Withdrawals During Retirement - Yearly, Quarterly, Monthly?

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Topic Author
Ckprocker
Posts: 31
Joined: Thu Apr 12, 2018 10:12 am

Withdrawals During Retirement - Yearly, Quarterly, Monthly?

Post by Ckprocker » Fri Jul 26, 2019 8:09 am

On Average, for those in Retirement, how often to you withdraw from your Investments?
I was planning on doing it Yearly (on average) and keeping the withdrawals in my Vanguard Money Market account and transferring once a month to my checking account to pay bills etc.

What are the pros and cons?

I know things can change for needed cash at any time.

jebmke
Posts: 9499
Joined: Thu Apr 05, 2007 2:44 pm

Re: Withdrawals During Retirement - Yearly, Quarterly, Monthly?

Post by jebmke » Fri Jul 26, 2019 8:16 am

I withdraw when I need cash to pay the bills coming due in the next 30 days.
When you discover that you are riding a dead horse, the best strategy is to dismount.

MJD
Posts: 25
Joined: Sat Aug 04, 2018 6:17 pm

Re: Withdrawals During Retirement - Yearly, Quarterly, Monthly?

Post by MJD » Fri Jul 26, 2019 8:17 am

I'm curious if you are planning on reinvesting dividends or taking them as income?

It would seem like withdrawing periodically more frequently (monthly/quarterly) would smooth out asset price fluctuations when you withdraw. I don't have any empirical data to back that up, but that's my first thought.

Topic Author
Ckprocker
Posts: 31
Joined: Thu Apr 12, 2018 10:12 am

Re: Withdrawals During Retirement - Yearly, Quarterly, Monthly?

Post by Ckprocker » Fri Jul 26, 2019 8:20 am

I would think in retirement, to take the dividends and spend them.

Sconie
Posts: 673
Joined: Sun Feb 07, 2010 10:23 am
Location: Arizona

Re: Withdrawals During Retirement - Yearly, Quarterly, Monthly?

Post by Sconie » Fri Jul 26, 2019 8:21 am

Generally quarterly here-----use quarterly dividends to replenish my "cash bucket."
I know you think you understand what you thought I said but I'm not sure you realize that what you heard is not what I meant. - Alan Greenspan

tomd37
Posts: 3028
Joined: Thu Mar 01, 2007 10:39 pm
Location: Middle Tennessee

Re: Withdrawals During Retirement - Yearly, Quarterly, Monthly?

Post by tomd37 » Fri Jul 26, 2019 8:27 am

I withdraw once a year. I do my Qualified Charitable Distributions first and then later I do my one final Required Minimum Distribution. At the time of my RMD I have made a final determination of how much federal tax to withhold to satisfy my federal income tax.
Tom D.

livesoft
Posts: 67372
Joined: Thu Mar 01, 2007 8:00 pm

Re: Withdrawals During Retirement - Yearly, Quarterly, Monthly?

Post by livesoft » Fri Jul 26, 2019 8:33 am

jebmke wrote:
Fri Jul 26, 2019 8:16 am
I withdraw when I need cash to pay the bills coming due in the next 30 days.
Me, too. We get quarterly dividends from our taxable accounts that are not usually reinvested. Those are used 4 times a year to pay expenses. So far, we have not needed to withdraw from tax-advantaged accounts. We float a lot of expenses on our credit cards without paying interest, too.
Wiki This signature message sponsored by sscritic: Learn to fish.

SGM
Posts: 3004
Joined: Wed Mar 23, 2011 4:46 am

Re: Withdrawals During Retirement - Yearly, Quarterly, Monthly?

Post by SGM » Fri Jul 26, 2019 8:35 am

I don't reinvest dividends since I retired. For a while I had dividends automatically go to checking, but that became unwieldy. I now keep dividends in a money market and send the dividends to checking when they accumulate on a monthly basis. I have a brokerage account outside of Vanguard and future dividends are projected out for the full year. This is helpful for planning.


If I dividends accumulate unspent I will allocate it to a stock or bond fund. I make quarterly payments for income and real estate taxes so occasionally I leave more in checking. Since I have to take some dividends I would rather spend them than sell a position and pay capital gains.

User avatar
CAsage
Posts: 1343
Joined: Sun Mar 27, 2016 6:25 pm

Re: Withdrawals During Retirement - Yearly, Quarterly, Monthly?

Post by CAsage » Fri Jul 26, 2019 8:35 am

I'm living off my IRA. I take monthly withdrawals to feed the checking account, and pay my taxes in December. It all comes out of a short-term bond fund which is my "cash-like" fund, holds a couple years worth of expenses. If that ever drops, will rebalance into that.
Salvia Clevelandii "Winifred Gilman" my favorite. YMMV; not a professional advisor.

TonyDAntonio
Posts: 450
Joined: Thu Mar 03, 2016 8:32 pm

Re: Withdrawals During Retirement - Yearly, Quarterly, Monthly?

Post by TonyDAntonio » Fri Jul 26, 2019 8:37 am

I have a small pension (monthly), a small retirement job (pay is every two weeks), quarterly dividends from all my index ETFs and quarterly dividends from AT&T and VZ stock (paid on a different schedule than the index ETFs). These income streams have been enough, so far, to cover our spending.

User avatar
ruralavalon
Posts: 16155
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: Withdrawals During Retirement - Yearly, Quarterly, Monthly?

Post by ruralavalon » Fri Jul 26, 2019 8:40 am

Ckprocker wrote:
Fri Jul 26, 2019 8:09 am
On Average, for those in Retirement, how often to you withdraw from your Investments?
I was planning on doing it Yearly (on average) and keeping the withdrawals in my Vanguard Money Market account and transferring once a month to my checking account to pay bills etc.

What are the pros and cons?

I know things can change for needed cash at any time.
We take Required Minimum Distributions (RMDs) monthly, proportionately from each fund in my rollover IRA, automatically deposited to our joint checking account.

Taking proportionally from each fund tends to keep our asset allocation on target. The monthly RMDs plus Social Security is about the amount of monthly living expenses.
Last edited by ruralavalon on Fri Jul 26, 2019 8:42 am, edited 1 time in total.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

MikeG62
Posts: 1945
Joined: Tue Nov 15, 2016 3:20 pm
Location: New Jersey

Re: Withdrawals During Retirement - Yearly, Quarterly, Monthly?

Post by MikeG62 » Fri Jul 26, 2019 8:41 am

Ckprocker wrote:
Fri Jul 26, 2019 8:20 am
I would think in retirement, to take the dividends and spend them.
I stopped reinvesting dividends when I retired. This funds a portion of our retirement spending along with interest on muni bonds and interest bearing cash investments. Any additional amounts needed are pulled from interest bearing cash (including periodically maturing or called bonds).
Real Knowledge Comes Only From Experience

User avatar
Feb29
Posts: 74
Joined: Wed Feb 29, 2012 7:52 pm
Location: Chicago Area

Re: Withdrawals During Retirement - Yearly, Quarterly, Monthly?

Post by Feb29 » Fri Jul 26, 2019 8:46 am

I usually withdraw twice a year into a money market fund. That allows me to stay on top of my investments, but minimizes the effort.

aristotelian
Posts: 5929
Joined: Wed Jan 11, 2017 8:05 pm

Re: Withdrawals During Retirement - Yearly, Quarterly, Monthly?

Post by aristotelian » Fri Jul 26, 2019 8:53 am

I am not retired but I would do monthly on the same principle as doing lump sum during accumulation. During accumulation you generally want as much money in the market as possible over time earning return. That means contributing as much as you can as soon as you can. During retirement I would incline toward monthly so as to reduce money out of market. Otherwise you will have on average 6 months expenses earning no return. That said, I doubt either method will make a note significant difference either way.

User avatar
Wiggums
Posts: 1217
Joined: Thu Jan 31, 2019 8:02 am

Re: Withdrawals During Retirement - Yearly, Quarterly, Monthly?

Post by Wiggums » Fri Jul 26, 2019 9:02 am

jebmke wrote:
Fri Jul 26, 2019 8:16 am
I withdraw when I need cash to pay the bills coming due in the next 30 days.
+1 same here

User avatar
ruralavalon
Posts: 16155
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: Withdrawals During Retirement - Yearly, Quarterly, Monthly?

Post by ruralavalon » Fri Jul 26, 2019 9:04 am

aristotelian wrote:
Fri Jul 26, 2019 8:53 am
I am not retired but I would do monthly on the same principle as doing lump sum during accumulation. During accumulation you generally want as much money in the market as possible over time earning return. That means contributing as much as you can as soon as you can. During retirement I would incline toward monthly so as to reduce money out of market. Otherwise you will have on average 6 months expenses earning no return. That said, I doubt either method will make a note significant difference either way.

Excellent point, keep your money invested in the market as long as possible to keep it producing returns.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

sixtyforty
Posts: 346
Joined: Tue Nov 25, 2014 12:22 pm
Location: USA

Re: Withdrawals During Retirement - Yearly, Quarterly, Monthly?

Post by sixtyforty » Fri Jul 26, 2019 12:47 pm

I've pondered this same question. Currently, I have a MM I withdraw from monthly to pay expenses and withdraw quarterly from investments to replenish the MM. I am most likely going to change this and invest the MM and then just withdraw monthly from my investments. I use balanced funds so I don't need to worry about re-balancing.
"Simplicity is the ultimate sophistication" - Leonardo Da Vinci

User avatar
mickeyd
Posts: 4727
Joined: Fri Feb 23, 2007 3:19 pm
Location: Deep in the Heart of South Texas

Re: Withdrawals During Retirement - Yearly, Quarterly, Monthly?

Post by mickeyd » Fri Jul 26, 2019 3:51 pm

I plan on taking RMD each December. My IPS reflects this. However, I have recently taken my RMD during the year at a time that the stock market reaches the all time high. (We are currently in that situation now.) I plan on adjusting my IPS to reflect this. Since I do not need my withdrawals to live on (due to healthy pension cash flow) I usually reinvest it or spend it on future fun.
Part-Owner of Texas | | “The CMH-the Cost Matters Hypothesis -is all that is needed to explain why indexing must and will work… Yes, it is that simple.” John C. Bogle

dbr
Posts: 29798
Joined: Sun Mar 04, 2007 9:50 am

Re: Withdrawals During Retirement - Yearly, Quarterly, Monthly?

Post by dbr » Fri Jul 26, 2019 3:59 pm

We withdraw money when we need it. We take RMDs at year end unless we need to spend more money sooner. An RMD is not a withdrawal from investments.

User avatar
willthrill81
Posts: 11892
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: Withdrawals During Retirement - Yearly, Quarterly, Monthly?

Post by willthrill81 » Fri Jul 26, 2019 4:59 pm

tomd37 wrote:
Fri Jul 26, 2019 8:27 am
I withdraw once a year. I do my Qualified Charitable Distributions first and then later I do my one final Required Minimum Distribution. At the time of my RMD I have made a final determination of how much federal tax to withhold to satisfy my federal income tax.
:thumbsup If you're going to do QCDs, this is the way to do them: first.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

User avatar
Phineas J. Whoopee
Posts: 8493
Joined: Sun Dec 18, 2011 6:18 pm

Re: Withdrawals During Retirement - Yearly, Quarterly, Monthly?

Post by Phineas J. Whoopee » Fri Jul 26, 2019 5:24 pm

MJD wrote:
Fri Jul 26, 2019 8:17 am
I'm curious if you are planning on reinvesting dividends or taking them as income?

It would seem like withdrawing periodically more frequently (monthly/quarterly) would smooth out asset price fluctuations when you withdraw. I don't have any empirical data to back that up, but that's my first thought.
Over such a short period of time, the results within one year really aren't predictable. Over long periods of time they may be.

Those drawing equal periodic amounts from their portfolios for spending are subject to the opposite of dollar cost averaging. Taking RMDs and investing them simply moves the assets from one tax category to another.

PJW

RadAudit
Posts: 3480
Joined: Mon May 26, 2008 10:20 am
Location: Second star on the right and straight on 'til morning

Re: Withdrawals During Retirement - Yearly, Quarterly, Monthly?

Post by RadAudit » Fri Jul 26, 2019 5:42 pm

Ckprocker wrote:
Fri Jul 26, 2019 8:09 am
I was planning on doing it Yearly (on average) and keeping the withdrawals in my Vanguard Money Market account and transferring once a month to my checking account to pay bills etc.

What are the pros and cons?
tomd37 wrote:
Fri Jul 26, 2019 8:27 am
I do my Qualified Charitable Distributions first and then later I do my one final Required Minimum Distribution. At the time of my RMD I have made a final determination of how much federal tax to withhold to satisfy my federal income tax.
+1

OP and tom37 cover my basic approach. Of course, it helps if you've got a pension and SS (or other income streams) to cover monthly expenses. I keep about 2% of the portfolio in a taxable MM to cover most additional unexpected costs that may pop up over usual monthly expenditures vs. monthly transfers to checking. It's just basically is a way that I use to keep from messing with that part of the portfolio that's tax advantaged throughout the year. And it seems to make rebalancing the portfolio easier. (Or at least that's what I tell myself)
FI is the best revenge. LBYM. Invest the rest. Stay the course. - PS: The cavalry isn't coming, kids. You are on your own.

KlangFool
Posts: 13281
Joined: Sat Oct 11, 2008 12:35 pm

Re: Withdrawals During Retirement - Yearly, Quarterly, Monthly?

Post by KlangFool » Fri Jul 26, 2019 5:51 pm

OP,

Why should the withdrawal have any fixed timing? You could keep 2 years of expense in cash. Then, you could do your withdrawal whenever it is advantageous to you in term of tax management.

KlangFool

User avatar
abuss368
Posts: 14457
Joined: Mon Aug 03, 2009 2:33 pm
Location: Where the water is warm, the drinks are cold, and I don't know the names of the players!

Re: Withdrawals During Retirement - Yearly, Quarterly, Monthly?

Post by abuss368 » Fri Jul 26, 2019 5:56 pm

tomd37 wrote:
Fri Jul 26, 2019 8:27 am
I withdraw once a year. I do my Qualified Charitable Distributions first and then later I do my one final Required Minimum Distribution. At the time of my RMD I have made a final determination of how much federal tax to withhold to satisfy my federal income tax.
You have a good plan.
John C. Bogle: "You simply do not need to put your money into 8 different mutual funds!"

Topic Author
Ckprocker
Posts: 31
Joined: Thu Apr 12, 2018 10:12 am

Re: Withdrawals During Retirement - Yearly, Quarterly, Monthly?

Post by Ckprocker » Fri Jul 26, 2019 6:43 pm

KlangFool wrote:
Fri Jul 26, 2019 5:51 pm
OP,

Why should the withdrawal have any fixed timing? You could keep 2 years of expense in cash. Then, you could do your withdrawal whenever it is advantageous to you in term of tax management.

KlangFool
I’m learning...enlighten me...I have read here that many feel having the likes of 2 to 3 years of cash in a MM is a drag on your ability to earn more so instead keep the money invested.

KlangFool
Posts: 13281
Joined: Sat Oct 11, 2008 12:35 pm

Re: Withdrawals During Retirement - Yearly, Quarterly, Monthly?

Post by KlangFool » Fri Jul 26, 2019 6:58 pm

Ckprocker wrote:
Fri Jul 26, 2019 6:43 pm
KlangFool wrote:
Fri Jul 26, 2019 5:51 pm
OP,

Why should the withdrawal have any fixed timing? You could keep 2 years of expense in cash. Then, you could do your withdrawal whenever it is advantageous to you in term of tax management.

KlangFool
I’m learning...enlighten me...I have read here that many feel having the likes of 2 to 3 years of cash in a MM is a drag on your ability to earn more so instead keep the money invested.
Ckprocker,

Versus the ability to withdraw or not withdraw as needed? Depending on the individual's tax situation, having the flexibility to generate the right amount of taxable income every year could be very useful.

Cash in a MM is generating 2+% interest now. It is equivalent to the fixed income portion of your portfolio. So, how much do you actually lose?

In summary, depending on your annual expense and tax situation, this could be very useful. The tax savings could generate a higher return than keeping this pile of money invested.

KlangFool

summerof42
Posts: 94
Joined: Wed Nov 12, 2014 12:33 am

Re: Withdrawals During Retirement - Yearly, Quarterly, Monthly?

Post by summerof42 » Fri Jul 26, 2019 9:26 pm

@KlangFool

Where are you getting 2% in MM? I'm looking to transfer $20k from savings (which is earning next to nothing) at local bank, keeping a balance of around $5k in the savings account, but the rates I'm seeing for MM aren't great.

Of course, family and friends tell me I'm crazy and need to keep this cash in the savings as my emergency fund and avoid any fees and risk in a MM. I presently have retirement accounts at Vanguard. I think it's ridiculous to keep this amount of money at my local bank and let them earn interest on my money!

Does a great MM exist? What do most of the Boggleheads do for their emergency fund?
Last edited by summerof42 on Fri Jul 26, 2019 9:31 pm, edited 1 time in total.

KlangFool
Posts: 13281
Joined: Sat Oct 11, 2008 12:35 pm

Re: Withdrawals During Retirement - Yearly, Quarterly, Monthly?

Post by KlangFool » Fri Jul 26, 2019 9:29 pm

summerof42 wrote:
Fri Jul 26, 2019 9:26 pm
@KlangFool

Where are you getting 2% in MM? I'm looking to transfer $20k from savings (which is earning next to nothing) at local bank, keeping a balance of around $5k in the savings account, but the rates I'm seeing for MM aren't great.

Of course, family and friends tell me I'm crazy and need to keep this cash in the savings due to fees and risk in a MM. I have accounts at Vanguard but of course there's the risk of not being FDIC insured and then also fees for the MM.

Does a great MM exist? What do most of the Boggleheads do for their emergency fund?
summerof42,

Vanguard Treasury Money Market Fund (VUSXX)

https://investor.vanguard.com/mutual-fu ... file/VUSXX

KlangFool

summerof42
Posts: 94
Joined: Wed Nov 12, 2014 12:33 am

Re: Withdrawals During Retirement - Yearly, Quarterly, Monthly?

Post by summerof42 » Fri Jul 26, 2019 9:33 pm

@KlangFool

Thanks for the quick response. I'm going to Vanguard site as we speak to check it out.

Update: No can do, minimum is $50k. Per earlier post, I'm looking to transfer $20k. So the search is still on for the ideal MM.

KlangFool
Posts: 13281
Joined: Sat Oct 11, 2008 12:35 pm

Re: Withdrawals During Retirement - Yearly, Quarterly, Monthly?

Post by KlangFool » Fri Jul 26, 2019 9:47 pm

summerof42 wrote:
Fri Jul 26, 2019 9:33 pm
@KlangFool

Thanks for the quick response. I'm going to Vanguard site as we speak to check it out.

Update: No can do, minimum is $50k. Per earlier post, I'm looking to transfer $20k. So the search is still on for the ideal MM.
summerof42,

How about this one?

Vanguard Prime Money Market Fund Admiral Shares (VMRXX)
https://investor.vanguard.com/mutual-fu ... view/vmrxx

KlangFool

User avatar
GerryL
Posts: 2373
Joined: Fri Sep 20, 2013 11:40 pm

Re: Withdrawals During Retirement - Yearly, Quarterly, Monthly?

Post by GerryL » Fri Jul 26, 2019 9:55 pm

tomd37 wrote:
Fri Jul 26, 2019 8:27 am
I withdraw once a year. I do my Qualified Charitable Distributions first and then later I do my one final Required Minimum Distribution. At the time of my RMD I have made a final determination of how much federal tax to withhold to satisfy my federal income tax.
This is my plan, which I have started executing this first year of RMDs. I also get dividends from my taxable account each quarter that supplement SS.

User avatar
Blackwood
Posts: 158
Joined: Mon Nov 05, 2007 7:26 pm
Location: Atlanta, USA

Re: Withdrawals During Retirement - Yearly, Quarterly, Monthly?

Post by Blackwood » Fri Jul 26, 2019 9:55 pm

Advice on handling withdrawals in retirement depends on your circumstances. Here are mine.

This is my 4th year of retirement. Most of my investments are in Vanguard IRAs that I haven't had to tap yet as I still have several years worth of spending in a Vanguard taxable account. I still have 5 years to go (under current law) until I have to take Required Minimum Distributions from my traditional IRA and I don't expect to be able to convert all of it to a Roth before then. My taxable account is almost all invested in Total Stock Market Admiral Funds with the rest in Prime Money Market, dividends from TSM are sent to Prime Money Market.

I have Vanguard transfer enough to cover my spending from the Money Market to my bank account on a monthly basis. The stock dividends are not enough to cover these withdrawals, so once a quarter I sell enough TSM to cover the rest. The quarterly sales are a compromise. Selling more often (e.g. monthly) would mean more taxable events to track (not really a big deal). Selling less often (e.g. annually) would mean a higher average balance in the lower yielding money market fund (also not really a big deal).

When I must start taking Required Minimum Distributions from my traditional IRA, I will do so annually and add enough to the money market in my taxable account to cover withdrawals for the year (after accounting for expected dividends from TSM) and add the rest to TSM.

scrabbler1
Posts: 2394
Joined: Fri Nov 20, 2009 2:39 pm

Re: Withdrawals During Retirement - Yearly, Quarterly, Monthly?

Post by scrabbler1 » Fri Jul 26, 2019 11:10 pm

As an early retiree (age 56), and one not old enough to have unfettered access to my IRA, I take my withdrawals in the form of monthly and quarterly dividends from my bond and stock mutual funds within my taxable account.

Charon
Posts: 133
Joined: Thu May 03, 2018 12:08 pm

Re: Withdrawals During Retirement - Yearly, Quarterly, Monthly?

Post by Charon » Fri Jul 26, 2019 11:19 pm

KlangFool wrote:
Fri Jul 26, 2019 9:47 pm
Vanguard Prime Money Market Fund Admiral Shares (VMRXX)
https://investor.vanguard.com/mutual-fu ... view/vmrxx
You mean the non-Admiral version, VMMXX ( https://investor.vanguard.com/mutual-fu ... file/VMMXX ). Admiral shares require a minimum of $5M :shock:

ClaycordJCA
Posts: 277
Joined: Sun Aug 09, 2015 11:19 pm
Location: SF Bay Area

Re: Withdrawals During Retirement - Yearly, Quarterly, Monthly?

Post by ClaycordJCA » Sat Jul 27, 2019 1:30 am

summerof42 wrote:
Fri Jul 26, 2019 9:26 pm
@KlangFool

Where are you getting 2% in MM? I'm looking to transfer $20k from savings (which is earning next to nothing) at local bank, keeping a balance of around $5k in the savings account, but the rates I'm seeing for MM aren't great.

Of course, family and friends tell me I'm crazy and need to keep this cash in the savings as my emergency fund and avoid any fees and risk in a MM. I presently have retirement accounts at Vanguard. I think it's ridiculous to keep this amount of money at my local bank and let them earn interest on my money!

Does a great MM exist? What do most of the Boggleheads do for their emergency fund?
Fidelity - SPAXX. The current yield is 2.03%. However, I prefer Ally which is currently paying 2.1% on savings, not a CD.

KlangFool
Posts: 13281
Joined: Sat Oct 11, 2008 12:35 pm

Re: Withdrawals During Retirement - Yearly, Quarterly, Monthly?

Post by KlangFool » Sat Jul 27, 2019 6:40 am

Charon wrote:
Fri Jul 26, 2019 11:19 pm
KlangFool wrote:
Fri Jul 26, 2019 9:47 pm
Vanguard Prime Money Market Fund Admiral Shares (VMRXX)
https://investor.vanguard.com/mutual-fu ... view/vmrxx
You mean the non-Admiral version, VMMXX ( https://investor.vanguard.com/mutual-fu ... file/VMMXX ). Admiral shares require a minimum of $5M :shock:
Thanks for catching my mistake.

KlangFool

User avatar
ruralavalon
Posts: 16155
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: Withdrawals During Retirement - Yearly, Quarterly, Monthly?

Post by ruralavalon » Sat Jul 27, 2019 7:36 am

ClaycordJCA wrote:
Sat Jul 27, 2019 1:30 am
summerof42 wrote:
Fri Jul 26, 2019 9:26 pm
@KlangFool

Where are you getting 2% in MM? I'm looking to transfer $20k from savings (which is earning next to nothing) at local bank, keeping a balance of around $5k in the savings account, but the rates I'm seeing for MM aren't great.

Of course, family and friends tell me I'm crazy and need to keep this cash in the savings as my emergency fund and avoid any fees and risk in a MM. I presently have retirement accounts at Vanguard. I think it's ridiculous to keep this amount of money at my local bank and let them earn interest on my money!

Does a great MM exist? What do most of the Boggleheads do for their emergency fund?
Fidelity - SPAXX. The current yield is 2.03%. However, I prefer Ally which is currently paying 2.1% on savings, not a CD.
Vanguard Prime Money Market Fund (VMMXX) current SEC Yield = 2.27%, current Compound Yield = 2.29%.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

User avatar
mickeyd
Posts: 4727
Joined: Fri Feb 23, 2007 3:19 pm
Location: Deep in the Heart of South Texas

Re: Withdrawals During Retirement - Yearly, Quarterly, Monthly?

Post by mickeyd » Sun Aug 11, 2019 1:02 pm

FWIW I have used PMMF as my cash dump off/on for about 20 years. It generally holds up during current ups/downs, but there is no FDIC insurance, if that is an important issue for you. PMMF is a hard place to beat... currently 2.23%.
Part-Owner of Texas | | “The CMH-the Cost Matters Hypothesis -is all that is needed to explain why indexing must and will work… Yes, it is that simple.” John C. Bogle

Dandy
Posts: 5880
Joined: Sun Apr 25, 2010 7:42 pm

Re: Withdrawals During Retirement - Yearly, Quarterly, Monthly?

Post by Dandy » Sun Aug 11, 2019 4:32 pm

Ckprocker wrote:
Fri Jul 26, 2019 8:09 am
On Average, for those in Retirement, how often to you withdraw from your Investments?
I was planning on doing it Yearly (on average) and keeping the withdrawals in my Vanguard Money Market account and transferring once a month to my checking account to pay bills etc.

What are the pros and cons?

I know things can change for needed cash at any time.
I think that is a reasonable approach. I have pension and SS sent to Savings and 2X a month transfer it to checking. Acts a bit like my old 2X a month paycheck when I was working. I use Alliant Credit Union checking (pays 0.65%) and Savings currently at 2.10% I would highly recommend them. 24/7 service, little or no minimums or fees, move $ instantly between Savings and checking, reimburse $20/month in outside ATM fees, lots of free ATMs nationwide.

If the monthly transfers approximate your target yearly withdrawals (divided by 12 of course) you will also get a feel as to whether your expenses are exceeding your target. If you always add money to checking at the end of the month - your expenses are above your goal and vice versa. Having a bit of a cushion in Savings helps smooth out the lumpy monthly expenses.

longinvest
Posts: 3754
Joined: Sat Aug 11, 2012 8:44 am

Re: Withdrawals During Retirement - Yearly, Quarterly, Monthly?

Post by longinvest » Sun Aug 11, 2019 4:47 pm

Ckprocker wrote:
Fri Jul 26, 2019 8:09 am
What are the pros and cons?
Here's a post where I've provided some arguments in favor of monthly withdrawals with a small cash cushion. The overall process is explained in this post.
Bogleheads investment philosophy | single-ETF balanced portfolio | VBAL

Grasshopper
Posts: 985
Joined: Sat Oct 09, 2010 3:52 pm

Re: Withdrawals During Retirement - Yearly, Quarterly, Monthly?

Post by Grasshopper » Sun Aug 11, 2019 5:55 pm

jebmke wrote:
Fri Jul 26, 2019 8:16 am
I withdraw when I need cash to pay the bills coming due in the next 30 days.
This is us, withdrawal as needed, retired 13 years ago works fine.

User avatar
Leif
Posts: 2644
Joined: Wed Sep 19, 2007 4:15 pm

Re: Withdrawals During Retirement - Yearly, Quarterly, Monthly?

Post by Leif » Sun Aug 11, 2019 6:00 pm

As needed to replenish my checking account. On average I would say every 2-3 of months. I expect that once I start SS and RMDs it will probably be once a year at RMD time.

Barefoot
Posts: 108
Joined: Tue Sep 27, 2016 8:30 pm

Re: Withdrawals During Retirement - Yearly, Quarterly, Monthly?

Post by Barefoot » Sun Aug 11, 2019 6:01 pm

Monthly

User avatar
patrick013
Posts: 2660
Joined: Mon Jul 13, 2015 7:49 pm

Re: Withdrawals During Retirement - Yearly, Quarterly, Monthly?

Post by patrick013 » Sun Aug 11, 2019 6:03 pm

How about checking the annual returns of your 3 or 4 mutual funds in December. Make a withdrawal in January from the highest returner. Deposit that in a bank account (used to pay 2.5%) and spend as needed. RMD's just take as usual maybe a little more if those returns are high. But those are mostly bonds anyway.
age in bonds, buy-and-hold, 10 year business cycle

hulburt1
Posts: 356
Joined: Tue Jul 15, 2014 9:17 pm

Re: Withdrawals During Retirement - Yearly, Quarterly, Monthly?

Post by hulburt1 » Sun Aug 11, 2019 9:02 pm

I like a weekly check sent to my bank from Van. MM. What is left over from last week go's to saving. In Dec. I look at what I've saved and stop having the sent weekly until I use up some of that saving. I might look at a car or RV. Will pay cash from saving. I'm 66 and have don it that way for 11 years.

User avatar
SevenBridgesRoad
Posts: 423
Joined: Sat Jul 07, 2018 12:14 am

Re: Withdrawals During Retirement - Yearly, Quarterly, Monthly?

Post by SevenBridgesRoad » Sun Aug 11, 2019 9:15 pm

ruralavalon wrote:
Sat Jul 27, 2019 7:36 am
ClaycordJCA wrote:
Sat Jul 27, 2019 1:30 am
summerof42 wrote:
Fri Jul 26, 2019 9:26 pm
@KlangFool

Where are you getting 2% in MM? I'm looking to transfer $20k from savings (which is earning next to nothing) at local bank, keeping a balance of around $5k in the savings account, but the rates I'm seeing for MM aren't great.

Of course, family and friends tell me I'm crazy and need to keep this cash in the savings as my emergency fund and avoid any fees and risk in a MM. I presently have retirement accounts at Vanguard. I think it's ridiculous to keep this amount of money at my local bank and let them earn interest on my money!

Does a great MM exist? What do most of the Boggleheads do for their emergency fund?
Fidelity - SPAXX. The current yield is 2.03%. However, I prefer Ally which is currently paying 2.1% on savings, not a CD.
Vanguard Prime Money Market Fund (VMMXX) current SEC Yield = 2.27%, current Compound Yield = 2.29%.
Keep it super simple with the VG Federal Money Market fund VMFXX which is the standard "comes with" settlement account with VG accounts. 7-day SEC yield is 2.16%.

Interesting piece on the much-feared cash drag: https://portfoliocharts.com/2017/05/12/ ... -investor/

Keep it simple. Relax.
Retired 2018 | Love to work at nothing all day | 30:70 VTINX with two deferred single premium annuities and deferred SS | VPW Method | Sleeping very well at night

User avatar
Sandtrap
Posts: 8028
Joined: Sat Nov 26, 2016 6:32 pm
Location: Hawaii No Ka Oi , N. Arizona

Re: Withdrawals During Retirement - Yearly, Quarterly, Monthly?

Post by Sandtrap » Mon Aug 12, 2019 6:37 pm

Withdrawals on an "as needed" basis.
j :happy
Wiki Bogleheads Wiki: Everything You Need to Know

best2u
Posts: 83
Joined: Tue Jul 28, 2015 12:51 pm

Re: Withdrawals During Retirement - Yearly, Quarterly, Monthly?

Post by best2u » Mon Aug 12, 2019 8:23 pm

We make a budgeted quarterly withdrawal for recurring expenses like insurance plus two additional semi-annual withdrawals for property taxes. So 6 per year. Pension and SS provide rest. Try to spend all available funds outside of retirement accounts. Usually when we get a couple thousand in personal savings my wife will help us dispose of it. I just ask for her input. Right now she has us in Italy for 12 days. So soon things will get back to normal as we will be out of excess spendable cash. :beer
“There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest of them have to pee on the electric fence for themselves.” Will Rogers

retiredflyboy
Posts: 136
Joined: Sun Dec 02, 2018 10:02 pm

Re: Withdrawals During Retirement - Yearly, Quarterly, Monthly?

Post by retiredflyboy » Mon Aug 12, 2019 10:11 pm

I take interest monthly from bond fund and dividends quarterly from stock fund and capital gains yearly. Each of these are deposited into checking account.
Facts are stubborn things. Everything works until it doesn’t.

MnD
Posts: 4298
Joined: Mon Jan 14, 2008 12:41 pm

Re: Withdrawals During Retirement - Yearly, Quarterly, Monthly?

Post by MnD » Tue Aug 13, 2019 7:36 am

aristotelian wrote:
Fri Jul 26, 2019 8:53 am
I am not retired but I would do monthly on the same principle as doing lump sum during accumulation. During accumulation you generally want as much money in the market as possible over time earning return. That means contributing as much as you can as soon as you can. During retirement I would incline toward monthly so as to reduce money out of market. Otherwise you will have on average 6 months expenses earning no return. That said, I doubt either method will make a note significant difference either way.
Exactly.
I generate a monthly net paycheck through an automatic fixed dollar amount and proportional to AA (70/30) sale and withdrawal from a retirement account. Taxes are paid quarterly with proportional sales made just prior to payment.
Cash bucket schemes are demonstrably suboptimal and really just mental accounting. That said, if cash balances are included in your AA and invested properly (MM, t-bills, ect) there's not much harm to it.
https://papers.ssrn.com/sol3/papers.cfm ... id=3274499

Post Reply