Withdraw buckets

[svho]

Hello,

The 4% withdraw guide has got me very interested. I have watched various videos still a but want to simplify a bit so I seek your guys advice

Lets say I have $1.2 million on the portfolio.
- $700K on IRA
-$100K on Roth
-$200k taxable investment
-$200k on CD (ladder 1-5 years).

Will be 51 in March. Lets say I want to move to Asia and live from 53-59. My yearly expense will be $36k. How would I withdraw $36k a year? From the matured of CD or a combination of CD and taxable account? My current staggered CD won't cover 36k a year of expense (some CD at $20k, some at $40K, etc).

I am thinking I should stagger my CD to cover 36k a year. Use the money from the matured CD when the market is down. When the market is up from the prior year, in January I could pull out 36K from taxable investment.


Of course If I could get my GF to go with me, then I probably won't have to touch a penny.

Btw, wish I had more but a divorce with kid in 2019 set me back (house was almost paid off in Socal).

Happy Friday!
TT

[Peter Foley]

Look up the concept of a Roth conversion ladder. Contributions to a Roth can be removed tax free at any time.

Doing a small Roth conversion with little or no taxes and then removing the amount a few years later is a good way to go.

[retired@50]

If you intend to access the IRA money before 59.5 years old, you may want to read this article...
https://www.madfientist.com/how-to-acce ... nds-early/

Regards,

[svho]

Too much caffeine today. I have a $200k taxable account. I don't plan on touching the IRA after 59.5.

Just updated the post. I plan to do Roth conversion each year up to the max allowed standard deduction.

[GAAP]

You might also want to consider that the 4% SWR studies assumed a 30-year retirement period. Unless you have good reason to suspect that you will not be around after age 83 (53+30), 4% may be high.

I would also consider inflation in your plans. That can be more difficult with an ex-pat retirement since the inflation-protected choices are pretty much tied to the US Dollar -- where inflation may be less or more than where you chose to live.

Also remember that US Citizens are still required to file an pay US income taxes regardless of where they live on this planet. Other countries may have additional requirements, and how they treat income or withdrawals from a US retirement account may not align with the treatment here. Tax treaties may or may not be your friend -- all this to say that you may have additional taxes to plan for. IOW, you should probably do some research around specific choices of foreign domicile.

You really need to know how to handle these issues first, then determine an investment and withdrawal strategy.

[trueblueky]

Hello,

The 4% withdraw guide has got me very interested. I have watched various videos still a but want to simplify a bit so I seek your guys advice

Lets say I have $1.2 million on the portfolio.
- $700K on IRA
-$100K on Roth
-$200k taxable investment
-$200k on CD (ladder 1-5 years).

Will be 51 in March. Lets say I want to move to Asia and live from 53-59. My yearly expense will be $36k. How would I withdraw $36k a year? From the matured of CD or a combination of CD and taxable account? My current staggered CD won't cover 36k a year of expense (some CD at $20k, some at $40K, etc).

I am thinking I should stagger my CD to cover 36k a year. Use the money from the matured CD when the market is down. When the market is up from the prior year, in January I could pull out 36K from taxable investment.


Of course If I could get my GF to go with me, then I probably won't have to touch a penny.

Btw, wish I had more but a divorce with kid in 2019 set me back (house was almost paid off in Socal).

Happy Friday!
TT

You need 7*$36,000 = $252,000. The CDs will grow; the taxable account may grow.

Simplest is to take the maturing CD and top off from the taxable account. Your taxable income will be low since much of the money will be untaxed return of principal.

This presents an opportunity to tax gain harvest or Roth convert.