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Old 10-08-2017, 02:38 PM
 
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Quote:
Originally Posted by matisse12 View Post
mathjack107, I can look this up (and I will) but I figure you probably know the answer which I will then verify.

Is there a minimum withdrawal amount that one must take when one reaches age 70 and a half? I know withdrawals must start, but I'm not sure of the minimum amount or set amount.

I also have an old 401(k) at one of the law firms where I worked - how is that money handled, if impacted by requirement to withdraw at age 70.5 like an IRA. (I'm thinking this money does not fall under that 70.5 requirement?)

(sorry, I haven't read the thread yet, which I definitely will do - I apologize if this is repetitive)
yes , there is an irs table. it is based on your portfolio value each year and the idea is to get all the money taxed and out by around age 100 or so . it is not only based on your age but if you and your spouse differ by 10 year years in age they count too and there is a different chart if passing to your spouse .

from irs website :
Calculating the required minimum distribution
The required minimum distribution for any year is the account balance as of the end of the immediately preceding calendar year divided by a distribution period from the IRS’s “Uniform Lifetime Table.” A separate table is used if the sole beneficiary is the owner’s spouse who is ten or more years younger than the owner.

Last edited by mathjak107; 10-08-2017 at 02:47 PM..
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Old 10-08-2017, 03:29 PM
 
1,212 posts, read 711,881 times
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I have enough tax withheld from the RMD to pay the tax on it and on some Roth conversion. I stick what's left in a saving account that exists only for accumulating RMD's. I can easily transfer some to checking at if I want to use it. I'm resistant to using it for living expenses. I want it to be used for life enhancing things.
Some recent home expenses, & trip costs, in the same month, wiped out most of the checking account. I moved a little, 5%, RMD to checking to recover. It could have come from other savings, I could have left the trip on charge cards. I thought the RMD account is there, why not use it. Did not pay any charge card interest.
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Old 10-08-2017, 06:51 PM
 
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Quote:
Originally Posted by semispherical View Post
I'm also researching QLACs. I don't understand how you are calculating a $240K QLAC, since my research seems to indicate the maximum you can set aside in a QLAC is 25% of your tax-deferred account up to a maximum of $125K.

I'm not getting why buying a QLAC at a younger age would be advantageous as long as you buy it before you are required to start taking the RMD; even after that, if your account is >$500K you would still only be able to set aside $125K. It seems that the QLAC just shelters you from having to withdraw as large a taxable RMD.

I'm hoping to use it as self-insurance for long-term care <shudder> costs and as a way to pass more of my assets on to my heirs instead of having the government tax them at a high marginal rate.
I should have said deferred annuity, not QLAC. As you rightly point out, a QLAC is a tax-sheltered type of deferred annuity with stringent caps (that I expect will gradually rise over time). With after-tax money you can buy as much of a deferred annuity policy as you want or can afford.
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Old 10-09-2017, 01:43 AM
 
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just remember it would be a mistake buying any longevity annuity if you did not delay ss first .
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Old 10-09-2017, 01:52 AM
 
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Quote:
Originally Posted by mathjak107 View Post
just remember it would be a mistake buying any longevity annuity if you did not delay ss first .
In my world, that almost goes without saying (the SS delay is the cheapest and most secure annuity you can possibly buy) but you are absolutely right to emphasize it.

When buying a longevity annuity, here are some suggestions:

- Don't overdo it; the purchase price should be no more than 15% of your investable net worth.
- Don't buy the annuity with the highest interest rate - it will also have the highest risk of default, because they are investing your money in risky assets. Stick to the most reputable companies
- Diversify among 2 or 3 annuity issuers, to reduce the risk of total loss in case of a default
- Don't buy annuities that are loaded up with features such as a "period certain" guarantee, a provision for heirs, etc. You should be trying to buy pure longevity insurance. If not having the features is a deal killer, you can't afford the insurance.
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Old 10-09-2017, 02:43 AM
 
71,831 posts, read 71,919,037 times
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my opinion is the people a longevity annuity are best for are the same people who likely do not have the assets to delay ss or even afford the annuity .

the people best served are those with the slightly underfunded retirement .

imagine having limited resources and instead of planning them to last out to 95 you only had to plan until 85 .
that provides a big difference in income available to live on .


then , if you make it to 85 the longevity annuity takes over .

but the problem is in order to delay ss if retiring early you need the assets to layout .

but if you are going to be working until 70 this could be an ideal product to enlarge your cash flow .

for the rest of us a traditional portfolio planning out to 90-95 should be more than fine without any longevity annuity .
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Old 10-09-2017, 04:53 AM
 
29,816 posts, read 34,907,142 times
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Quote:
Originally Posted by mathjak107 View Post
my opinion is the people a longevity annuity are best for are the same people who likely do not have the assets to delay ss or even afford the annuity .

the people best served are those with the slightly underfunded retirement .

imagine having limited resources and instead of planning them to last out to 95 you only had to plan until 85 .
that provides a big difference in income available to live on .


then , if you make it to 85 the longevity annuity takes over .

but the problem is in order to delay ss if retiring early you need the assets to layout .

but if you are going to be working until 70 this could be an ideal product to enlarge your cash flow .

for the rest of us a traditional portfolio planning out to 90-95 should be more than fine without any longevity annuity .
How does this relate to or answer the OP question? He currently has more fixed income than he needs prior to taking RMD's. Not everyone has the fear or problem of those living off of their investments and he appears to be one of those folks. He was very specific in his thread title and had a well written specific OP question. Are you suggesting that the OP and others in a similar situation are not living in the reality of their situation and need to reconsider their thinking? As you note his situation is like still working with a predictable income flow and not like the situation you might be suggesting.
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Old 10-09-2017, 06:22 AM
 
71,831 posts, read 71,919,037 times
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i am not addressing the op as much as i am others who may be not aware .

i have seen those taking rmd's over and over state "they don't need the money to live on "

many are mis-informed about what the rmd represents . they think if they need as an example 40k from the portfolio and they have a million bucks that if the rmd is 100k they now have 140k to live on . so they think they don't need the money to live on so it must be extra money they can blow or give away . in reality they would be taking a 14% draw rate

so i want to make it clear to others in this thread that if that money was part of the goose laying those golden eggs before rmd's it is still part of it after .

as far as the op , i wouldn't give advice about they should do with their money . i have no idea what their financial situation is in total or even their long term care plan if any.

based on other posts the op was not even sure what constituted the medical expenses they could see .. perhaps this is not money they don't need , they just have not looked at all the other unplanned expenses that hit us . so telling them what to do with the money is not something i would do .

Last edited by mathjak107; 10-09-2017 at 07:02 AM..
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Old 10-09-2017, 09:14 AM
 
3,145 posts, read 1,735,127 times
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Quote:
Originally Posted by TuborgP View Post
How does this relate to or answer the OP question? He currently has more fixed income than he needs prior to taking RMD's. Not everyone has the fear or problem of those living off of their investments and he appears to be one of those folks. He was very specific in his thread title and had a well written specific OP question. Are you suggesting that the OP and others in a similar situation are not living in the reality of their situation and need to reconsider their thinking? As you note his situation is like still working with a predictable income flow and not like the situation you might be suggesting.
Not that it matters, and most certainly not even remotely connected to the topic, but I thought Nefret, the OP, was a she!
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Old 10-09-2017, 09:32 AM
 
3,145 posts, read 1,735,127 times
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Quote:
Originally Posted by mathjak107 View Post
i am not addressing the op as much as i am others who may be not aware .

i have seen those taking rmd's over and over state "they don't need the money to live on "

many are mis-informed about what the rmd represents . they think if they need as an example 40k from the portfolio and they have a million bucks that if the rmd is 100k they now have 140k to live on . so they think they don't need the money to live on so it must be extra money they can blow or give away . in reality they would be taking a 14% draw rate

so i want to make it clear to others in this thread that if that money was part of the goose laying those golden eggs before rmd's it is still part of it after .

as far as the op , i wouldn't give advice about they should do with their money . i have no idea what their financial situation is in total or even their long term care plan if any.

based on other posts the op was not even sure what constituted the medical expenses they could see .. perhaps this is not money they don't need , they just have not looked at all the other unplanned expenses that hit us . so telling them what to do with the money is not something i would do .
MJ, she was asking what do others in similar situation (more than adequate cash flow from reliable sources, and RMD that just goes back in) do with this post-tax money that seems suddenly available, if it is assumed they withhold adequate taxes on the RMD. She says they lived below their means all their lives, don't have expensive tastes, and now want to do something meaningful.

I kind of identify with her. We always lived below our means - smaller house than we could afford, mortgage paid off early, children in public and state universities with tuition paid off, our cars are 10 and 15 years old, and retired late, not early. Her ideas of for this money, while they have some good years left, seems quite thought out. I would not buy a vacation house, but a lot of people like that as a family gathering place that will become part of their estate.
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