's smaller 401k until age 73. Same monthly installment for decades, no inflation adjustment. RMDs don't reach 6% until age 83. Our pensions and future SS benefits will have COLAs. People tend to spend less as they get older, so why adjust for inflation? With a pessimistic 6% return on investment (S&P averages 11%), my 401k will last greater than 30 years. No having to adjust each year, until age 83 when I will recalibrate to meet RMDs. By age 73 my wife's 401k should be double in size and we will do RMD'S on that. So I am currently exceeding the 4% rule but not adjusting for inflation, not going 50-50 stocks and bonds, and not having to readjust each year. Seems simpler and not over-though with steady reliable income. Update: I may go 50/50 S&P and bonds once the S&P hits a new all time high. That will lock in some gains, still allow some growth, mitigate losses from a crash, and allow me to go back to 100% S&P during the next -20% bear market. If the market loses more than 20% I can always turn off the installment spigot until it recovers.

[@nancycoonis3957]

Thanks, Rob. This was so helpful.

[@keithmachado-pp6fv]

Both RMDs and SS increase annually for inflation and for that reason I find them an ideal way to cover normal annual expenses allowing other assets to grow and become tax free to heirs (with step up in basis or as tax free life insurance).

[@keithmachado-pp6fv]

Correction RMDs don’t adjust for inflation but they do increase.

[@stephenlupi4547]

Let me School Berger again. BILL BENGEN updated the 4% rule increasing it due to adding in more Stock sub sectors.

[@euclidessoares6650]

Rob, I appreciated the video very much and in a way, it stated what I was already planning to do. The only thing I would add, and suggest it to be added to the overall approach, is to align your Roth conversions do that the RMDs are not a lot more than your SS income plus required spending. I have been trying to calculated what my RMDs will be at the required age and increasing my Roth conversions accordingly. Obviously, it is not an exact science, but I am trying to be at least directionally correct. Basically, I am trying to avoid having my marginal RMD dollars being taxed at the 37%+ tax bracket. Thanks again for the video.

[@alphamale2363]

I just spend what I need and as long as it's less than 4% I don't give it another thought. I'll probably have some left over when I die but so what. I've never been a big spender.

[@LarryWilliams-xu8qs]

Also, you can easily see what percentage withdrawal the year’s RMD is by dividing “1” by the factor. Using your example of 27.4…divide 1 by 27.4. So 1/27.4 = 3.649%. As each subsequent year’s factor goes down, the percentage withdrawal goes up.

[@jordankendall86]

At 75, the current rules require a distribution of about 4.1% and that percentage goes up every year. So, who cares about the 4% rule when you are already above 4% after 75. RMDs force middle class people to pay taxes on their distributions before they die. You don't see any law forcing rich people to liquidate their investments before they die. We should pass a law banning RMDs. Let middle class people do what they want with their paltry wealth.

[@learning.finances]

Remember RMDs, only apply to traditional 401s and IRAs. Thus, you may be "forced" to withdraw 4.1% the first year on those accounts, but someone who has any roth accounts or brokerage accounts could withdraw 0 money from them and end up with a much lower total portfolio withdraw, like 3.5% or less.

[@martinguldnerAutisticSwanGuru]

Roth Roth baby!!! With Roth IRA and Roth 401k starting next year no RMDs.

[@howardfriedman7077]

Martin: The Roth decision should come down to tax rates during accumulation stage vs. tax rates during draw down stage.

[@martinguldnerAutisticSwanGuru]

@@howardfriedman7077 even though I'm currently in the 12% federal tax bracket going to go up to 15% in 2026 I expect tax rates to be higher in the future. Also the only income that is exempt from calculation of taxation of Social Security benefits is distributions from a Roth IRA or Roth 401k. For those reasons plus the the growth of the account balance is the reason why I'm going Roth all the way baby.

[@janethunt4037]

This was a great presentation. Live or not, it matters not to me unless you are taking questions.

[@noreenn6976]

It was live but was Rob live? LOL

[@iamkerenlouise]

😂hilarious! Good one!😊

[@noreenn6976]

@@iamkerenlouise 😆

[@cryengine_x]

for me i dont expect to live too long. sounds macabre but its the truth. i'm overweight, high blood pressure, and heart issues. so i plan around retiring no later than 62 and if i live past 70 its a bonus. i'm pushing 50 and sometimes surprised i made it this long lol. maybe thats a incorrect strategy, but it's just how i feel. i also feel like every dollar spent is going to bring less joy the older i am. i'll enjoy spending money a lot less when age is hitting me hard later. advertisers target younger viewers because old people naturally go into a shell and stop spending money LOL. so i also plan to spend more early in retirement, like more spending in early 60's and even late 50's is my plan. just some thoughts. I know a guy who was retiring in may of that year. That March he left work, went to a gas station and keeled over. Turned out he had a brain tumor. He waited his whole life and two months before he retired he found out he had a deadly tumor. That also influences my thinking, although it could happen at any time so not much you can do.

[@pareshjoshi5113]

Rob - your shorter video like this are really subject matter focused and personally I learn more then your live session. In live session after first 10 minutes it is not interesting. Something you may want to consider.

[@rob_berger]

Well, some people like one format, some another, and some both. Take what works for you, and ignore the rest!

[@likethesky]

What if your spouse is 18 or 19 years old? Out of luck I guess! LOL (Yes, I'm just kidding--though it's true the tables don't cover those two ages; just 20 years of age onward--in some states even younger than 18--yikes!)

[@vmobile890]

I spend safely in retirement knowing my beneficiaries will enjoy my money more than I have and will in the future .

[@dakkon74]

ROM the space knight in the background?!?! I need a closeup.

[@rob_berger]

Issue #1.

[@dakkon74]

@@rob_berger My brother had the tall action figure. I think it was like 14 in. I actually sold it on eBay a few years back.

[@AntonioBianh]

Retirees who struggle to meet their basic needs are the ones who could not accumulate enough money during their active years to meet their needs. Retirement choices determine a lot of things. My parents both spent same number of years in the civil service, but my mom was investing through a wealth manager, and my dad through the 401k.

[@JenniferDrawbridge]

It's recommended to save at least 20% of your income in a 401k. You can use online calculators to estimate how much you should save based on your age and income. Saving at least 20% of your income in a 401(k) can help ensure that you have enough money to retire comfortably. By saving this much, you can take advantage of investing in the stock market and potentially grow your retirement savings over time.

[@cythiahan8455]

Considering the increased complexity since the 2008 crash and COVID, I suggest diversifying your financial portfolio. I hired an advisor and successfully grew my portfolio by over $150K during this turbulent market using defensive strategies that protect and profit from market fluctuations.

[@sophiadouglaswagner]

@@cythiahan8455 Could you kindly share the contact details of your investment advisor? I really need one urgently.

[@SophiaChristian-so2of]

Could you kindly share the contact details of your investment advisor? I really need one urgently.

[@cythiahan8455]

@@SophiaChristian-so2of My advisor is Laurel Dell Sroufe, who has extensive experience in the financial market. You can easily find more information about her online.

[@quaternion-pi]

When planning retirement distributions, consider that assisted living now costs ~$8,000/month and memory care could easily be $10,000/month. My mom has been in assisted living for 5 years and is 94. Medicaid, for the indigent requiring assisted living, is not a pleasant thought - visit an assisted living facility that accepts Medicaid to see for yourself.

[@marcalvarado1915]

Only 2-4% of retirees live in assisted living facilities. I think if my wife or myself have that bad luck we will just take a reverse mortgage to pay for it. It doesn’t seem prudent to worry about it when it affects so few people.

[@quaternion-pi]

@@marcalvarado1915 Not many retirees could afford $80-100+K/year for independent/assisted/memory care. So I understand not worrying about it. Hopefully family or spouse will provide that care. Both my parents required assisted living and was funded by selling their home. You must be indigent for the government to fund that care - and it is not a pleasant life. It's your gamble if you ignore the possibility and spend more in your "go-go" decade(s) of retirement. If I had a 2-4% chance of my home burning down I would still consider fire insurance.

[@marcalvarado1915]

@@quaternion-pi In your first comment you said that when planning retirement distributions consider that assisted living costs $8-10k per month. I’m curious, what do you think one should do for this possibility? Take out as little as possible to have enough later on or buy long term care insurance or ??? I am pretty content with saving my house to cover that potential need the same way your parents did. As someone that has dealt with this possibility more recently, what is your plan?

[@quaternion-pi]

@@marcalvarado1915 My siblings discussed contingency plans if our parents could not care for themselves in their home. As one of the siblings, I was the only one with resources that could pay for home care aides, then independent, then assisted, then memory care for both parents. Fortunately their home equity is funding their living needs. When/if that is depleted, I will fund their expenses - keeping them off Medicaid. It was not an option for them to live with one of their children. As boomers age, the incidence of Alzheimer's and frailty is skyrocketing. I am in the health care field and my assessment is that future need for assisted living will be much greater than the current 2-4% of retired seniors needing quite costly care. In CA, home health aides get ~$30/hour if you can find them. My goal was only to point out possible retirement expenses and at a minimum have a family discussion about them. Depleting all resources and becoming dependent on Medicaid is likely the fate of most retirees requiring assisted living. Thanks for the dialog.

[@krisskogs2532]

Did I miss the part on what someone who retires early is supposed to live on with this strategy? I’m not waiting until 72-75 to enjoy retirement, more like 55.

[@christopherkeller5263]

I think the plan would be to live off your taxable accounts until you get to 72-75.

[@rob_berger]

I think you did. I explain how to calculate RMDs at any age.

[@gg80108]

Unbelievable you never heard of the 4% rule of thump. How you on the rule of 72?

[@TravelingtheWorld96]

@RobBerger, another great video. Thanks. Very interesting this one and as a new retiree I am still looking for a withdrawal strategy that resonates with me. This one is great. The other has been Michael Kitces Monte Carlo strategy (whether to 75 or 50% or some other number). Have you ever come across anybody making practical use of that particular strategy? Would love to hear if you have. Thank you !

[@williamharberts5514]

I am subscriber, but didn't know this was coming up live. I liked it and as more people catch on you should get more and better questions in the chat. I use this system myself, I pull my RMD and along with my SS that is what I spend. It is so easy and I never come up short when the IRS looks at my RMDs.

[@utube4mica]

Excellent info. Thanks for pointing this out. It makes a lot of sense. Thanks so much.

[@alex182618]

Elderly spend more than young.

[@wilma6235]

@RobBerger, thanks for the video. Would single people use the Uniform Table III for RMDs?

[@rob_berger]

Yes.

[@raleedy]

A mistake I made was to start Social Security at 65. In the long run it seems better to bridge to 70 by drawing down from tax-deferred accounts. This reduces the taxable income that creeps up on us in our later years when tax deferred balances are apt to be higher and the RMD factors definitely are. Especially when one of the couple dies, and taxes are assessed on the survivor at individual, rather than joint, rates.

[@hero108zero3]

You can suspend social security. Also reverse the decision if you are ready to pay it all back

[@christopherkeller5263]

Hopefully you are enjoying retirement though! Don’t forget as we get older, we tend to cut spending and not travel etc. if you need extra to spend some of that excess early it’s not crazy to take SS at 65

[@raleedy]

@@hero108zero3 no longer.

[@raleedy]

@@christopherkeller5263 Best career move.

[@EJJ-EvArms]

If one takes social security at 62, thus reducing what they have to take out of portfolio (or put the SS $$ into another portfolio) and that portfolio grows merely 5%, the break-even age is 89. At 7% the break-even age is over 100. I'll take my chances with the bird in the hand, especially since it'll be reduced in some form in 2033, and they'll also probably be taxing the p!$$ out of it by then.

[@EJJ-EvArms]

Rob: "...spending too low in early retirement.... 5 options...." Option #6 is super-simple: take your social security at 62. Problem solved. Not only that, but you leave more in your portfolio, so it grows more. If what you left grows at a mere 5%, your SS break even age is 89.

[@jeffm6273]

We are 68 and retired for 7 years, luckily we had enough cash to live on until I started taking SS at 66. Our combined SS is $54k per year and honestly we don't spend even that much. Our current withdrawal strategy is to take the maximum we can every year from our IRA's so that we don't owe any income tax. That money goes into a regular brokerage account in money market or CD's for emergencies. That amounts to around $20k per year, or a 2.3% withdrawal rate. We will have to increase that when we hit 73 (RMD age) but we'll worry about it then.

[@stevegorkowski3246]

Waiting to 70 to take money out? Male life expectancy is 73.1 years old. You will lose 8 years of SS and you have 3.1 years of higher SS to make it up. Wow, no Roth conversions? Leaving too much money on the table. My basic rule is simple for me I can take out 4% or less if I don't need it. If your account balance stays the same or goes up you will never run out of money.

[@pauravidesai9500]

Most calculations that say you will get 30% more social security if you wait till 67 as opposed to 62, assume that in the former case you are working until you are 67. If you retire when you are in your 50s and not contributing to SS after retiring, you will NOT get 30% more. No calculator tells us how much differential you will get if you hold off until FRA if you are not contributing to social security. They also do not take into account the present value of the amount you get if you start taking payout at 62 when the say that anyone over life expectancy of 78 is better of waiting until FRA as against starting payout at 62.

[@RobWilliams007]

But if you’re spending down your savings, that’s money that could have compounded for your spouse to make up the difference. You’re just stealing from one bucket to satisfy the other. I’m all for delaying SS but to spend down savings to do it is stupid.

[@raymondrust9084]

Why not let Vanguard take the RMD automatically every year from a Vanguard of your choosing. So simple nohassel I'm 76 & have doing this for 4years

[@joereckon6824]

If you wait until age 70 for social security, the annual payout will be maximized. Then at age 73, RMD's become mandatory. The combined amount could put a married couple into a higher tax bracket every year going forward. Further, that combined amount could subject the couple to Medicare penalties that will apply to both partners every month. The couple may not have enough flexibility to try to avoid the Medicare penalty. Reducing tax deferred accounts through Roth Conversions before RMDs become mandatory could result in significant tax savings in many circumstances. Taxes are not likely to decrease in the future. Any thoughts? I like the live format. It may take less time for you to prepare and edit allowing more time to respond to comments?

[@janibeg3247]

we live on S.S. and our pensions. We take out our RMD's and either give away that money and pay taxes with the RMD's. We do not touch our other investments. In retirement, our expenses are fairly low.

[@johnbrown1851]

Well..... You can't take out less than the RMD (without penalty). So I guess that part is a no brainer .

[@M22Research]

As to whether to do LIVE videos… This would appear to be completely a question for yourself since doing live streams might a lot easier for you - no retakes, no laborious editing and uploading, etc… of course at the expense of potentially less polish. But from this regular viewer’s perspective, this video was just about as polished as your non-live video. Kudos on that, not an easy thing to accomplish! From the viewer perspective, I’d guess they’re watching the video on their schedule either way - even if it were pre-announced - at least that’s the case for me. It seems the normal reason to do live videos is for live interaction with viewers via the comments - certainly a different animal, with less control on your part. Good luck either way, I’m certainly appreciating your content…

[@hummerchine]

Brilliant

[@joecocklin8596]

This is what I plan on doing. Roth conversions didn't make sense to me. Pay all your taxes up front and hopefully reap the reward 10 years from then. I'll pay as I go. I'll retire at 63 and pull money out when I need it, but will put off social security until 70. Spouse will continue to work up until 65. She's two years younger. RMD's will be much more than I need, but will just invest it or give to the kids. Anyway, I love that you acknowledge that nobody follows the process to a tee. Life's too short to worry about the little things. Keep it up.

[@bobdurso1]

I like this strategy for several reasons, one of which is that I don’t need to do any messy Roth conversions, which would catapult my earnings into the highest Medicare premium bracket.

[@MILGEO]

I didn't expect a live stream or to be watching YT this time of day today. I guess I just saw the new content dot when I opened YT and decided to check, expecting a regular video, which would have been fine. My brother is a retired CFP and Accountant who has told me that he and his wife live off of the dividends they receive from various stocks and a couple of funds (most of which I've never heard of). He says that they are more than enough to cover his RMD's. He sparked my interest although I've always done my own investing and getting close to traditional retirement age. He's a bit older than I am. It seems like it would be difficult to switch investments to the degree needed to employ this strategy for me at this point.

[@stephenlupi4547]

Keep it simple : 3.5% withdrawal rate at All Times...never run out of $$$$

[@xzx3]

Rob, I actually like your last approach. I am a planner. I am about 12 years to retirement unless I am lucky to leave early. I calculate the minimum spend on utilities each year and set it aside for the following year, plan to do the same for retirement. As you mentioned going to think of big ticket items to spend on like house, renovation etc which could leave a legacy for my offspring and travel of course. But I am thinking of leaving my Super in the high growth even in retirement. What do you think about that? My goal is to leave it in the estate and keep earning minimum for living expenses doing what I would love to do rather than my current job. I plan to be active until I don't know when.

[@manuvns]

spend taxable assets until 70-72 years of age then do RMD ?

[@davestevis200]

How do you figure out your number with this strategy if you're retiring early?

[@RobWilliams007]

All depends on the 3 tax buckets but that has to be planned as you invest.

[@pware9643]

Would be easier for first timers using this chart is IRS used % of RMD withdrawal instead of these factors.. ie at age 73.. your RMD is 3.77% of your total Qualified money balance. SO should it be mentioned that the 4% rule is designed to keep up with inflation.. not just making your money last until ones death. Never see it mentioned how a person should calculate your personal inflation rate.. meaning if your house is paid off, cars paid off at retirement.. then inflation on house prices doesn't affect you..and your have the advantage of downsizing if your portfolio gets stressed, and you could say if a couple had 2 new cars on day one of retirement, inflation on cost of new cars may not be a factor for you, especially if you plan on being a one car couple in 10 years or so. Same with inflation of travel once you hit 80 or so.. as travel not likely occurring much..

[@rob_berger]

A paid off home would seem to lower your personal inflation rate, although Big Ern wrote about it and concluded it doesn't reduce inflation as much as one might think: earlyretirementnow.com/2023/04/14/accounting-for-homeownership-swr-series-part-57/

[@nicnac-n1o]

4% rule is mentioned a lot, and so are different percentage withdrawal rates: 3%, or maybe 5%, etc. Isn’t an individual’s RMD set by the IRS?

[@rob_berger]

Yes.

[@markhenderson558]

Thank you, Rob. this was exactly what I was looking for.

[@jvolstad]

RMDs? I am doing QCDs.

[@cathya222]

Thanks Rob! Excellent content!

[@fredmorgan996]

Thanks Rob. I love your Withdraw Strategy discussions. Quick note: I notice (for me at least) when using "NewRetirement" with the "Spending Needs" withdrawal assumption, this is pretty much what they recommend.

[@M22Research]

While I can see why many people use this method since it is the “no think”, let it all happen to us method, it seems shortsighted not to consider your own situation. In our case our SS + moderate pension (won’t kick in until 65) will more than cover our needs. So letting our RMDs smack us in the face has the potential to wreck our tax situation. And smack even harder if one of us dies earlier, forcing single tax filing status. So our plan is to do Roth IRA conversions to get that tax-infested 401K balance down to a more reasonable balance. Zeroing it will be a challenge, but would be a nice simplification for my wife if she outlives me. And a nice tax simplification for our kids so they don’t get smacked with tax bracket pain due to having to distribute all of the 401K within 10 years of our deaths.

[@M22Research]

Something to consider if one of you expects to die long before the other - the surviving spouse will take a significant hit to the SS benefit since the lower earner SS check goes away. In this case those RMD’s might nicely fill the income needs. But I’d never simply let it happen without intention!

[@rob_berger]

Absolutely. And one can always apply the RMD formula to a Roth if it makes sense for them.

[@M22Research]

@@rob_berger but why would anyone go to the extra trouble of “applying the RMD formula to a Roth”? Particularly for a Roth, where there is zero govt requirement to withdraw funds, it seems retirees should remove no more than their retirement income needs. And as to the % withdrawn, they can determine for themselves whether they believe in the “4% rule” or another % to limit their withdrawals to appropriately extend the life of their assets.

[@pensacola321]

I know many retirees and I have also been retired for 15 + years. Comfortable, but not wealthy. I don't know anyone that uses any of these withdrawal strategies. Besides, right now, dividends and interest alone will be more than 4%.

[@jo-fe9mb]

keyboard link?

[@auricgoldfinger8478]

I have resisted Roth conversions, partly because of the size of my IRA- withdrawals to 22 or 24% marginal wouldn’t significantly deplete the IRA. I’ll pay my taxes and live off of my RMDs at age 73 in 6 years. Combined with qualified charitable distributions and the $50000 charitable annuity,it’s the simplest way to go. Keep it simple

[@richmurphy8144]

I've been thinking about a charitable annuity, mind sharing how much you receive (or will receive) from a $50K donation?

[@auricgoldfinger8478]

@@richmurphy8144 Have to be 70 1/2. One time lifetime gift of up to 50000 from your IRA. No taxes or deductions owed. Currently about 4.75- 5% with survivor benefits. Some better. Good way to give and get some income with remainder to charity

[@stephenlupi4547]

Also...I a retired at 59...living off savings and Pension at 60...Lower Taxes and RMDs by doing Roth IRA conversions Now before 2nd pension at 62 and SS at 68.

[@johnstokes4235]

I have retired thousands of people and never once used any percentage rule. It’s starts with financial planning and strategy.