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I am seeking advice from Retired Fools that have reached 70-1/2 years of age on how to invest unneeded RMD withdrawals from my IRA.

I wasn't in a rush to retire and retired in 2013 at age 68 after my wife turned 66. My Social Security monthly retirement benefit and my wife's monthly spousal benefit were much larger than expected due to COLA being applied after the Primary Insurance Amount was calculated. This along with two small pensions (>$1000/mo.) covers all our "essential" expenses.

At present, the RMD withdrawal is being used to pay federal and state income taxes on the RMD withdrawal and the two small pensions and the federal income tax on 85% of the Social Security benefits. This year, I am withdrawing my RMD in quarterly installments and have deposited the after tax dollars of my first two withdrawals in my saving account. I now have roughly 5-years worth of 'essential" living expenses in savings.

I expect to live as long as my Dad who is currently 97. Do I reset my clock and invest as if I were in my thirties and forties again?
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"This year, I am withdrawing my RMD in quarterly installments and have deposited the after tax dollars of my first two withdrawals in my saving account. I now have roughly 5-years worth of 'essential" living expenses in savings.

I expect to live as long as my Dad who is currently 97. Do I reset my clock and invest as if I were in my thirties and forties again? "



May you live to 97 Plus. Be thankful you have good family genes. take care of your health.

Obviously you are sitting on a pile of cash. Hopefully you've at least bought some CDs - maybe a rolling five year ladder so one come due each year and you'll ride the interest rate rise up with a new one each year.

Or you could invest in things like GNMAs or other bond like instruments, corporate bond funds, etc. Or perhaps in REIT index funds.

No need to do 100% investing in other assets. Sounds like with your COLA and RMDs you are pretty well set.

Of course, by the time you hit your 80s, that RMD keeps going up and up and up each year.

So you probably need to come up with something to invest a part of your cash reserves each year.

No sense piling up more money than you ever will need....don't know about health of wife and her family longevity.

If your IRA is mostly in stocks now, I would not be buying a whole lot of new ones each year...if at all.

Until you are less than 50% stocks overall , 50% bonds/REITS/GNMA/CDs, I would not be investing in more stocks at age 70.




t.
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We are somewhat in the same situation. Our monthly income is VA disability and both our SS. My DH is not well, and that has forced me to contemplate my future when I'm alone.

Right now we have CDs, both from Pen Fed and some in the Ameritrade account along with number of individual bonds. For now, I enjoy looking for investments and opportunities, but feel in the future I am going to want to simplify our investments. We currently do not take anything from investments for living expenses and I'm tired of finding things to do with that money. I normally let it pile up for 6 months or so then decide what to do.

I've been thinking about 1-3 years from now selling the Ameritrade investments and simply putting it all in Vanguard Funds and reinvesting the dividends and interest as that would require no work on my part.

I will not need the money from investments and my monthly income will come from DHs SS and his DIC (death & indemnity compensation) from the VA and that will more than cover my monthly expenses.

I guess I'm fortunate to have a problem like this. :))
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You expect to be retired for 27 years more or more. In that time, your living expenses will double at least once. Are you prepared to cover those additional costs?

Social Security and some pensions have cost of living adjustments, which might cover it. Perhaps the return you get on your investments will be sufficient.

For most investment in equities offers the best returns and the best potential to keep up with inflation. As a retiree, I would suggest a conservative approach. Blue chips or index funds for a portion of your assets.

Think about it and see what works for you and your risk tolerance.
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I have been taking RMD for 9 years. I take it on a monthly basis, deposited into a taxable account. Federal and State taxes are deducted first. I keep enough cash in my IRA so that nothing needs to be sold for RMD deductions.

I am invested solely in dividend stocks that are considered safe, essential businesses. Some of my stocks are very short term iShare bond funds.

I would love to be solely invested in CD's...but at 1% or less, why?

I do use the RMD deductions for other than normal expenses. Otherwise, they are reinvested in my taxable account.

Birgit
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Our monthly income is VA disability and both our SS.

I probably should have mentioned that I am a disabled Vietnam Era veteran and receive VA disability compensation that is not taxable. Unlike Social Security, COLA is not automatically applied each year. Congress must approve all COLA before VA disability compensation can be adjusted.

We currently do not take anything from investments for living expenses and I'm tired of finding things to do with that money.

It sounds as if your investments are held in taxable investment accounts. This provides you with a degree of flexibility that I don't have.

Nearly all of my "retirement funds" are held in IRA accounts. The IRS insists that I make an RMD withdrawal based on my age and the value of my IRA accounts on 31 December of the previous year.

To give you and others an idea of the scope of my problem and why I asked my question, my first year RMD withdrawal is a little over $80K. After taxes, I am left with roughly $65K that I need to spend, save, or invest.

I have played with a number of online RMD calculators using different scenarios. The amount of my annual RMD withdrawal will continue to increase until it peaks in my early nineties assuming that there are no major recessions like the Great Recession between now and then.
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<< Perhaps the return you get on your investments will be sufficient.

For most investment in equities offers the best returns and the best potential to keep up with inflation. As a retiree, I would suggest a conservative approach. Blue chips or index funds for a portion of your assets.

Think about it and see what works for you and your risk tolerance. >>



After eight years of retirement, my net worth has increased by about $500,000. That includes some significant loses during the 2008 mess, including getting my Washington Mutual stock wiped out.

The past few years I've been accumulating cash rather than making new investments, so another good stock market crash might do me good.


So far, so good.


Seattle Pioneer
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We've been retired for 20 years now, DH is 71 and I'm 70. He worked for an employee owned company so we had company stock that we were required to sell back to the company upon retirement.

We have no IRAs or 401K or anything, just formerly the company stock that we in turn invested with a "hot shot" financial planner. After 2 major downturns we kicked him to the curb and started doing our own investing. Made a few mistakes along the way, but we're happy with the way things are set up now.

DH is also Vietnam vet, 100% P & T.
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"Nearly all of my "retirement funds" are held in IRA accounts. The IRS insists that I make an RMD withdrawal based on my age and the value of my IRA accounts on 31 December of the previous year."


I've only got about 20% of my retirement funds in an IRA. They weren't around most of my career. well, IRAs were but limited to $1500 or $2000 a year back in the 70s/early 80s and my company went to a 401K about 1990 and I retired 10 years later. Didn't have time to stash cash.

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"To give you and others an idea of the scope of my problem and why I asked my question, my first year RMD withdrawal is a little over $80K. After taxes, I am left with roughly $65K that I need to spend, save, or invest."

Mine will be lower, but it will still be a kicker - start at age 70 1/2 next year.

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"I have played with a number of online RMD calculators using different scenarios. The amount of my annual RMD withdrawal will continue to increase until it peaks in my early nineties assuming that there are no major recessions like the Great Recession between now and then. "

Yes, it will.....assuming only a slightly growing portfolio so that after your withdrawals, you still have the same or more each Dec 31.

Of course, by age 90, you'd probably want to be mostly in bond or bond like funds in your IRA......so you won't have to worry bout the Great Recession.

And now, you'd probably be wise to be moving to 50/50 or maybe 30% stocks and 70% bonds/REITS/GNMA/TIPS, etc.

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Plus you'd probably want a cash cushion of at least 80K plus a year so you don't have to sell anything. Put the income from your investments in a cash account, rather than re-investing it...... so you don't have to sell anything to take your RMD.

Look to the bright side. Most folks retire on a lot less than 80K, and I assume you get SS, too.....

You can become very charitable if you want. or not.

or invest it in taxable accounts....maybe tax free muni bond funds.



t.
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""To give you and others an idea of the scope of my problem and why I asked my question, my first year RMD withdrawal is a little over $80K. After taxes, I am left with roughly $65K that I need to spend, save, or invest."


Well, I guess that would put your IRA at over 2.5 million or so.....

Hopefully you got a will set up....and a Living Revocable Trust.....
and have some heirs you really want to leave the money to.......


t.
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