What is your vote for the simplest withdrawal plan in retirement?

[GaryA505]

I curious as to what you think is the simplest withdrawal plan in retirement. Something so simple that even someone who has almost no financial expertise can do it. I know I present this question at the risk of being ridiculed and abused, but what the heck!

Now, a lot of presumptions have to be made, so I'll start with those. To keep it simple, let's say:
1. The assets are owned by a married couple, both retired.
2. Assets consist of assets in one IRA account and one taxable brokerage account, roughly equal amounts in each account. For simplicity let's leave out Roth accounts, home equity, and other types of assets.
3. The IRA assets are subject to RMD.
4. The couple needs roughly 3% from these assets, in addition to SS.
5. The horizon is long, roughly 40 years (similar to what an early retiree might plan for).
6. Purchasing SPIAs is an option, but only using the taxable assets because QLAC purchases are limited.
7. Asset holdings can be changed once in each account for simplification, but only at the beginning.
8. A paid AUM financial advisor is to be avoided.
9. A once-per-year appointment with an hourly financial advisor and a tax person is expected.
10. I'm sure I'll think of something else.

I'll start with what I'll call "Plan 1" and "Plan 2" to give you two examples:
Plan 1
-IRA is in VSMGX (Vanguard LifeStrategy Moderate). RMD from IRA is set up once per year, to be automatically withdrawn and deposited into bank account monthly.
-Taxable brokerage is in VTMFX (Vanguard Tax Managed Balanced). Automatic withdrawal from taxable brokerage account is set up once per year, so that 0.25%/month is taken from the VTMFX and deposited into bank account.
Plan 2
-IRA is in VSMGX (Vanguard LifeStrategy Moderate). RMD from IRA is set up once per year, to be automatically withdrawn and deposited into bank account monthly.
-Taxable brokerage assets are used to purchase one or more SPIAs which make automatic monthly payments into bank account.

Pros, cons, comments, ideas, rants, raves?

[FiveK]

If your income is high enough that a "tax managed" fund is attractive, then there seems no need for any (other than SS) annuity. Based on that, PLan 1 looks better than Plan 2.

[Mike Scott]

Take your RMD. Turn off reinvestment in taxable and spend it. If that is not enough $, then sell something. If that is too much, reinvest $ in taxable. If you average around 3% withdrawal then everything should be OK.

[fourwheelcycle]

I think my wife and I have the simplest withdrawal plan - we have no withdrawal plan. We live on a cash budget. If the money arrives, we spend it or gift it to our children and to charities. Having said that, a good portion of our money arrives because I have changed our Vanguard investment dividends setting from reinvest to distribute. Another chunk of money arrives because the IRS says "Withdraw this much from your IRAs each year, or else!" Also, the SSA and my pension kindly send us money each month. It all adds up to a cash budget.

[GaryA505]

If your income is high enough that a "tax managed" fund is attractive, then there seems no need for any (other than SS) annuity. Based on that, PLan 1 looks better than Plan 2.

I know I didn't mention tax efficiency as a goal or requirement, but I gave VTMFX as an example due to it's simplicity as a single holding. Vanguard Balanced (VBIAX) could of course be an option there also but will occasionally distribute some large cap gains.

I presented the SPIA in Plan 2 due to it's extreme simplicity. For Plan 2 I probably should have suggested a higher allocation to equities in the IRA, given the SPIA. This would be the Wade Pfau "Safety First" approach.

Note that these are just examples, and are not presented as two plans to choose from. They might not even be plans that would consider. I'm just soliciting ideas, since I'm sure I haven't thought of them all (I'm not that smart).

[123]

If you're considering a tax-managed fund perhaps there are better ways to achieve greater tax management. The general bogleheads advice is to put stocks and equities in taxable accounts and place fixed income in tax-deferred accounts. The reason for this is that the presumed greater gains of equities in a taxable account can take advantage of long-term capital gains taxation benefits. If you place equities in a tax-deferred account you lose the benefits of long-term capital gains taxation and any gains are simply taxed as ordinary income when they are distributed from the account. (IN addition you derive the benefit of qualified dividends on stocks in taxable accounts that you lose if they are held in tax-deferred.)

I went down this same road some years ago when I placed a fund-of-funds, like a Vanguard LifeStrategy fund, as a sole 100% holding in our (large) traditional IRA accounts. We also had a mix of holdings (stocks/bonds) in our taxable account (as well as 401ks). Then I started to do some more planning and "got religion" about tax efficiency. Then the stock market dip of March 2020 came along and in addition to some tax loss harvesting it provided the perfect opportunity to right my past wrongs of investment placement. Once you get the religion of tax efficiency and proper investment placement it's hard not to do it. The only limitations are how much investment space you have in taxable (and Roth) versus tax-deferred and how "pure" you want your holdings to be. And you might tolerate a significant fixed income position in taxable account(s) for your emergency fund and savings buffer.

[GaryA505]

If you're considering a tax-managed fund perhaps there are better ways to achieve greater tax management. The general bogleheads advice is to put stocks and equities in taxable accounts and place fixed income in tax-deferred accounts. The reason for this is that the presumed greater gains of equities in a taxable account can take advantage of long-term capital gains taxation benefits. If you place equities in a tax-deferred account you lose the benefits of long-term capital gains taxation and any gains are simply taxed as ordinary income when they are distributed from the account. (IN addition you derive the benefit of qualified dividends on stocks in taxable accounts that you lose if they are held in tax-deferred.)

I went down this same road some years ago when I placed a fund-of-funds, like a Vanguard LifeStrategy fund, as a sole 100% holding in our (large) traditional IRA accounts. We also had a mix of holdings (stocks/bonds) in our taxable account (as well as 401ks). Then I started to do some more planning and "got religion" about tax efficiency. Then the stock market dip of March 2020 came along and in addition to some tax loss harvesting it provided the perfect opportunity to right my past wrongs of investment placement. Once you get the religion of tax efficiency and proper investment placement it's hard not to do it. The only limitations are how much investment space you have in taxable (and Roth) versus tax-deferred and how "pure" you want your holdings to be. And you might tolerate a significant fixed income position in taxable account(s) for your emergency fund and savings buffer.

Thanks. Actually I'm prioritizing simplicity over tax-efficiency. I only gave VTMFX as an example because of it's simplicity as a single holding in a taxable account, and it doesn't distribute "lumpy" cap gains like VBIAX seems to. Other good choices in a taxable account might be one of the the iShares Allocation ETFs such as AOK or AOR. I have considered, and ruled out, tax-efficient asset location. I understand the benefits, but in our case the benefits would be small, and even the small amount of rebalancing work required is not going to work for us without using a paid advisor to do that work. I could do the rebalancing myself now, but in the future I may not be able to, and my wife cannot do it. My objective is to be able to "set it and forget it".

[Barsoom]

Does your 3% withdrawal account for dividend and interest earnings? Are you spending the portfolio earnings and then need an additional 3% on top of that?

I have a portfolio with 90% in before-tax and 10% in after-tax. The after-tax had an NUA from an ESOP that leaves me with 90% of it subject to long-term capital gains taxes. Therefore, I will withdraw the before-tax dollars first.

The before-tax is in a single IRA. No Roth. The earnings from both accounts covers my living expenses, so I have no net YoY reduction in my portfolio. I am not subject to RMD yet.

I withdraw my monthly living expenses from the Before-tax account, and have Fidelity uplift it by 17% for income taxes, which they pay monthly on my behalf.

Annually, I withdraw the dividends from the after-tax account, and pay the income taxes on that myself. I use that money to pay my annual property taxes.

-B

[GaryA505]

Does your 3% withdrawal account for dividend and interest earnings? Are you spending the portfolio earnings and then need an additional 3% on top of that?

I have a portfolio with 90% in before-tax and 10% in after-tax. The after-tax had an NUA from an ESOP that leaves me with 90% of it subject to long-term capital gains taxes. Therefore, I will withdraw the before-tax dollars first.

The before-tax is in a single IRA. No Roth. The earnings from both accounts covers my living expenses, so I have no net YoY reduction in my portfolio. I am not subject to RMD yet.

I withdraw my monthly living expenses from the Before-tax account, and have Fidelity uplift it by 17% for income taxes, which they pay monthly on my behalf.

Annually, I withdraw the dividends from the after-tax account, and pay the income taxes on that myself. I use that money to pay my annual property taxes.

-B

The 3% would be overall, not in addition to the dividends and interest. If I could find a way to get consistently that amount in dividends and interest, that is simpler so would be preferred. However, as we all know, dividends and interest can vary greatly from year-to-year.

[AlohaBill]

My wife and I have pensions and social security benefits of about $77,000 a year with cola. We need between $45,000 to $75,000 to live comfortably. Sometimes I have to take out money from our savings portfolio to pay for: Roth conversions, new car, roof, hvac, trips to Hawai’i and gifts to kids. The pensions and social security benefits are deposited into our checking. Easy Peasy.

[GaryA505]

My wife and I have pensions and social security benefits of about $77,000 a year with cola. We need between $45,000 to $75,000 to live comfortably. Sometimes I have to take out money from our savings portfolio to pay for: Roth conversions, new car, roof, hvac, trips to Hawai’i and gifts to kids. The pensions and social security benefits are deposited into our checking. Easy Peasy.

Thanks for the input. In our case SS will only provide for about 50% of our income needs, and we have no pensions I'm trying to simplify the other half of our income that will come from assets.

[swak]

Take your RMD. Turn off reinvestment in taxable and spend it. If that is not enough $, then sell something. If that is too much, reinvest $ in taxable. If you average around 3% withdrawal then everything should be OK.

This describes what I’m doing.

[backpacker61]

3. The IRA assets are subject to RMD.

5. The horizon is long, roughly 40 years (similar to what an early retiree might plan for).

These seem contradictory to me.
Do you mean that the IRA assets will eventually be subject to RMD's, but are not yet?
Anyone currently subject to RMD's is unlikely to live another 40 years (unless the RMD's are for an inherited IRA).

[GaryA505]

3. The IRA assets are subject to RMD.

5. The horizon is long, roughly 40 years (similar to what an early retiree might plan for).

These seem contradictory to me.
Do you mean that the IRA assets will eventually be subject to RMD's, but are not yet?
Anyone currently subject to RMD's is unlikely to live another 40 years (unless the RMD's are for an inherited IRA).

Nope. RMD will be required starting next year because the IRA is mine. My wife is more than 10 years younger and is sole beneficiary, so the RMD amount will be calculated using IRS Joint Life Expectancy. I probably won't live another 40 years, but my wife is likely to. I'm glad this thread is still alive though (no pun intended).

[dadjunk]

It seems to me you should plan for the worst case which is you leaving your wife alone tomorrow. Does the SS halve? Expenses definitely do not halve. I set up a spread sheet 17 years ago with the three scenarios, together forever, wife alone and me alone. Do a budget for each and project inflation and savings return. I have 50 years projected and it's been helpful but obviously not perfect due to my lack of clairvoyance. BTW, does your state tax SS?

[calmaniac]

What ages are the couple taking Social Security? An important variable not detailed in the described income plan (or I missed it). This is an even more important variable with a wife 10 years younger.

[GaryA505]

It seems to me you should plan for the worst case which is you leaving your wife alone tomorrow. Does the SS halve? Expenses definitely do not halve. I set up a spread sheet 17 years ago with the three scenarios, together forever, wife alone and me alone. Do a budget for each and project inflation and savings return. I have 50 years projected and it's been helpful but obviously not perfect due to my lack of clairvoyance. BTW, does your state tax SS?

Yes, dying tomorrow would be a problem. I should probably plan for that, today.

They just stopped taxing SS in NM this year if your income is under $100k. Not sure if that's AGI or taxable income though.

[GaryA505]

What ages are the couple taking Social Security? An important variable not detailed in the described income plan (or I missed it). This is an even more important variable with a wife 10 years younger.

Mine is already started and it will be while before the wife can start hers, but I've already factored that into my plan. Simplicity is a goal.

[Florida Orange]

I think my wife and I have the simplest withdrawal plan - we have no withdrawal plan. We live on a cash budget. If the money arrives, we spend it or gift it to our children and to charities. Having said that, a good portion of our money arrives because I have changed our Vanguard investment dividends setting from reinvest to distribute. Another chunk of money arrives because the IRS says "Withdraw this much from your IRAs each year, or else!" Also, the SSA and my pension kindly send us money each month. It all adds up to a cash budget.

This is what I do. It also provides peace of mind because share price fluctuation is largely an abstraction.

[GaryA505]

I think my wife and I have the simplest withdrawal plan - we have no withdrawal plan. We live on a cash budget. If the money arrives, we spend it or gift it to our children and to charities. Having said that, a good portion of our money arrives because I have changed our Vanguard investment dividends setting from reinvest to distribute. Another chunk of money arrives because the IRS says "Withdraw this much from your IRAs each year, or else!" Also, the SSA and my pension kindly send us money each month. It all adds up to a cash budget.

But a fund like Vanguard Total Stock pays about 1.5% dividends, and this will vary. You must have a lot of assets if you only need 1.5% per year. And the RMD will only apply to your tax-deferred accounts.

[dcabler]

I curious as to what you think is the simplest withdrawal plan in retirement. Something so simple that even someone who has almost no financial expertise can do it. I know I present this question at the risk of being ridiculed and abused, but what the heck!

Now, a lot of presumptions have to be made, so I'll start with those. To keep it simple, let's say:
1. The assets are owned by a married couple, both retired.
2. Assets consist of assets in one IRA account and one taxable brokerage account, roughly equal amounts in each account. For simplicity let's leave out Roth accounts, home equity, and other types of assets.
3. The IRA assets are subject to RMD.
4. The couple needs roughly 3% from these assets, in addition to SS.
5. The horizon is long, roughly 40 years (similar to what an early retiree might plan for).
6. Purchasing SPIAs is an option, but only using the taxable assets because QLAC purchases are limited.
7. Asset holdings can be changed once in each account for simplification, but only at the beginning.
8. A paid AUM financial advisor is to be avoided.
9. A once-per-year appointment with an hourly financial advisor and a tax person is expected.
10. I'm sure I'll think of something else.

I'll start with what I'll call "Plan 1" and "Plan 2" to give you two examples:
Plan 1
-IRA is in VSMGX (Vanguard LifeStrategy Moderate). RMD from IRA is set up once per year, to be automatically withdrawn and deposited into bank account monthly.
-Taxable brokerage is in VTMFX (Vanguard Tax Managed Balanced). Automatic withdrawal from taxable brokerage account is set up once per year, so that 0.25%/month is taken from the VTMFX and deposited into bank account.
Plan 2
-IRA is in VSMGX (Vanguard LifeStrategy Moderate). RMD from IRA is set up once per year, to be automatically withdrawn and deposited into bank account monthly.
-Taxable brokerage assets are used to purchase one or more SPIAs which make automatic monthly payments into bank account.

Pros, cons, comments, ideas, rants, raves?

QLAC's aren't the only way to get a SPIA inside your IRA space.
viewtopic.php?p=2782906#p2782906

[fourwheelcycle]

But a fund like Vanguard Total Stock pays about 1.5% dividends, and this will vary. You must have a lot of assets if you only need 1.5% per year. And the RMD will only apply to your tax-deferred accounts.

In fact, almost all of our equity savings are in Vanguard total stock index, with some in Vanguard 500 index, so we do not have an income-oriented portfolio. Our total interest and dividend income is a little less than our SS benefits. My pension is much less than our SS benefits. We have always lived modestly and saved the rest, but now we give the rest to our children and to charities.

[nisiprius]

I think my wife and I have the simplest withdrawal plan - we have no withdrawal plan. We live on a cash budget. If the money arrives, we spend it or gift it to our children and to charities. Having said that, a good portion of our money arrives because I have changed our Vanguard investment dividends setting from reinvest to distribute. Another chunk of money arrives because the IRS says "Withdraw this much from your IRAs each year, or else!" Also, the SSA and my pension kindly send us money each month. It all adds up to a cash budget.

This is what I do. It also provides peace of mind because share price fluctuation is largely an abstraction.

See Taylor Larimore's post, Safe withdrawal rates: complexity versus simplicity.

I retired in June of 1982 at the age of 57. We had about a $1 million dollar portfolio to last us the rest of our lives. I didn't know about safe withdrawal rates (the Trinity Study wasn't published until 1998). We had no computers, Internet, Monte Carlo, or sophisticated calculators. We only knew that we had to be careful to make our money last ($1M at 4% = $40,000/year before tax).

So what happened? We simply withdrew what we needed and kept an eye on our portfolio balance. Most years our balance went up and we spent the money on vacations, luxuries and charity. When our balance went down we tightened our belt and economized.

This is what most people do and it works. ...

Our plan is basically "spend the RMD and seat-of-the-pants." But "spend the RMD" is only a supplement to Social Security, an inflation-indexed annuity and a TIAA "graded" (amount increases annually) annuity. The annuities add roughly 20-25% to Social Security. The RMD, if we spent it all, would add roughly 33% to Social Security.

I've thought about looking into Schwab Intelligent Income, because apart from the automatic RMD service it seems to be the only game in town with regard to automated withdrawals, but I don't like the Schwab Intelligent Portfolios. And I don't like their illustration showing an "80%" success rate!

By every ballpark guesstimate the uncertainty of our health and longevity, and thus uncertainty of expenses, is far greater than the uncertainty of investments and inflation. I think it's silly to try to figure out whether Guyton-Klinger bands would gives us a higher SWR or anything like that. The Trinity authors made a point of saying that 4% was "a matter of planning, not of contract." It is a decent rule of thumb and a reality check.

And I don't know how to automate the 4% rule (or 3.5% or whatever the SWR-du-jour is), let alone anything more sophisticated.

We lived our lives pre-retirement without any statistical estimates of salary growth and fluctuations, and we never tried to calculate a "safe withdrawal rate" from our wages, why should post-retirement be so different?

[fourwheelcycle]

I've thought about looking into Schwab Intelligent Income, because apart from the automatic RMD service it seems to be the only game in town with regard to automated withdrawals, but I don't like the Schwab Intelligent Portfolios. And I don't like their illustration showing an "80%" success rate!

Does that mean only 20% of retirees who rely on Schwab Intelligent Income end up eating cereal for three meals each day?

PS. I always follow Taylor's posts. My own portfolio is all in Vanguard index funds. My father retired in 1984, at 63, with about $400K in savings. He rarely mentioned the specifics of his finances to me, but I remember once around 1990 when he said he and my mother were living on $50K per year. He was a GE retiree, with half of his total savings in GE stock. When GE's stock peaked, he proudly told me his total portfolio dividends were up to almost $50K and his income hit $100K for the first time. You know what happened next. Ten years after my mother died, when he was 94, he sold his house, moved to an independent living retirement facility, and asked me to take over his finances.

At that time, his dividends had dropped and his income was around $70K. His portfolio, except for $280K house proceeds, was almost 100% stocks, with no index funds. I had advised him to sell his GE stock and buy Vanguard index funds when he retired, but he resisted. When I took over his finances, I insisted he let me put his house proceeds in a Vanguard bond index. He chose GNMA, and that gave him a $1M 70/30 portfolio. As he aged, until 101 when he died last month, he progressed from independent living, to assisted living, and finally to memory care. Although his expenses exceeded his income each year, his non-GE stocks kept about even with the stock market and his portfolio was still about $1M when he died. It was divided equally among his five children, with my share going directly to my children.

[flyingaway]

Simple, retire with the 4% rule, but only need to take about 2%.

[Florida Orange]

We lived our lives pre-retirement without any statistical estimates of salary growth and fluctuations, and we never tried to calculate a "safe withdrawal rate" from our wages, why should post-retirement be so different?

Because if you don't have any income you have to make sure that whatever money you have lasts for the rest of your life.

[Taylor Larimore]

We lived our lives pre-retirement without any statistical estimates of salary growth and fluctuations, and we never tried to calculate a "safe withdrawal rate" from our wages, why should post-retirement be so different?

Because if you don't have any income you have to make sure that whatever money you have lasts for the rest of your life.

Florida Orange:

One of the best ways to be sure that "whatever money you have lasts the rest of your life" is a Single Premium Immediate Annuity (SPIA). I own two and they have turned-out to be the best investments we ever made (I'm 99 years old). We bought ours from "immediate annuities.com" without problems.

A SPIA provides the largest guaranteed lifetime income of any investment.

Best wishes.
Taylor

Jack Bogle's Words of Wisdom: "Depending on the particular circumstances, annuities are a good idea, but only annuities available at very low cost and commensurately high return."

[GaryA505]

To get us back on track, this thread is about the simplest withdrawal plan and not withdrawal rates, which has been discussed to death on this forum. It is also not about most efficient withdrawal plan, though a simpler plan could in fact be more efficient if it prevents errors due to miscalculations.

Certainly Taylor's suggestion of buying a SPIA with part of assets fits within the "simplest withdrawal plan" topic, as the payments are automatic for the remainder of your life!

[celia]

We didn’t retire until the mortgage was paid off, the kids were done with college and our retirement accounts had enough in them. So the idea was to first decrease our expenses.

Now our SS and pensions more than meet our retirement needs and no withdrawals are necessary. We finished Roth conversions before RMDs started and don’t have to think of any withdrawals at all. That is the simplest thing we could do and it should serve us well if we have cognitive decline.

[stlrick]

I think my wife and I have the simplest withdrawal plan - we have no withdrawal plan. We live on a cash budget. If the money arrives, we spend it or gift it to our children and to charities. Having said that, a good portion of our money arrives because I have changed our Vanguard investment dividends setting from reinvest to distribute. Another chunk of money arrives because the IRS says "Withdraw this much from your IRAs each year, or else!" Also, the SSA and my pension kindly send us money each month. It all adds up to a cash budget.

+1

Social security, pension, SPIA and RMD's all deposited automatically in our checking account means that we put something back in our brokerage account at the end of each month.

[GaryA505]

I think my wife and I have the simplest withdrawal plan - we have no withdrawal plan. We live on a cash budget. If the money arrives, we spend it or gift it to our children and to charities. Having said that, a good portion of our money arrives because I have changed our Vanguard investment dividends setting from reinvest to distribute. Another chunk of money arrives because the IRS says "Withdraw this much from your IRAs each year, or else!" Also, the SSA and my pension kindly send us money each month. It all adds up to a cash budget.

+1

Social security, pension, SPIA and RMD's all deposited automatically in our checking account means that we put something back in our brokerage account at the end of each month.

SS, pension, SPIA and RMD are certainly "simple" when it comes to a withdrawal plan. An automatic RMD can be set up with most investment companies. That leaves non-retirement (i.e. taxable) accounts. Now, if someone had considerable assets in a non-retirement account and needed to spend some of that in retirement, one way to simplify a withdrawal plan would be to buy a SPIA with some of those assets.

[Mr. Rumples]

As I age, so does my cognitive flexibility; thus, simplicity is in order. My withdrawal plan is what the RMD's are; the spending is 3.3% of the balance of the tax deferred accounts; money in excess is just saved until I need to dip into it for medical and house help.

[GaryA505]

As I age, so does my cognitive flexibility; thus, simplicity is in order. My withdrawal plan is what the RMD's are; the spending is 3.3% of the balance of the tax deferred accounts; money in excess is just saved until I need to dip into it for medical and house help.

Indeed, cognitive decline is one reason why withdrawal plan simplicity is important. The simpler the plan, the less likely it is that a costly mistake might be made.

[bltn]

I think my wife and I have the simplest withdrawal plan - we have no withdrawal plan. We live on a cash budget. If the money arrives, we spend it or gift it to our children and to charities. Having said that, a good portion of our money arrives because I have changed our Vanguard investment dividends setting from reinvest to distribute. Another chunk of money arrives because the IRS says "Withdraw this much from your IRAs each year, or else!" Also, the SSA and my pension kindly send us money each month. It all adds up to a cash budget.

Excellent plan for simplicity and security.

We also live on a budget made up of distributions from stock index funds, required withdrawals from IRAs, a small pension, and social security. Unless a drop in the market affects dividends, we won t be bothered by changes in the stock market.

Our IRA withdrawals are monthly with enough withheld to more than cover our taxes. Thus, no estimated quarterly tax payments. The monthly IRA withdrawals are directly transferred into our checking account as are monthly withdrawals from our money market settlement fund which are the stock fund distributions. This system feels a lot like a monthly paycheck.

We adjust the monthly IRA withdrawals and withholding at the beginning of every year.

[bltn]

I think my wife and I have the simplest withdrawal plan - we have no withdrawal plan. We live on a cash budget. If the money arrives, we spend it or gift it to our children and to charities. Having said that, a good portion of our money arrives because I have changed our Vanguard investment dividends setting from reinvest to distribute. Another chunk of money arrives because the IRS says "Withdraw this much from your IRAs each year, or else!" Also, the SSA and my pension kindly send us money each month. It all adds up to a cash budget.

This is what I do. It also provides peace of mind because share price fluctuation is largely an abstraction.

This is a good observation.

[fourwheelcycle]

Our IRA withdrawals are monthly with enough withheld to more than cover our taxes. Thus, no estimated quarterly tax payments.

I hate quarterly estimated tax payments. I hate to prepare and submit them, and I worry as I get older I may forget to do them on time. When I retired, I set half of my pension for tax withholding. We do QCDs during May through September each year, and in late November or early December I look at our likely taxes. Then we take the balance of our RMDs, withholding a sufficient amount to get close to our expected taxes. I am very pleased with myself, and the many BHs who also use IRA withholding to avoid quarterly estimated tax payments.

[zie]

I think the easiest would be putting both accounts into something like AOM or AOR (there are Vanguard equivalent MF's if @ Vanguard). These are 50-60% stocks(depending on which fund you choose), the rest bonds. Turn off dividend reinvestment in taxable, follow the RMD schedule and spend whatever shows up.

If you need more money on occasion, you sell and spend it.

[GaryA505]

I think the easiest would be putting both accounts into something like AOM or AOR (there are Vanguard equivalent MF's if @ Vanguard). These are 50-60% stocks(depending on which fund you choose), the rest bonds. Turn off dividend reinvestment in taxable, follow the RMD schedule and spend whatever shows up.

If you need more money on occasion, you sell and spend it.

That's pretty simple.

One thing on a related subject for RMDs. When using the automatic RMD withdrawal services provided by brokerages, one would want to be aware of the rules. Vanguard's RMD service only works with Vanguard Mutual Funds. Fidelity's and Merrill's automatic RMD service will work with any Mutual Fund. Schwab is the odd bird here, as they will only do it with ETFs, and only if you are using their Intelligent Portfolio and Intelligent Income.

[radiowave]

OP, if simplicity is your primary goal, and you are willing to sacrifice tax efficiency, and if an AA of 60/40 is appropriate for you, I would recommend VBIAX in both funds and be done with it. Turn dividend reinvestment on, then set up your withdrawals to meet RMD and tweak taxable withdrawal to get your target 3%. I'd do it monthly so it would be just like working and getting a paycheck.

[GaryA505]

OP, if simplicity is your primary goal, and you are willing to sacrifice tax efficiency, and if an AA of 60/40 is appropriate for you, I would recommend VBIAX in both funds and be done with it. Turn dividend reinvestment on, then set up your withdrawals to meet RMD and tweak taxable withdrawal to get your target 3%. I'd do it monthly so it would be just like working and getting a paycheck.

That is certainly simple. For a small variation on the theme, those who want non-US exposure would use VSMGX in tax-deferred and VBINX in taxable accounts. There have been whole threads on that "single holding in each account" idea. Regardless of the fund chosen for each type of account, what this does is eliminate any asset management tasks. "One and done".

[zie]

I think the easiest would be putting both accounts into something like AOM or AOR (there are Vanguard equivalent MF's if @ Vanguard). These are 50-60% stocks(depending on which fund you choose), the rest bonds. Turn off dividend reinvestment in taxable, follow the RMD schedule and spend whatever shows up.

If you need more money on occasion, you sell and spend it.

That's pretty simple.

One thing on a related subject for RMDs. When using the automatic RMD withdrawal services provided by brokerages, one would want to be aware of the rules. Vanguard's RMD service only works with Vanguard Mutual Funds. Fidelity's and Merrill's automatic RMD service will work with any Mutual Fund. Schwab is the odd bird here, as they will only do it with ETFs, and only if you are using their Intelligent Portfolio and Intelligent Income.

Interesting on the AutoRMD rules across providers, I have no experience.

Only Vanguard has Mutual Funds in the 50-60% range with a reasonable fee. Fidelity has some cheap 1-fund mutual funds, but not in the 50-60% range(that I know of), the closest would probably be FIKFX @ 20% equities, which is probably to little in equities. One could do some math and find a way to hold FIKFX and then something with more equites in taxable to force the autoRMD system to work, but that starts to get complicated though. Personally I think I'd just stick to doing it manually with duplicate funds in IRA and Taxable, it's once a year and it's not remotely rocket science.

Good luck whatever you decide! It would be great(from my perspective) if you check in here on occasion and let us know how your plan is working out in practice.

[SuzBanyan]

And, of course, even if the simplest option is to have a balanced fund or ETF in both taxable and tax deferred, there may be a tax cost involving recognizing significant capital gains when moving to that investment in taxable.

[Target2019]

Simple advice that may help. We use checking as the fulcrum in our system. Every piece of income is deposited there. Most bills are paid from there.

It becomes very obvious what we need per month. In our case the bank balance grows through the month, and then becomes "too much", and we transfer an amount to higher yielding cash account or money fund.

We are not at RMD's yet, but what will happen is that we'll identify a specific IRA-type account, and take periodic RMD payments, or lump-sum.

I expect we'll not need the RMD's, but who knows for sure? Our indicator will be the bank balance, and at periodic intervals it will go very positive, and we have a decision about using the excess or transferring elsewhere for investment.

We maintain the checking at a minimum of $7,500 and a target balance of $10,000. Goes much beyond $12,000 and I transfer out.

In your case you need to find values for the minimum and a target.

I see that you're looking for absolute automation of everything. You can do that, but a human needs to understand whatever system you put in place, and monitor an indicator to make sure all works smoothly.

[TN_Boy]

stuff deleted ...

See Taylor Larimore's post, Safe withdrawal rates: complexity versus simplicity.

I retired in June of 1982 at the age of 57. We had about a $1 million dollar portfolio to last us the rest of our lives. I didn't know about safe withdrawal rates (the Trinity Study wasn't published until 1998). We had no computers, Internet, Monte Carlo, or sophisticated calculators. We only knew that we had to be careful to make our money last ($1M at 4% = $40,000/year before tax).

So what happened? We simply withdrew what we needed and kept an eye on our portfolio balance. Most years our balance went up and we spent the money on vacations, luxuries and charity. When our balance went down we tightened our belt and economized.

This is what most people do and it works. ...

I'm sorry but every time I see this post I am unable to prevent myself from remarking:

• 1 million in 1982 is about 2.6 million in 2023, a non-trivial portfolio

• 1982 marks the beginning of the greatest stock AND bond market in US history

• I think Taylor had a pension and maybe SS also

Very true in 1982 we didn't know about SWRs, and we especially did not know the next 18 years would be wonderful for stock and bond investors. But as one lived those years, certainly they were seeing awesome returns, which made it a lot easier to just withdraw "what we needed." Great returns make simple easy.

Though to some extent, there are two separate issues; how much to pull, and where to pull it from. Taylor's post seems oriented towards how much, whereas the OP's question seems more "how and where," as they've already indicated a target 3% withdrawal rate.

My first response to the OP is that I would not buy any SPIAs in either account just for "simplicity." At a conservative 3% withdrawal, why?

[kabob]

...The couple needs roughly 3% from these assets, in addition to SS...
My objective is to be able to "set it and forget it".

Want simple "set it and forget it", need only 3%...
LockIn 5.5% with VCLT(or its equivalent MutualFund) - NOW, at its current price(~$76ish), and get 2.5% extra!
That'll meet the needs++ and possibly produce some capital gains.
At worst you'll still always have your monthly dividend income on the original investment.
That's simple "set it and forget it" - and it aint all that bad, with Extra(2.5%) and Self Sustaining!

[radiowave]

I think the easiest would be putting both accounts into something like AOM or AOR (there are Vanguard equivalent MF's if @ Vanguard). These are 50-60% stocks(depending on which fund you choose), the rest bonds. Turn off dividend reinvestment in taxable, follow the RMD schedule and spend whatever shows up.

If you need more money on occasion, you sell and spend it.

That's pretty simple.

One thing on a related subject for RMDs. When using the automatic RMD withdrawal services provided by brokerages, one would want to be aware of the rules. Vanguard's RMD service only works with Vanguard Mutual Funds. Fidelity's and Merrill's automatic RMD service will work with any Mutual Fund. Schwab is the odd bird here, as they will only do it with ETFs, and only if you are using their Intelligent Portfolio and Intelligent Income.

Thanks, I learned something about auto RMD at Schwab. May have to rethink my RMD strategy.

[GaryA505]

I think the easiest would be putting both accounts into something like AOM or AOR (there are Vanguard equivalent MF's if @ Vanguard). These are 50-60% stocks(depending on which fund you choose), the rest bonds. Turn off dividend reinvestment in taxable, follow the RMD schedule and spend whatever shows up.

If you need more money on occasion, you sell and spend it.

That's pretty simple.

One thing on a related subject for RMDs. When using the automatic RMD withdrawal services provided by brokerages, one would want to be aware of the rules. Vanguard's RMD service only works with Vanguard Mutual Funds. Fidelity's and Merrill's automatic RMD service will work with any Mutual Fund. Schwab is the odd bird here, as they will only do it with ETFs, and only if you are using their Intelligent Portfolio and Intelligent Income.

Thanks, I learned something about auto RMD at Schwab. May have to rethink my RMD strategy.

I would contact them to confirm. The brokerages seem to change their rules from time to time.