A Retirement Income Solution: Get a Little Help from the I.R.S.
A Retirement Income Solution: Get a Little Help from the I.R.S.
A Retirement Income Solution: Get a Little Help from the I.R.S.Some experts argue that perhaps the best rule of thumb for determining a safe retirement withdrawal rate is to actually use the I.R.S.’s Annual Percentage Withdrawal Table to determine optimal retirement withdrawals — for any account (and at any age).You are probably aware that starting at age 73 you are required to withdraw a certain percentage of your 401k and IRA savings each year in order to avoid hefty tax penalties. The amount you must withdraw is published by the I.R.S. — the Required Minimum Distribution tables. The I.R.S. determines your withdrawal amounts by applying a formula that is based on life expectancy tables. The balance of your account is to be divided by your life expectancy factor (the average number of years someone your age is expected to live).So, the RMD retirement withdrawal strategy is to apply the I.R.S. RMD formula to any account you want to tap for retirement expenses, it doesn’t matter how old you are or the type of savings vehicle you are calculating.As you age the percentage rises since you have a lower life expectancy, so at age 90 it’s about 9% of your total portfolio (for a married couple). If you had $500K remaining in your portfolio that would be about $45,000 in that year.