We know the 1st half of retirement savings, let's discuss the 2nd half of spending it

[LivingAlmostLarge]

If you want to have a visual for over your lifetime--here is a link to a chart: https://www.irs.gov/publications/p59...blink100090310
You would take the value of the pretax asset as of 31 Dec and divide it by the life expectancy number on the table (note--there are different tables depending on your situation). You will note that life expectancy goes down as you get older and the RMD will be higher (tax man wants his taxes). There are little nuisances to this. One is Qualified Charitable Donations (QCDs) which are allowed starting at age 70.5 ( https://www.irs.gov/newsroom/reminde...fts-to-charity) --They will count towards your RMDs and will not count towards your taxable income (as long as it goes directly from your IRA to the charitable organization and it has to be the first distributions of the year).

They have made several changes to RMDs in the past few years. I believe they changed the life expectancy tables (from when I first looked at it anyway 8 years ago). They have changed the beginning age a couple of times.The latest change from the secure act:
"The RMD rules require individuals to take withdrawals from their IRAs (including SIMPLE IRAs and SEP IRAs) every year once they reach age 72 (73 if the account owner reaches age 72 in 2023 or later), even if they're still employed."
https://www.irs.gov/newsroom/irs-rem...e-law-for-2023

So, anyway I'm not sure what the life expectancy tables will look like next year. I populated an excel spread sheet so I could visualize what the RMDs would look like for DH and myself and I will have to make adjustments for the age 73 change (and possibly the life expectancy tables).

Can you share your RMD spreadsheet

[Like2Plan]

Some reasons to think about converting to Roth

After about year 4-the RMD amount exceeded the 4% safe withdrawal rate for DH and myself. This means that we would most likely not want to spend the entire RMD, but rather put some of it into savings. But, under that scenario--I thought it would be better to proactively convert to Roth prior to reaching RMD age.

These distributions (along with all of your taxable income) will impact whether or not some (or most) your social security is taxed (up to 85% of your SS income). . "You will pay federal income taxes on your benefits if your combined income (50% of your benefit amount plus any other earned income) exceeds $25,000/year filing individually or $32,000/year filing jointly." https://www.ssa.gov/manage-benefits/...withhold-taxes
If you receive a taxable pension you will probably exceed that anyway (so, this would be a neutral).

If you decide to enroll in Part B medicare you might have to pay IRMAA (Medicare income related monthly adjustment amount). They look at your tax returns from 2 years prior to determine whether you will pay extra for medicare part b. It is based on your modified adjusted gross income: https://www.bogleheads.org/wiki/Inco..._Amount_(IRMAA).

Some of these IRMAA thresholds seem quite high, but for married couples something to consider is what happens to the surviving spouse.

My goal is to smooth out the tax liability--so, I don't want to defer taxes into a higher bracket just as I don't want to convert funds into a higher bracket. (There is a lot to consider. )

[Like2Plan]

Can you share your RMD spreadsheet

I can tell you how I made it.

Column A (year) Column B (age) Column C (pretax retirement $$) Column D (life expectancy per IRS table) Column E (RMD) column F (remaining pretax retirement $$ after RMD)


formula for column E: = c*/d* (where *=row number)
formula for column F: =c*- e* (where *=row number)

Row 1 Column C would be a guess as to what the amount will be on Dec 31st of the previous year when I reach RMD age.
Row 2 Column C would be another guess (the more guessing I do, the less accurate the number -right?) but, I assumed it would be a 6% rate of return for DH (mostly stocks) and 4% for me (mostly bonds)
In DH's case, I took the column F number from the row above and multiplied it by 6% (rate of return) = F (from row above) * 1.06 (in my case =F (from row above) *1.04)

Then, I just copied the formulas all the way down for C, E and F.

I did the same for mine and then I added our RMDs together for each year to come up with a total for each year...

[srblanco7]

It's not really an all or nothing strategy. You could do it one year and not the other.

I agree. Adaptability is important based on your personal goals. I'm trying to minimize current taxes and avoid a future tax "time bomb" in our tax deferred accounts.

[LivingAlmostLarge]

Some reasons to think about converting to Roth

After about year 4-the RMD amount exceeded the 4% safe withdrawal rate for DH and myself. This means that we would most likely not want to spend the entire RMD, but rather put some of it into savings. But, under that scenario--I thought it would be better to proactively convert to Roth prior to reaching RMD age.

These distributions (along with all of your taxable income) will impact whether or not some (or most) your social security is taxed (up to 85% of your SS income). . "You will pay federal income taxes on your benefits if your combined income (50% of your benefit amount plus any other earned income) exceeds $25,000/year filing individually or $32,000/year filing jointly." https://www.ssa.gov/manage-benefits/...withhold-taxes
If you receive a taxable pension you will probably exceed that anyway (so, this would be a neutral).

If you decide to enroll in Part B medicare you might have to pay IRMAA (Medicare income related monthly adjustment amount). They look at your tax returns from 2 years prior to determine whether you will pay extra for medicare part b. It is based on your modified adjusted gross income: https://www.bogleheads.org/wiki/Inco..._Amount_(IRMAA).

Some of these IRMAA thresholds seem quite high, but for married couples something to consider is what happens to the surviving spouse.

My goal is to smooth out the tax liability--so, I don't want to defer taxes into a higher bracket just as I don't want to convert funds into a higher bracket. (There is a lot to consider. )

This I think is something people miss. Sometimes you pay a little more upfront to have a better chance st smoothing out the taxes later.