FIRST --- The total is a separate question from the RMD on 401k/IRA
accounts to which that applies (note: not Roth IRAs as with those
contributions were after tax). In other words, you must take AT LEAST
the amount as of 12/31 the previous year divided by the life expectancy
table the gov't uses for this purpose. That latter number will always be
decreasing, so taking a larger and larger percentage. But that does not
take into account that your fund is presumably growing at 4-5%. As a
result the amount you would be taking not constant but increasing until
near the end (at 5% the max amount would be over 80 years old).If this
amount is greater than your total planned withdrawals (from all sources)
you invest the excess.
SECOND --- If you calculate how much to withdraw from other sources
assuming a constant rate of return, the amount will fluctuate wildly.
Most organizations use a multi-year average to determine how much to
take from endowment funds. Rules for that vary, but I will give an
example. The rule might be, average the rate of return for the previous
three years and take that (mean) percentage of the previous end of year
balance. Could use a different number of years, different ways of
calculating average*, etc.
THIRD --- Notice that inflation, etc. not (yet) taken into account. Nor
questions like how much needed to sock away now to provide a large
enough fund to produce annual payments of at least that amount. In
practice, rules about how much you are allowed to sock away tax
deferred, how much subject to matching, etc. are going to play a large
role in what you end up doing.
Michael D Novack
* especially when much longer periods used, fancier ways of calculating
"average" might give better results
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