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Investing/Strategies / Retirement Investing
|Subject: Re: Protecting your heirs||Date: 7/10/2000 8:14 AM|
|Author: BGPenhollo||Number: 23228 of 77280|
"It seems my IRA ends up at the end of the year with a little more value than at the beginning of the year, because the interest I'm getting on the CD is more than what's being distributed. Isn't that unusual? I thought my distribution would deplete it eventually. Any thoughts? "
It depends on your life expectancy at your present age.
If your life expectancy is around 17 to 20 years, your Require Minimum distribution will be 1/17 to 1/20th of the value of your portfolio as of Dec 31 of the previous year.
1/17 is 5.8% and 1/20 is 5%. If your CD's on average pay more than whatever your minimum percent withdrawal is, the value of your portfolio should increase.
As you age, the number of years left in your life expectancy will decrease. When your life expectancy reduces to 15 years you will taking out 6.67%(1/15) and when you get to 10 years, you will be taking 10% (1/10) and when you have 2 years, you will take 50% (1/2).
So if you live long enough your RMD will deplete your IRA/401K.
Does this make sense?
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