Frequency of Withdrawals in Retirement

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tvubpwcisla
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Frequency of Withdrawals in Retirement

Post by tvubpwcisla »

During retirement, I am curious if investors are withdrawing 4% (or whatever percentage they choose) on a Weekly, Monthly, Quarterly, or Yearly basis? Would one time frame be better than another and why?

Thanks!
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AlohaJoe
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Re: Frequency of Withdrawals in Retirement

Post by AlohaJoe »

It doesn't matter. Any of them is fine.
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Sandtrap
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Re: Frequency of Withdrawals in Retirement

Post by Sandtrap »

When DW spends on home and property upgrades.😬😬

Fractional withdrawals year round totaling 2.5—3%.

j🌺
Last edited by Sandtrap on Fri Jun 12, 2020 8:03 am, edited 1 time in total.
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Dave55
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Re: Frequency of Withdrawals in Retirement

Post by Dave55 »

I withdraw when I need the money to pay bills. Frequency is about once a month.

Dave
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tvubpwcisla
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Re: Frequency of Withdrawals in Retirement

Post by tvubpwcisla »

Sandtrap wrote: Fri Jun 12, 2020 8:01 am When DW spends on home and property upgrades.

j😬😬
That's funny!

:sharebeer
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Re: Frequency of Withdrawals in Retirement

Post by livesoft »

Dave55 wrote: Fri Jun 12, 2020 8:02 am I withdraw when I need the money to pay bills. Frequency is about once a month.

Dave
Same, except my frequency is random.
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KlangFool
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Re: Frequency of Withdrawals in Retirement

Post by KlangFool »

OP,

Keep 2 years of expense in CASH. Spend from the CASH. Your withdrawal is totally independent of your expense requirement. Then, you can pay fewer taxes in retirement.

KlangFool
260chrisb
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Re: Frequency of Withdrawals in Retirement

Post by 260chrisb »

My plan is to lump sum withdraw 90% of what I plan to take each year in January from a rollover IRA that is managed thus reducing the advisor fees as much as possible until the fund is exhausted. I'll probably take the same approach when it comes to my second rollover account that will be at Vanguard.
eldinerocheapo
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Re: Frequency of Withdrawals in Retirement

Post by eldinerocheapo »

Withdraw one fixed amount at the end of the month so all bills are paid and expenses for the month are zero'd out. Any excess is sent to our Ally savings account to assist with lump sum payment on Homeowner's insurance, property & income tax, and emergencies.
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BGeste
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Re: Frequency of Withdrawals in Retirement

Post by BGeste »

I withdraw once a month from my settlement account to cover all bills for that month.

All distributions (dividends, capital gains, interest) from my investment funds go to my settlement account to ensure it is replenished.
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Re: Frequency of Withdrawals in Retirement

Post by abuss368 »

tvubpwcisla wrote: Fri Jun 12, 2020 7:54 am During retirement, I am curious if investors are withdrawing 4% (or whatever percentage they choose) on a Weekly, Monthly, Quarterly, or Yearly basis? Would one time frame be better than another and why?

Thanks!
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PhoebeCoco
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Re: Frequency of Withdrawals in Retirement

Post by PhoebeCoco »

I withdraw quarterly and pay my estimated quarterly taxes at that time, added on top of the money I am withdrawing.
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22twain
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Re: Frequency of Withdrawals in Retirement

Post by 22twain »

tvubpwcisla wrote: Fri Jun 12, 2020 7:54 am During retirement, I am curious if investors are withdrawing 4% (or whatever percentage they choose) on a Weekly, Monthly, Quarterly, or Yearly basis?
About once per year, I sell enough shares to cover (together with estimated dividends) my expenses for the coming year. I leave the proceeds and the dividends in my settlement fund.

Once per month, I transfer a "paycheck" from the settlement fund to my checking account.

You can decide for yourself which of these steps is the "withdrawal".
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Bir48die
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Re: Frequency of Withdrawals in Retirement

Post by Bir48die »

Fund once a year. Put in Fidelity. Pay myself twice a month just like when I worked.
LearnerSD
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Re: Frequency of Withdrawals in Retirement

Post by LearnerSD »

Klang, or anyone,

Hi. Assuming the below is true, how does it lower taxes?

I understand that holding cash can buffer stock market volatility, so it's a good idea, and spending from it makes one's expenses independent from market moves, but taxes?

Thanks from a financial novice
KlangFool wrote: Fri Jun 12, 2020 8:16 am OP,

Keep 2 years of expense in CASH. Spend from the CASH. Your withdrawal is totally independent of your expense requirement. Then, you can pay fewer taxes in retirement.

KlangFool
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Re: Frequency of Withdrawals in Retirement

Post by KlangFool »

LearnerSD wrote: Fri Jun 12, 2020 2:28 pm Klang, or anyone,

Hi. Assuming the below is true, how does it lower taxes?

I understand that holding cash can buffer stock market volatility, so it's a good idea, and spending from it makes one's expenses independent from market moves, but taxes?

Thanks from a financial novice
KlangFool wrote: Fri Jun 12, 2020 8:16 am OP,

Keep 2 years of expense in CASH. Spend from the CASH. Your withdrawal is totally independent of your expense requirement. Then, you can pay fewer taxes in retirement.

KlangFool
LearnerSD,

Check out this thread.

viewtopic.php?t=87471
<<How to pay ZERO taxes in retirement with 6-figure expenses>>

KlangFool
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Re: Frequency of Withdrawals in Retirement

Post by Doc »

tvubpwcisla wrote: Fri Jun 12, 2020 8:02 am
Sandtrap wrote: Fri Jun 12, 2020 8:01 am When DW spends on home and property upgrades.

j😬😬
That's funny!

:sharebeer
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Barsoom
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Re: Frequency of Withdrawals in Retirement

Post by Barsoom »

I withdraw monthly from Fidelity, and have them uplift and pay the taxes from my IRA.

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aristotelian
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Re: Frequency of Withdrawals in Retirement

Post by aristotelian »

I think of it the same way as lump sum investing but opposite. If you generally want to have funds invested earning return, you want to minimize cash. During accumulation that means investing lump sums as soon as cash is available. In retirement, it would mean smaller monthly or quarterly withdrawals. Cash buckets are intuitively appealing but the literature I have seen suggest they drag on returns and actually reduce portfolio success over time. That said, if I were to get a nice positive sequence of returns it would be tough to resist cashing out a few years worth of expenses.
Last edited by aristotelian on Fri Jun 12, 2020 2:45 pm, edited 1 time in total.
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Re: Frequency of Withdrawals in Retirement

Post by MN-Investor »

In a year where I've taken RMDs, I've taken those annually in November. I'll do a year's worth of federal and state tax withholding from those RMDs.

If I need more than Social Security and RMDs, I'll just transfer a chunk from my taxable brokerage account, probably on a quarterly basis (I'm still new at this).
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GerryL
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Re: Frequency of Withdrawals in Retirement

Post by GerryL »

MN-Investor wrote: Fri Jun 12, 2020 2:45 pm In a year where I've taken RMDs, I've taken those annually in November. I'll do a year's worth of federal and state tax withholding from those RMDs.

If I need more than Social Security and RMDs, I'll just transfer a chunk from my taxable brokerage account, probably on a quarterly basis (I'm still new at this).
I am also relatively new to it, but this (above) is pretty much how I handle withdrawals. My cash stash is supplemented monthly with SS. End of year I can take my RMD (with taxes withheld) and move what I will need in the next year into my cash account. The rest gets reinvested into my taxable account. So far I have not had a need to sell any of my taxable investments. The decision about whether to reinvest dividends from taxable investments is made on a quarter-by-quarter basis.
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Re: Frequency of Withdrawals in Retirement

Post by NoblesvilleIN »

Our expenses are lumpy, so our withdrawals are lumpy too. That said, I've paid a few bills directly from the taxable account at Fidelity, but most bills are paid from our local B&M bank account. That account has a requirement for at least 1 direct deposit (or EFT) every month to remain a free checking account. Usually the first of the month, DW gives me an estimate of how much we will need for the bills and a guesstiment of what we will need for groceries and I'll move that from the taxable to the bank. We have discussed setting up more bills at Fidelity, but she has them already set up at the local bank.

So to answer your question, about once a month I'll move some money. Some months, I've moved money more than once. Sometimes, I'll pay directly from Fidelity (when we have used the Fidelity CC for large purchases). It has not been a set amount or %, but it is well under the "standard" 4%.

This is our first calendar year of both of us being retired and we have been greatly surprised at how little we have spent. We've only been spending from the taxable account and haven't taken from the tIRA yet. This is primarily due to both of us getting really nasty colds (took 3 weeks each to throw) in late January after a celebration trip to the Cayman's followed by us locking down in early March. We did manage to get in a day trip just before the lock-down's started. Yesterday we took our first day trip - it was to a state park for a hike about 2 hours from home followed by a stop on the way home at a butcher's that specializes in pork to stock back up ($). We just have not been doing the short overnight trips that we had discussed last December.

At some point this year, I'll want to take a withdrawal from the tIRA to increase our taxable income to meet the minimum requirements for the ACA subsidy. I'll have to figure out what that amount should be. We are well below what I had estimated on the healthcare.gov site last November.
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Re: Frequency of Withdrawals in Retirement

Post by Dandy »

I have pension and SS sent to a High Yield Savings account. Twice a month money is automatically sent to my checking account --somewhat like a bi monthly paycheck. Each year I fund the Savings account with some of my RMD .

The transfers each month approximate the annualized targeted withdrawal I selected. So, if I find that I need more in my checking account frequently to pay bills I know I'm exceeding my target. So that acts a bit like an early warning of expense creep.
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Re: Frequency of Withdrawals in Retirement

Post by Barefoot »

Once a month, just like a paycheck.
marcopolo
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Re: Frequency of Withdrawals in Retirement

Post by marcopolo »

KlangFool wrote: Fri Jun 12, 2020 8:16 am OP,

Keep 2 years of expense in CASH. Spend from the CASH. Your withdrawal is totally independent of your expense requirement. Then, you can pay fewer taxes in retirement.

KlangFool
I don't see how this solves the problem at all.
You have just shifted the question to "how frequently do you fill your cash bucket?"
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rixer
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Re: Frequency of Withdrawals in Retirement

Post by rixer »

I take a yearly withdrawal in January and hold it in a high interest savings. If you want to call it high interest..... Then I have monthly distributions automatically sent to my brick and mortar bank with some excess left for emergencies.
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Re: Frequency of Withdrawals in Retirement

Post by Sheepdog »

I take withdrawals as needed.
I just wrote this in another thread which explains, I hope:
I have been withdrawing from my savings for 22 years in retirement. Never have I had the same needs two years in a row, so how would I set a fixed amount? Why would I want to? I did, however, set an average withdrawal amount forecast to allow variable spending needs (new auto, nice vacation, home remodel, special monetary gift, etc.) If I have a large need or want year, I try to control spending to fit needs to keep close to the plan. What percentage is that? You figure that out for you. I decided on 4.5% withdrawal average which is close to 4% and offers a little more to cover inflation and spending variability needs.. Can you keep a record of your annual spending and withdrawals ?
In these approx. 22 years, I have withdrawn from 3.11% to 7.52% annually, but the 22 year average was 4.57% (close to the plan). (2008 withdrawal was 6.57%, 2009 was 3.11%. 2010 was 4.89%, 2011 was 7.52% which, as you may note, were bust and boom years in the stock market.)
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Re: Frequency of Withdrawals in Retirement

Post by MathIsMyWayr »

marcopolo wrote: Sat Jun 13, 2020 12:28 am
KlangFool wrote: Fri Jun 12, 2020 8:16 am OP,

Keep 2 years of expense in CASH. Spend from the CASH. Your withdrawal is totally independent of your expense requirement. Then, you can pay fewer taxes in retirement.

KlangFool
I don't see how this solves the problem at all.
You have just shifted the question to "how frequently do you fill your cash bucket?"
??? What is withdrawal and what is not?
  • One way transaction, e.g., from retirement accounts?
    Transfer funds to bank accounts, e.g., checking or savings?
    From ATM?
    Money leaving from my possession?
marcopolo
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Re: Frequency of Withdrawals in Retirement

Post by marcopolo »

MathIsMyWayr wrote: Sat Jun 13, 2020 2:12 am
marcopolo wrote: Sat Jun 13, 2020 12:28 am
KlangFool wrote: Fri Jun 12, 2020 8:16 am OP,

Keep 2 years of expense in CASH. Spend from the CASH. Your withdrawal is totally independent of your expense requirement. Then, you can pay fewer taxes in retirement.

KlangFool
I don't see how this solves the problem at all.
You have just shifted the question to "how frequently do you fill your cash bucket?"
??? What is withdrawal and what is not?
  • One way transaction, e.g., from retirement accounts?
    Transfer funds to bank accounts, e.g., checking or savings?
    From ATM?
    Money leaving from my possession?
In this context I am assuming we are talking about withdrawal from a portfolio into a checking/cash management account that is used to pay bills.
Once in a while you get shown the light, in the strangest of places if you look at it right.
dominque
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Re: Frequency of Withdrawals in Retirement

Post by dominque »

I have an automatic withdrawal set up on a monthly basis. It's a very small percentage of the total and is my bridge to SS at 70.
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Re: Frequency of Withdrawals in Retirement

Post by samsoes »

KlangFool wrote: Fri Jun 12, 2020 8:16 am OP,

Keep 2 years of expense in CASH. Spend from the CASH. Your withdrawal is totally independent of your expense requirement. Then, you can pay fewer taxes in retirement.

KlangFool
How often, then, to replenish the two years of cash stash which is being spent down every month? After the first month of living off of this cash, there won't be two years of it left anymore.
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Re: Frequency of Withdrawals in Retirement

Post by KlangFool »

samsoes wrote: Sat Jun 13, 2020 6:34 am
KlangFool wrote: Fri Jun 12, 2020 8:16 am OP,

Keep 2 years of expense in CASH. Spend from the CASH. Your withdrawal is totally independent of your expense requirement. Then, you can pay fewer taxes in retirement.

KlangFool
How often, then, to replenish the two years of cash stash which is being spent down every month? After the first month of living off of this cash, there won't be two years of it left anymore.
Whenever it makes sense for you in terms of tax management.

If you pay less taxes by withdrawal next year, you can skip a year. Or, you can withdraw more in one year and skip the next 2 years.

All are possible now.

KlangFool
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Re: Frequency of Withdrawals in Retirement

Post by sixtyforty »

Setup for automated monthly withdrawals. I'm following VPW, my own TMV spreadsheet and a few other retirement calculators to validate the % to withdraw. I'm still new to all this.

If you are withdrawing from cash, then whether it's monthly or annually wouldn't seem to make a difference.
If your withdrawing from investments in a rising market, monthly should do better compared to annual, since your holding onto shares longer for them to appreciate. OTOH, if you withdraw your annual amount at the beginning of the year and then a bear market hits, your annual withdrawal will do better.
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Re: Frequency of Withdrawals in Retirement

Post by Stinky »

260chrisb wrote: Fri Jun 12, 2020 8:17 am My plan is to lump sum withdraw 90% of what I plan to take each year in January from a rollover IRA that is managed thus reducing the advisor fees as much as possible until the fund is exhausted. I'll probably take the same approach when it comes to my second rollover account that will be at Vanguard.
Just a question - if the rollover IRA that you're withdrawing from now is at a high-fee advisor, why don't you roll it over to Vanguard and save the fees?
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MJS
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Re: Frequency of Withdrawals in Retirement

Post by MJS »

Going into retirement, I wasn't quite sure how my budget would work. So, the first and second years, I put the whole year's income into an easily accessible money market account, with monthly budget and random travel expenditures transferred to a checking account. By the 1st December, I still had enough for a generous holiday season, but around mid-August had had to reassess some travel plans. Each year's left-over funds went to the local foodbank. The 2nd year was smoother, and I now do quarterly withdrawals.
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Re: Frequency of Withdrawals in Retirement

Post by ralph124cf »

If you will ever want credit again, the good folks only seem able to deal with monthly income. They don't want to hear about your assets.

In response to a question "What is your income?" they especially do not want to hear "What ever I want it to be."

I have chosen to take my RMDs on a monthly basis (Schwab or Fidelity will both figure this out for you if you wish, and deposit to your bank or money market).

I know that it would be slightly better to take one withdrawal towards the end of the year, with all income taxes withheld from the withdrawals so that there is no need for quarterly tax payments, but, especially with today's low interest rates, it doesn't seem to matter much.

Ralph
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Re: Frequency of Withdrawals in Retirement

Post by MathIsMyWayr »

marcopolo wrote: Sat Jun 13, 2020 3:21 am
MathIsMyWayr wrote: Sat Jun 13, 2020 2:12 am
marcopolo wrote: Sat Jun 13, 2020 12:28 am
KlangFool wrote: Fri Jun 12, 2020 8:16 am OP,

Keep 2 years of expense in CASH. Spend from the CASH. Your withdrawal is totally independent of your expense requirement. Then, you can pay fewer taxes in retirement.

KlangFool
I don't see how this solves the problem at all.
You have just shifted the question to "how frequently do you fill your cash bucket?"
??? What is withdrawal and what is not?
  • One way transaction, e.g., from retirement accounts?
    Transfer funds to bank accounts, e.g., checking or savings?
    From ATM?
    Money leaving from my possession?
In this context I am assuming we are talking about withdrawal from a portfolio into a checking/cash management account that is used to pay bills.
Many on this board deal with how to withdraw RMD and there is no room to maneuver around taxes on withdrawal. You have to take RMD every year whether you need or not.
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Re: Frequency of Withdrawals in Retirement

Post by texasdiver »

My parents have a financial advisor who manages their accounts and withdraws the appropriate amount from the various IRAs and such to comport with minimum distribution requirements for IRAs. I think he does it quarterly but I'm not sure.

My parents, of course, being depression-era babies in their 80s diligently save a chunk of their withdrawals because they can't stop being frugal or saving. And they seem to derive satisfaction from frugality.

So their cash savings accounts keep growing. Which is not a bad problem to have I guess.
rick0
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Re: Frequency of Withdrawals in Retirement

Post by rick0 »

I do withdrawal/tax planning on a calendar year basis.

In December or January - depending on which years tax return I want income to be in, I move
all of the cash needed for the year over to an online bank (Ally) where I use a combination
of Checking, Savings, and no-penalty CD's to save and spend the money for the year.
I have a small pension that passes thru this bank also.

I like having my weekly/monthly cash needs independent from my investments - but that's just me.

I'm currently withdrawing ~4.5%/year, but that will drop to ~3% in a couple years when SS starts.

..As mentioned previously, there are many ways to do this. This works for me.
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Re: Frequency of Withdrawals in Retirement

Post by Broken Man 1999 »

By the last week of the month I know what my bills will be for the next month. I withdraw enough to pay the bills coming due in the first half of the next month, and my SS pays the bills due the last half of the next month. Repeat monthly.

My bills are lumpy, or I would automate withdrawals like I have automated my bill paying.

The first year I started drawing from my portfolio, I withdrew an amount estimated to be enough to pay a year's expenses. But, I didn't like having the cash just hanging around, so I changed to monthly withdrawals the next year.

Broken Man 1999
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Re: Frequency of Withdrawals in Retirement

Post by KlangFool »

MathIsMyWayr wrote: Sat Jun 13, 2020 10:54 pm
Many on this board deal with how to withdraw RMD and there is no room to maneuver around taxes on withdrawal. You have to take RMD every year whether you need or not.
MathIsMyWayr,

Yes and no.

A) A person could Roth convert some of the tax-deferred accounts without spending the money.

B) In some cases, it might be advantageous in terms of tax management to withdraw more than RMD in one year in order to reduce the RMD for the subsequent years. For example, in some years, the tax brackets are lower versus future years.

KlangFool
MathIsMyWayr
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Re: Frequency of Withdrawals in Retirement

Post by MathIsMyWayr »

KlangFool wrote: Sun Jun 14, 2020 9:34 am
MathIsMyWayr wrote: Sat Jun 13, 2020 10:54 pm
Many on this board deal with how to withdraw RMD and there is no room to maneuver around taxes on withdrawal. You have to take RMD every year whether you need or not.
MathIsMyWayr,

Yes and no.

A) A person could Roth convert some of the tax-deferred accounts without spending the money.

B) In some cases, it might be advantageous in terms of tax management to withdraw more than RMD in one year in order to reduce the RMD for the subsequent years. For example, in some years, the tax brackets are lower versus future years.

KlangFool
KlangFool,

Sorry, no and no to both A) and B).

A) I would not call a Roth conversion a withdrawal. As the terminology is self-explanatory, it is a conversion from one investment to another more favorable investment.

B) In the same vein, why does any sane investor withdraw more than RMD in this example? It is better for him to choose Roth conversion instead. Again back to A).
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Re: Frequency of Withdrawals in Retirement

Post by KlangFool »

MathIsMyWayr wrote: Sun Jun 14, 2020 9:49 am
KlangFool wrote: Sun Jun 14, 2020 9:34 am
MathIsMyWayr wrote: Sat Jun 13, 2020 10:54 pm
Many on this board deal with how to withdraw RMD and there is no room to maneuver around taxes on withdrawal. You have to take RMD every year whether you need or not.
MathIsMyWayr,

Yes and no.

A) A person could Roth convert some of the tax-deferred accounts without spending the money.

B) In some cases, it might be advantageous in terms of tax management to withdraw more than RMD in one year in order to reduce the RMD for the subsequent years. For example, in some years, the tax brackets are lower versus future years.

KlangFool
KlangFool,

Sorry, no and no to both A) and B).

A) I would not call a Roth conversion a withdrawal. As the terminology is self-explanatory, it is a conversion from one investment to another more favorable investment.

B) In the same vein, why does any sane investor withdraw more than RMD in this example? It is better for him to choose Roth conversion instead. Again back to A).
MathIsMyWayr,

<<Many on this board deal with how to withdraw RMD and there is no room to maneuver around taxes on withdrawal. >>

Then, a person does not have to withdraw RMD as per your definition. They could Roth convert a portion of the RMD.

KlangFool
MathIsMyWayr
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Re: Frequency of Withdrawals in Retirement

Post by MathIsMyWayr »

KlangFool wrote: Sun Jun 14, 2020 10:11 am
MathIsMyWayr wrote: Sun Jun 14, 2020 9:49 am
KlangFool wrote: Sun Jun 14, 2020 9:34 am
MathIsMyWayr wrote: Sat Jun 13, 2020 10:54 pm
Many on this board deal with how to withdraw RMD and there is no room to maneuver around taxes on withdrawal. You have to take RMD every year whether you need or not.
MathIsMyWayr,

Yes and no.

A) A person could Roth convert some of the tax-deferred accounts without spending the money.

B) In some cases, it might be advantageous in terms of tax management to withdraw more than RMD in one year in order to reduce the RMD for the subsequent years. For example, in some years, the tax brackets are lower versus future years.

KlangFool
KlangFool,

Sorry, no and no to both A) and B).

A) I would not call a Roth conversion a withdrawal. As the terminology is self-explanatory, it is a conversion from one investment to another more favorable investment.

B) In the same vein, why does any sane investor withdraw more than RMD in this example? It is better for him to choose Roth conversion instead. Again back to A).
MathIsMyWayr,

<<Many on this board deal with how to withdraw RMD and there is no room to maneuver around taxes on withdrawal. >>

Then, a person does not have to withdraw RMD as per your definition. They could Roth convert a portion of the RMD.

KlangFool
Sorry, no again.

Any money coming out of retirement accounts is RMD first until the full RMD is met for the year. This is the IRS regulation whether you like it or not.
KlangFool
Posts: 17739
Joined: Sat Oct 11, 2008 12:35 pm

Re: Frequency of Withdrawals in Retirement

Post by KlangFool »

MathIsMyWayr wrote: Sun Jun 14, 2020 11:36 am
KlangFool wrote: Sun Jun 14, 2020 10:11 am
MathIsMyWayr wrote: Sun Jun 14, 2020 9:49 am
KlangFool wrote: Sun Jun 14, 2020 9:34 am
MathIsMyWayr wrote: Sat Jun 13, 2020 10:54 pm
Many on this board deal with how to withdraw RMD and there is no room to maneuver around taxes on withdrawal. You have to take RMD every year whether you need or not.
MathIsMyWayr,

Yes and no.

A) A person could Roth convert some of the tax-deferred accounts without spending the money.

B) In some cases, it might be advantageous in terms of tax management to withdraw more than RMD in one year in order to reduce the RMD for the subsequent years. For example, in some years, the tax brackets are lower versus future years.

KlangFool
KlangFool,

Sorry, no and no to both A) and B).

A) I would not call a Roth conversion a withdrawal. As the terminology is self-explanatory, it is a conversion from one investment to another more favorable investment.

B) In the same vein, why does any sane investor withdraw more than RMD in this example? It is better for him to choose Roth conversion instead. Again back to A).
MathIsMyWayr,

<<Many on this board deal with how to withdraw RMD and there is no room to maneuver around taxes on withdrawal. >>

Then, a person does not have to withdraw RMD as per your definition. They could Roth convert a portion of the RMD.

KlangFool
Sorry, no again.

Any money coming out of retirement accounts is RMD first until the full RMD is met for the year. This is the IRS regulation whether you like it or not.
MathIsMyWayr,

As per the IRS regulation, Roth IRA has no RMD requirement.

https://www.bogleheads.org/wiki/Require ... stribution

So, in 2019, a person could Roth Convert to Roth IRA a lot more than the RMD requirement. Then, in 2020, the RMD number will be less.

KlangFool
MathIsMyWayr
Posts: 2258
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Location: CA

Re: Frequency of Withdrawals in Retirement

Post by MathIsMyWayr »

KlangFool wrote: Sun Jun 14, 2020 11:40 am
MathIsMyWayr wrote: Sun Jun 14, 2020 11:36 am
KlangFool wrote: Sun Jun 14, 2020 10:11 am
MathIsMyWayr wrote: Sun Jun 14, 2020 9:49 am
KlangFool wrote: Sun Jun 14, 2020 9:34 am

MathIsMyWayr,

Yes and no.

A) A person could Roth convert some of the tax-deferred accounts without spending the money.

B) In some cases, it might be advantageous in terms of tax management to withdraw more than RMD in one year in order to reduce the RMD for the subsequent years. For example, in some years, the tax brackets are lower versus future years.

KlangFool
KlangFool,

Sorry, no and no to both A) and B).

A) I would not call a Roth conversion a withdrawal. As the terminology is self-explanatory, it is a conversion from one investment to another more favorable investment.

B) In the same vein, why does any sane investor withdraw more than RMD in this example? It is better for him to choose Roth conversion instead. Again back to A).
MathIsMyWayr,

<<Many on this board deal with how to withdraw RMD and there is no room to maneuver around taxes on withdrawal. >>

Then, a person does not have to withdraw RMD as per your definition. They could Roth convert a portion of the RMD.

KlangFool
Sorry, no again.

Any money coming out of retirement accounts is RMD first until the full RMD is met for the year. This is the IRS regulation whether you like it or not.
MathIsMyWayr,

As per the IRS regulation, Roth IRA has no RMD requirement.

https://www.bogleheads.org/wiki/Require ... stribution

So, in 2019, a person could Roth Convert to Roth IRA a lot more than the RMD requirement. Then, in 2020, the RMD number will be less.

KlangFool
KlangFool,

Of course, there is no limit to how much you may convert to Roth to the delight of IRS.
cjking
Posts: 1933
Joined: Mon Jun 30, 2008 4:30 am

Re: Frequency of Withdrawals in Retirement

Post by cjking »

I think there is a slight benefit to more frequent withdrawals. It reduces the amount you sell at extreme prices.

In an ideal world where withdrawing was administratively painless, I'd withdraw monthly. In reality, I have to update a spreadsheet to calculate an amount to withdraw, login to an account with 2 factor authentication and sell some ETFs, wait a few days for funds to clear, then login again and request a withdrawal, then wait a few days for funds to arrive so I can move them on to a savings account. So it's at least 15 minutes of my time on each of three separate days, for each withdrawal. So I do it quarterly instead. It's also the case that nearly all my holdings pay dividends quarterly, so well-timed quarterly withdrawals synch nicely with dividend cash appearing in my accounts. Compared to monthly, quarterly could mean fewer trades and/or less cash sitting around in investment accounts.

(It isn't the case that I can just withdraw dividends, I have three different accounts with three different tax statuses, so tax considerations will feed into which account/s I withdraw from. So when I login to withdraw, it's possible I'll be making trades to reinvest dividends in two accounts, and selling in the third to top up dividends there to the amount I want to withdraw. Quarterly withdrawals mean I get to do a lot of different admin in one session. )
User avatar
GerryL
Posts: 2867
Joined: Fri Sep 20, 2013 11:40 pm

Re: Frequency of Withdrawals in Retirement

Post by GerryL »

ralph124cf wrote: Sat Jun 13, 2020 10:42 pm If you will ever want credit again, the good folks only seem able to deal with monthly income. They don't want to hear about your assets.

In response to a question "What is your income?" they especially do not want to hear "What ever I want it to be."

I have chosen to take my RMDs on a monthly basis (Schwab or Fidelity will both figure this out for you if you wish, and deposit to your bank or money market).

I know that it would be slightly better to take one withdrawal towards the end of the year, with all income taxes withheld from the withdrawals so that there is no need for quarterly tax payments, but, especially with today's low interest rates, it doesn't seem to matter much.

Ralph
When I wanted to increase the limit on my AmEx card, the bot at American Express had no problem dealing with annual income. I just entered the AGI from my recent tax return and the increase was quickly approved.
A few years earlier, before I started SS and RMDs, I got two new cards with the "my income is what ever I want it to be" situation. They told me to just enter a number, so I used the amount of cash that I had set aside to use for expenses that year. It was essentially what I was paying myself.
If you have a good credit score, they want you as a customer and will accommodate. Now, as for something like a car loan … I couldn't say.
texasdiver
Posts: 3481
Joined: Thu Jun 25, 2009 12:50 am
Location: Vancouver WA

Re: Frequency of Withdrawals in Retirement

Post by texasdiver »

GerryL wrote: Mon Jun 15, 2020 1:56 am
ralph124cf wrote: Sat Jun 13, 2020 10:42 pm If you will ever want credit again, the good folks only seem able to deal with monthly income. They don't want to hear about your assets.

In response to a question "What is your income?" they especially do not want to hear "What ever I want it to be."

I have chosen to take my RMDs on a monthly basis (Schwab or Fidelity will both figure this out for you if you wish, and deposit to your bank or money market).

I know that it would be slightly better to take one withdrawal towards the end of the year, with all income taxes withheld from the withdrawals so that there is no need for quarterly tax payments, but, especially with today's low interest rates, it doesn't seem to matter much.

Ralph
When I wanted to increase the limit on my AmEx card, the bot at American Express had no problem dealing with annual income. I just entered the AGI from my recent tax return and the increase was quickly approved.
A few years earlier, before I started SS and RMDs, I got two new cards with the "my income is what ever I want it to be" situation. They told me to just enter a number, so I used the amount of cash that I had set aside to use for expenses that year. It was essentially what I was paying myself.
If you have a good credit score, they want you as a customer and will accommodate. Now, as for something like a car loan … I couldn't say.
Last time I got a car loan they just ran my FICO and didn’t verify income.
User avatar
teen persuasion
Posts: 1267
Joined: Sun Oct 25, 2015 1:43 pm

Re: Frequency of Withdrawals in Retirement

Post by teen persuasion »

NoblesvilleIN wrote: Fri Jun 12, 2020 4:35 pm Our expenses are lumpy, so our withdrawals are lumpy too. That said, I've paid a few bills directly from the taxable account at Fidelity, but most bills are paid from our local B&M bank account. That account has a requirement for at least 1 direct deposit (or EFT) every month to remain a free checking account. Usually the first of the month, DW gives me an estimate of how much we will need for the bills and a guesstiment of what we will need for groceries and I'll move that from the taxable to the bank. We have discussed setting up more bills at Fidelity, but she has them already set up at the local bank.

So to answer your question, about once a month I'll move some money. Some months, I've moved money more than once. Sometimes, I'll pay directly from Fidelity (when we have used the Fidelity CC for large purchases). It has not been a set amount or %, but it is well under the "standard" 4%.

This is our first calendar year of both of us being retired and we have been greatly surprised at how little we have spent. We've only been spending from the taxable account and haven't taken from the tIRA yet. This is primarily due to both of us getting really nasty colds (took 3 weeks each to throw) in late January after a celebration trip to the Cayman's followed by us locking down in early March. We did manage to get in a day trip just before the lock-down's started. Yesterday we took our first day trip - it was to a state park for a hike about 2 hours from home followed by a stop on the way home at a butcher's that specializes in pork to stock back up ($). We just have not been doing the short overnight trips that we had discussed last December.

At some point this year, I'll want to take a withdrawal from the tIRA to increase our taxable income to meet the minimum requirements for the ACA subsidy. I'll have to figure out what that amount should be. We are well below what I had estimated on the healthcare.gov site last November.
If you don't need the tIRA withdrawal for spending, why not Roth convert instead of withdrawing, to meet the ACA minimum?
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