This is very timely for us. We just started withdrawals this year at age 65 and plan to claim Social Security at 67. I ran some scenarios using ChatGPT to see when RMDs would overtake a 4% withdrawal strategy adjusted annually for inflation (2–5%). The results were interesting: With 2% increases, withdrawals never exceed RMDs—RMDs set the pace. With 3% increases, RMDs surpass withdrawals at age 74. With 4% increases, that happens around age 80. I also tested different starting withdrawal rates (3–5%), inflation adjustments (2–5%), and returns (5–9%). The pattern was clear: starting above 4%, raising withdrawals more than 4% annually, and earning less than 7% ROI tends to deplete the portfolio before age 96 in a 30-year plan. So my simple takeaway is what I call the 4-4-7 rule: start at 4%, increase 4% per year, and aim for at least 7% ROI (from a 60/40 portfolio). In the end, RMDs eventually take over, and the real lever you control is managing ROI with as little risk as possible.
1. Everything saved is from hard work; don't want to lose it. 2. A feeling of financial security in retirement. 3. Not a problem, less than 1/3 in equities, the rest produces retirement income. 4. Yes, I feel that my 40 years in engineering was productive. 5. We're good, we are retired and live the same lifestyle as before. 6. Retired. I do some consulting, then manage and play in golf tournaments; my spouse volunteers 3 to 4 days a week. 7. Not sure; we're OK financially; most relatives have passed at home with hospice care; that makes sense. 8. We update our estate plan every 5 years and live by George Carlin's law: "a person spends the first half of their life acquiring stuff and the second half trying to get rid of it all!"
Although I'm concerned that the next Bernie Madoff will use AI to steal everything from bank accounts to real estate titles, I use 100% software and online tax returns, filing and payments. As a society, we must continue to stive for better protection of our assets.
And on the other hand, I don't use any social media, except for responding to these wonderful HD articles.
My interesting experience is using CPAs. In the 90's I was a limited partner in an LLC so I used a CPA firm to handle my tax returns (on paper, that I signed and mailed). But almost every year I got that dreaded letter from the IRS describing an error in my return and stating that I owed hundreds more dollars, including penalties.
Each year, the CPA sent me a booklet and requested that I fill it out and gather the tons of documents and receipts needed for them to prepare my returns. Long-story-short, I started using TurboTax about 15 years ago with e-file and e-payment, and I spend less time than it took to gather the documents, and I've never received another letter from the IRS (knock on wood!).
I graduated from college in '85 and went to work for a small engineering company (100 employees). In 1987 the CFO set up the company's first 401K plan through Fidelity. There were many investment choices, but the CFO (a friend) said that Contrafund would be a good one. I invested "the max" each year until 2018, then rolled that into an S&P 500 index fund and retired at age 60 in 2019 (and started reading this column). Who knew?
I'm truly not sure how it happened; I've had an 850 for a few years now. I've had car loans but always paid them off early. My "oldest" credit card is from 1984, I don't use it, but I won't close it. I've never been late on anything and finally paid off that mortgage. Currently we have zero debt.
On the subject of credit cards, this might be widely known, but I recently discovered that if you pay your card total before the closing date the amount that gets reported to the credit bureaus is zero. My credit rating stays at 850 unless I miss that early payment. Paying the total monthly still dings my rating by 11 to 15 points. Who knew!
At my first job after graduating from college, the CFO recommended investing fully in the company's 401K plan. He recommended a stock mutual fund. I invested the max allowed for 30+ years.
Comments
This is very timely for us. We just started withdrawals this year at age 65 and plan to claim Social Security at 67. I ran some scenarios using ChatGPT to see when RMDs would overtake a 4% withdrawal strategy adjusted annually for inflation (2–5%). The results were interesting: With 2% increases, withdrawals never exceed RMDs—RMDs set the pace. With 3% increases, RMDs surpass withdrawals at age 74. With 4% increases, that happens around age 80. I also tested different starting withdrawal rates (3–5%), inflation adjustments (2–5%), and returns (5–9%). The pattern was clear: starting above 4%, raising withdrawals more than 4% annually, and earning less than 7% ROI tends to deplete the portfolio before age 96 in a 30-year plan. So my simple takeaway is what I call the 4-4-7 rule: start at 4%, increase 4% per year, and aim for at least 7% ROI (from a 60/40 portfolio). In the end, RMDs eventually take over, and the real lever you control is managing ROI with as little risk as possible.
Post: Are you actually using the 4% rule?
Link to comment from September 20, 2025
1. Everything saved is from hard work; don't want to lose it. 2. A feeling of financial security in retirement. 3. Not a problem, less than 1/3 in equities, the rest produces retirement income. 4. Yes, I feel that my 40 years in engineering was productive. 5. We're good, we are retired and live the same lifestyle as before. 6. Retired. I do some consulting, then manage and play in golf tournaments; my spouse volunteers 3 to 4 days a week. 7. Not sure; we're OK financially; most relatives have passed at home with hospice care; that makes sense. 8. We update our estate plan every 5 years and live by George Carlin's law: "a person spends the first half of their life acquiring stuff and the second half trying to get rid of it all!"
Post: Ask Me a Tough One
Link to comment from April 19, 2025
Although I'm concerned that the next Bernie Madoff will use AI to steal everything from bank accounts to real estate titles, I use 100% software and online tax returns, filing and payments. As a society, we must continue to stive for better protection of our assets. And on the other hand, I don't use any social media, except for responding to these wonderful HD articles. My interesting experience is using CPAs. In the 90's I was a limited partner in an LLC so I used a CPA firm to handle my tax returns (on paper, that I signed and mailed). But almost every year I got that dreaded letter from the IRS describing an error in my return and stating that I owed hundreds more dollars, including penalties. Each year, the CPA sent me a booklet and requested that I fill it out and gather the tons of documents and receipts needed for them to prepare my returns. Long-story-short, I started using TurboTax about 15 years ago with e-file and e-payment, and I spend less time than it took to gather the documents, and I've never received another letter from the IRS (knock on wood!).
Post: A Tax Filing Conundrum
Link to comment from February 22, 2025
Switching to a 60/40 about 8 years ago; wish I had stuck with 100% stock mutual funds, and then switched to 80/20 today.
Post: My Mistakes
Link to comment from February 22, 2025
I graduated from college in '85 and went to work for a small engineering company (100 employees). In 1987 the CFO set up the company's first 401K plan through Fidelity. There were many investment choices, but the CFO (a friend) said that Contrafund would be a good one. I invested "the max" each year until 2018, then rolled that into an S&P 500 index fund and retired at age 60 in 2019 (and started reading this column). Who knew?
Post: No Barriers to Entry
Link to comment from December 28, 2024
I'm truly not sure how it happened; I've had an 850 for a few years now. I've had car loans but always paid them off early. My "oldest" credit card is from 1984, I don't use it, but I won't close it. I've never been late on anything and finally paid off that mortgage. Currently we have zero debt.
Post: House of Cards
Link to comment from October 8, 2023
On the subject of credit cards, this might be widely known, but I recently discovered that if you pay your card total before the closing date the amount that gets reported to the credit bureaus is zero. My credit rating stays at 850 unless I miss that early payment. Paying the total monthly still dings my rating by 11 to 15 points. Who knew!
Post: House of Cards
Link to comment from October 7, 2023
At least once a year hire an independent financial advisor on an hourly basis to review your portfolio and how best to draw that 4% from it.
Post: When does it make sense to hire a financial advisor?
Link to comment from April 15, 2023
At my first job after graduating from college, the CFO recommended investing fully in the company's 401K plan. He recommended a stock mutual fund. I invested the max allowed for 30+ years.
Post: How did you get started as an investor?
Link to comment from April 15, 2023
Don't buy one.
Post: What’s the best strategy for getting a good deal on a car?
Link to comment from April 15, 2023