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Old 10-09-2017, 12:16 PM
 
Location: Paranoid State
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I'm not close to RMD, but my plan is to spend half on hookers & blow and then waste the rest.

Seriously, though, by the time a person is old enough for RMD, their spending patterns are fairly stable. Absent an unexpected windfall such as hitting the lottery for a couple hundred million, most people at the age of RMD are not going to change what they spend their money on.

So invest it in a non-qualified (regular taxable) account.
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Old 10-09-2017, 01:03 PM
 
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Some people with pensions like to stay in their lane and share with other like folks. Direct and simple and consistently relevant
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Old 10-09-2017, 01:33 PM
 
Location: Florida -
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Quote:
Originally Posted by mathjak107 View Post
STOP !!!!!! VERY IMPORTANT " never forget these rmd's are still money that is calculated as part of the pile of money developing your income . this is not "EXTRA " money .

because you have to change a tax status on some of your money does not mean it is "extra money" in any way .

if you needed x-amount in a portfolio to be the goose laying those golden eggs up to the rmd's , you still pretty much need the same amount less some tax money after them . nothing changed because you are switching pockets on some of the money .

to many folks screw up here thinking it is bonus spending money they don't need . yet that money was calculated in the size of the total portfolio when setting their draw rate and is part of the income generation end of things and is still needed to safely generate that income .

taking raises because things are better than expected is a different issue than just being forced to shift from one account type to another .

if a balance of 1 million was generating A 40K income pre rmd's , you still need the same million to generate that same income . the fact you have to pull 100k rmd amount out does not make it extra money and you now have a 140k to spend so you think you can blow it or give it away . .. the 100k still needs to do its share and will just do its share of generation from a brokerage account instead of an ira .

don't blow this because of a misconception as to what is happening when you take rmd's .
(Just catching back-up with the thread) - Thanks, good points! However, as is the situation with the OP, Tuborg and others, our income is comfortably sufficient and derived from a sizable pension, 2X SS and relatively debt-free living. Our remaining, deferred-tax IRA's, 403b's and an annuity (against which RMD's will become due in 2018) could be used to offset healthcare or inflation issues later-on. But, for now, we only 'need it' to fund grandkid's college, charitable giving, RMD taxes, post-tax, inheritance-building investments and 'extra' spending/giving.

We were/are neither wealthy or lucky, but, simply planned and invested to avoid post-retirement life and financial stress. God has also greatly blessed us with health; self-sufficient, productive, Christian kids; and limited wealth/asset-draining problems and obstacles.
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Old 10-09-2017, 01:41 PM
 
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all that fits right in to camp 2 as i said above . no matter what the income sources are outside the portfolio they are enough to cover things without having to pensionize the portfolio .

you are free to pretty much do with that money or rmds as you see fit .

unlike camp 1 who has to turn that portfolio in to a safe life long income and the rmds's remain an integral part of that portfolio .
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Old 10-09-2017, 02:41 PM
 
29,782 posts, read 34,871,258 times
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Quote:
Originally Posted by mathjak107 View Post
all that fits right in to camp 2 as i said above . no matter what the income sources are outside the portfolio they are enough to cover things without having to pensionize the portfolio .

you are free to pretty much do with that money or rmds as you see fit .

unlike camp 1 who has to turn that portfolio in to a safe life long income and the rmds's remain an integral part of that portfolio .
Yup so can we have a campground 2 for Retirement forum campers?
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Old 10-09-2017, 03:14 PM
 
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i guess you really are not much different though than anyone else still in their accumulation stage over in the investing forum .

most retirement decisions other than the creation of a pensionized income for those who need it would be the same regardless of the income make up .

the only difference is you don't have to pensionize your income and are free to do with your portfolio as you see fit .
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Old 10-09-2017, 03:36 PM
 
29,782 posts, read 34,871,258 times
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Quote:
Originally Posted by mathjak107 View Post
i guess you really are not much different though than anyone else still in their accumulation stage over in the investing forum .

most retirement decisions other than the creation of a pensionized income for those who need it would be the same regardless of the income make up .

the only difference is you don't have to pensionize your income and are free to do with your portfolio as you see fit .
I would say that those in my situation really need to personalize their portfolio and identify possible uses for and hold as such. Regardless of LTCi etc, I have learned to still identify the recommended amount which is now 275k by Fidelity for health care cost. So that much is identified and checked off. I have a targeted amount in after tax funds which is a growth component from additional savings and RMD deposit. I was told previously that my amounts there were unrealistic for most and shouldn't be discussed.
The other money is targeted for poop happening with our pensions or SS and to provide a Self developed COLA based on those returns equaling a COLA. As I noted before a multiple of X times fixed income can be used to provide a COLA. 3X is a good amount.

This enables me to wrap my head around the portfolio and encourage it to grow over the next decade to be reviewed at age 80 if not sooner by circumstance. Did that getting to now or almost age 70. By taking SS months earlier than 70 the time table moved up.

I don't need to tell you that aimlessly investing without goals can lead to less than optimum results.
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Old 10-09-2017, 08:17 PM
 
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Interesting article in Market Watch related to this today.
It

Quote:
It may be worth thinking about whether to publicize the message that people should feel free to spend the money that the government requires retirees to take out of their account.
The above quote is from the end of the article.
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Old 10-10-2017, 12:18 AM
 
6,353 posts, read 5,161,362 times
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Quote:
Originally Posted by mathjak107 View Post
for the rest of us a traditional portfolio planning out to 90-95 should be more than fine without any longevity annuity .
If "the rest of us" means people who have saved 30x annual expenses, then I agree. You will never outlive that. But only a couple million people out of our vast population are in that category.

By the way, at today's stock prices the safety of a 4% withdrawal rule is NOT guaranteed. It is a fair bet, but when I am 103 (the age to which my grandfather lived, and he was born in 1887 when life expectancies were shorter) I do not want to be making fair bets.
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Old 10-10-2017, 03:05 AM
 
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as long as you maintain at least a 2% real return average over the first 15 years 4% will hold fine . that is easy enough to monitor along the way . you know if 5 years in you are below that a red flag should go up and certainly by 10 years a pay cut is in order .

so it has not a lot to do with just market returns . it is a combo of sequence risk , market returns annually , rates and inflation .


i did say if a retirement is underfunded a longevity annuity can help but if you don't delay ss first you are hurting yourself as there is no better longevity annuity ..

just having a higher equity position can surpass that longevity annuity as well . no guarantee but odds are almost 100% that over decades the higher equity position will have a better outcome . kitces already crunched those numbers for us.

even buying longer term bonds vs the longevity annuity decades before you use it like the annuity turned out to be very close . figuring a more average life expectancy as opposed to 100 made the difference between just buying bonds on the day you plunked the money down for the longevity annuity very very close in outcome .


kitce's found the longevity annuity did better because of mortality credits if you made it to age 100 , but not enough to make or break someones retirement .

don't forget there is a big cost to tying up money in a longevity annuity that won't be collected on for decades .

sure the payment is increased over time but when crunched if you made it to age 100 and most will not you saw a 5-6% before inflation return . equities over decades have generally been in the 9-10% range for comparison . in fact my fidelity insight growth model i have since 1987 is averaging almost 11% .

so while the longevity annuities can help , they really are not doing anything you can't likely do better on your own , unless you are that gun shy of markets .

if that is the case then the best deal for a couple would likely be an immediate annuity for one of them , a bit of their own investing and life insurance for the 2nd spouse instead of having that annuity as a joint annuity . that joint annuity will not only pay out more if a single but the tax free life insurance for the spouse is totally tax free . that is a big game changer and when pfau ran 10,000 different outcomes the comprehensive plan beat just investing on your own 67% of the time frames to date and allowed a higher draw rate than investing on your own 100% of the time because of little sequence risk allowing less to have to be held in reserve for poor sequencing .

that is a big difference since there are no taxes , no rmds at a time you will be filing single .

as it is drawing 4% inflation adjusted with a 60/40 mix has left you with more than you started with 90% of every rolling 20 year period since 1926 . it has left you with more than 2x what you started with 67% of the time and more than 3x what you started with 50% of the time .

that in itself is pretty darn durable as far as lasting , but that is because it is based on the most horrific outcomes to date . anything better just increases the odds and if raises are not taken along they way the real danger is dying with to much money left on the table that could have been enjoyed .

Last edited by mathjak107; 10-10-2017 at 03:32 AM..
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