advice on withdrawals until SS starts

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
WeakOldGuy
Posts: 586
Joined: Mon Jan 01, 2024 10:42 pm

advice on withdrawals until SS starts

Post by WeakOldGuy »

From 2024 through 2027 I will need to withdraw ~$175k from some account to cover expenses until my SS benefits start. That amount includes taxes on Roth conversions I plan to make. I have about $760k in my taxable account and plenty in the retirement accounts. The taxable account is mostly equities and a small amount of cash equivalents. The taxable account will kick off about $16k/year at its current value.

My thought so far has been to put any interest and dividend income into cash equivalents rather than reinvesting. Then sell off additional securities as needed for income.

My goal is to put as much of my tIRA funds into my Roth while keeping my income below the next IRMAA bracket. Selling appreciated shares out of my taxable will be less of a tax impact and make it easier to keep the income below the next IRMAA bracket than spending down the tIRA. Using Roth would be great on the tax and IRMAA front, but wouldn't help with the goal to max the amount of my portfolio that is in the Roth.

Starting in 2028, my income from non-portfolio sources will likely cover all expenses. I'm just trying to make the best choices between now and SS. Any and all suggestions would be appreciated.
On investing; I have lots of questions, many opinions, and little knowledge. A dangerous combination. Be warned.
User avatar
Peter Foley
Posts: 5538
Joined: Fri Nov 23, 2007 9:34 am
Location: Lake Wobegon

Re: advice on withdrawals until SS starts

Post by Peter Foley »

I think you are on target with your suggested approach. Roth conversions and withdrawals from taxable accounts to cover taxes and expenses is a good approach. If there are no tax consequences for doing so (perhaps you hold some equities with no capital gains) earning less in your taxable account and more in Roth or IRA might help a bit.
User avatar
22twain
Posts: 4047
Joined: Thu May 10, 2012 5:42 pm

Re: advice on withdrawals until SS starts

Post by 22twain »

WeakOldGuy wrote: Mon Apr 01, 2024 10:47 pm From 2024 through 2027 I will need to withdraw ~$175k from some account to cover expenses until my SS benefits start.
[...]
Starting in 2028, my income from non-portfolio sources will likely cover all expenses.
I suppose you will have other non-portfolio income sources. I can't imagine getting $175k from Social Security, even for a formerly high-earning couple. A pension, maybe?
Meet my pet, Peeve, who loves to convert non-acronyms into acronyms: FED, ROTH, CASH, IVY, ...
Topic Author
WeakOldGuy
Posts: 586
Joined: Mon Jan 01, 2024 10:42 pm

Re: advice on withdrawals until SS starts

Post by WeakOldGuy »

22twain wrote: Mon Apr 01, 2024 11:06 pm
WeakOldGuy wrote: Mon Apr 01, 2024 10:47 pm From 2024 through 2027 I will need to withdraw ~$175k from some account to cover expenses until my SS benefits start.
[...]
Starting in 2028, my income from non-portfolio sources will likely cover all expenses.
I suppose you will have other non-portfolio income sources. I can't imagine getting $175k from Social Security, even for a formerly high-earning couple. A pension, maybe?
The $175k is the total over a 4 year period. We have a pension, rent proceeds, and the installment sale from my business. SS has started for my wife and will start for me in 2028. In today's dollars, my SS benefit at FRA would be about $42k/year.
On investing; I have lots of questions, many opinions, and little knowledge. A dangerous combination. Be warned.
Topic Author
WeakOldGuy
Posts: 586
Joined: Mon Jan 01, 2024 10:42 pm

Re: advice on withdrawals until SS starts

Post by WeakOldGuy »

Peter Foley wrote: Mon Apr 01, 2024 10:56 pm I think you are on target with your suggested approach. Roth conversions and withdrawals from taxable accounts to cover taxes and expenses is a good approach. If there are no tax consequences for doing so (perhaps you hold some equities with no capital gains) earning less in your taxable account and more in Roth or IRA might help a bit.
Yeah, the good news is that all the assets in Taxable have nice gains. The bad news is that there aren't currently any losses to take advantage of. Most of my funds in the taxable are reasonably efficient. The non-efficient are in the tax-advantaged accounts. One reason I am thinking of putting what dividend returns there are into cash equivalents until needed, I would only be about 6 months on average each year.
On investing; I have lots of questions, many opinions, and little knowledge. A dangerous combination. Be warned.
User avatar
Metsfan91
Posts: 1106
Joined: Sat Jan 11, 2020 11:33 am
Location: Rust Belt

Re: advice on withdrawals until SS starts

Post by Metsfan91 »

WeakOldGuy wrote: Mon Apr 01, 2024 10:47 pm

My thought so far has been to put any interest and dividend income into cash equivalents rather than reinvesting. --- Yes, that's the way to do it.

Then sell off additional securities as needed for income. --- Sell securities with long term gains. Tax will be low. Or sell the ones with losses. This will reduce taxable income.

My goal is to put as much of my tIRA funds into my Roth while keeping my income below the next IRMAA bracket. ---Sounds good.

Using Roth would be great on the tax and IRMAA front, but wouldn't help with the goal to max the amount of my portfolio that is in the Roth. --- Right
You got this all thought out. Awesome!
"Know what you own, and know why you own it." — Peter Lynch
Post Reply