RMDs, account withdrawals, 4% simplified- MAYBE?

The  recent discussion about withdrawal rates – 4% and all  that – got me thinking about the importance and confusion surrounding that decision.  I don’t  personally have to deal with it and gladly so because I’m sure I would not handle it well. My withdrawals are those required by RMDs. 

The current RMD table is based on the 2012 Individual Annuity Mortality (IAM). The table is more generous than a “single life” actuarial table. It is calculated using the Joint Life and Last Survivor expectancy for an individual and a hypothetical beneficiary who is exactly 10 years younger. This results in a smaller required withdrawal.

73- 3.77%

75- 4.07%

80 – 4.95%

85 – 6.25%

90 – 8.25%

95- 11.24%

100 – 15.63%

Instead of wrestling with a withdrawal rate, why not base retirement income planning on the RMD table? For most average retirements it hovers in the 4% range anyway. RMDs will never cause you to hit zero $. 

However, there is still the market risk, which based on reading HD post by HD investors, can be managed to some extent by investment choices. Or, using in-kind transfers may help too by avoiding selling in a down market. 

Of course, there is no requirement to spend the entire RMD if it is more than needed. Take the cash, pay the taxes, and immediately move the remaining amount into a taxable brokerage account. I use QCDs for a portion of my RMD, give a portion to each of our children and reinvest the balance into a money market fund (SPAXX) with Fidelity to add to cash reserves. 

As I said, I am not faced with the withdrawal decision or with relying on investments for living expenses so I am not in a position to give advice. I’m just thinking what I might do if faced with the decisions most people must deal with given I like to keep things simple. My rollover IRA has more than doubled in value since taking my first RMD in 2014 – the luck of the markets, surely not my investing skills.