Bogleheads® retirement planning start-up kit

🇺🇸 Below is a suggested list of topics for retirement planning.

Tip: Open links in a new browser tab. It will help you keep track of where you started from as you read through these pages. Adding bookmarks will also work.

Preparing for retirement

 * Preparing for retirement — List of resources, such as books and free online publications, to get started

Pre-retirement spending

 * Planning large pre-retirement expenditures

Spending considerations post-retirement

 * Retirement spending — Links to more detailed wiki pages that cover various aspects of retirement spending

Determining your retirement income sources

 * Matching strategy — Planning income across all of your income sources
 * Social Security — Retirement benefits as an inflation-adjusted life annuity

Individual retirement plans

 * Traditional IRA — Personal savings plan with tax-deductible contributions
 * Non-deductible Traditional IRA — Feature of a traditional IRA that allows for non-deductible contributions
 * Roth IRA — Non-deductible contributions can be useful where your tax rate will rise in retirement
 * Charitable pooled income fund — Trust established and maintained by a public charity

Employer-provided plans
Plan details are addressed in separate wiki pages, just click on the provided link. IRS (Internal Revenue Service) and DOL (Department of Labor) references are also provided.

Tip: Use page Contents to see how the plans are structured.

Annuities

 * Fixed annuity — Insurance contract that pays a fixed rate of interest for a set term
 * Variable annuity — Insurance contract that delays payments until the investor elects receipt
 * Immediate fixed annuity — Fixed sum of money paid to someone each year, typically for the rest of life
 * Immediate variable annuity — Insurance contract that pays you an income at a later time
 * Charitable gift annuity — Allows gifts to a charity while still receiving income from the gifted capital

Taxable investments

 * Taxable account — Account for which the default IRS tax rules apply; no tax deferral or other special benefits

Pension

 * Defined benefit pension plan — Promises a specified monthly benefit at retirement
 * Employer retirement plans overview — Employee benefit plan established or maintained by an employer or employee organization

If your employer offers a choice between "all at once" (lump sum) or every year (annuity), see: Lump sum vs pension.

Reverse mortgages

 * Reverse mortgages — Allows some homeowners to withdraw a portion of home equity as income or a line of credit

Withdrawal rates and life expectancy

 * Safe withdrawal rates — Percentage of investments that can be drawn annually without being exhausted. Controversial.
 * Required Minimum Distribution — IRS-mandated withdrawal from certain types of tax-protected accounts
 * Life expectancy calculators — Use historical models to predict life expectancy based on lifestyle and family history

Asset allocation effect on withdrawal rates

 * Asset allocation — Dividing an investment portfolio among different asset categories

Calculating withdrawals
When it comes time to start taking withdrawals from your retirement portfolio, there are several withdrawal methods you can use:
 * Constant dollar
 * Constant percentage
 * Variable percentage
 * Spending only the dividends
 * Alternative methods, such as glide path and 1/N

Asset allocation adjustments as you age
When you take money out of your portfolio, you should consider more than just the method of withdrawal. Consider your current asset allocation between stocks and bonds, and decide if your allocation will be changed during the withdrawal phase.


 * Constant-dollar (age in bonds)
 * Constant-percentage (age in bonds)

Determining the date to take withdrawals during each year
If you turn 72 in a particular calendar year, you must take the first Required Minimum Distribution (RMD) prior to April 1 of the following year and as early as January 1 of the year you turn 72. This is the only year in which the April 1 extension is given. The RMD for the following year must be taken prior to the end of that following year and similarly subsequent year's withdrawals must be taken prior to year end.

If you choose to delay the first RMD until the following year, you would then be taking two annual withdrawals in that following year, and paying tax on both of those amounts. Most retirees would take their first withdrawal in the same year that they turn 72 so that only one year's tax is paid on the withdrawals.

It is recommended to take the RMD no later than the first half of December of any year just in case something unexpected comes along. It is even possible for the stock exchanges to be closed under certain conditions. Failing to take an RMD will result in a very high 50% tax penalty on the amount not withdrawn.

The special first RMD year option is not limited to deferring the entire first RMD to the second year. You can can choose to defer any part of it. Other income and deductions in each year can vary, so that you might optimize avoiding higher marginal rates by taking some portion of the first RMD in the first distribution year. It is also possible that Social Security taxation might result in a lower tax by not equalizing the RMD amounts. For example, if something like 75% of your Social Security will be included in AGI if you take the RMDs each year in the usual fashion, but if you defer more of the first year it will result in no Social Security inclusion in year one and 85% in year two; deferring a larger amount might actually reduce the total tax over both years.

If you plan on doing any conversions (such as to a Roth IRA) in any RMD year, you must first satisfy the RMD before converting. Additionally, if you are considering a Qualified charitable distribution (QCD) after reaching 72 to the day, the QCD must be done first if you want it counted toward your RMD. The sequence of events therefore is QCD first, then RMD, and then conversion.

Other considerations
Other considerations are:
 * Selecting accounts for taking withdrawals
 * Considering fund distributions
 * Considering tax implications of taking withdrawals
 * Processing withdrawals

Taxes in retirement
Considerations include:
 * Taxes on investment gains compared to taxes on earned income
 * IRA taxation
 * No payroll taxes (Social Security, Medicare)