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Joel: "Why do we seem to keep revisiting this issue? Juxtaposing the two items is illogical, because RMDs and SWR are completely unrelated.

The rate that money is withdrawn or converted from a tax-deferred IRA, whether voluntarily or involuntarily has no bearing on your total portfolio returns or how much you spend.

RMDs are about involuntary conversions. SWR is about how much of your assets you spend. The two are not related.

Just because you take money out of an IRA doesn't mean you have to spend it.

End of story."


No.....not by far

The SWR is the amount you COULD spend each year, safely. Just because the numbers say you COULD spend XXXXX amount, doesn't mean you have to spend it!

And heck, you could be selling stock, a 'voluntary conversion', paying the tax on the gain, and not spending it but re-investing it.

On one hand, once you set your SWR at the beginning of retirement, it's a fixed percentage (plus inflation) - maybe 4% for 30 years.

On the other hand, the RMD is a percentage of remaining assets in the IRA each year. It can vary widely. It could drop in half (like '73/74 or '09) or soar like a bird in the 90s. You will never deplete an IRA to zero.

However, if you NEED the original amount each year to live on, then it 'resembles' a SWR withdrawal with inflation.

If you have other assets than the IRA, for example if your IRA is half your portfolio, then it can very much, overall, look like a SWR as the withdrawals ratchet up to 5% or more in your 90s. You simply withdraw less from the other half to maintain an overall 'safe withdrawal rate' of 4% plus inflation.

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