“1) Will we have a RMD/tax issue as the advisor/insurance agent states based on their Monte Carlo simulation. 2) Is insurance a good option despite the cost? 3) Considering our situation, what is a good spend down strategy? 4) I always figured we were going to be ok with what we’ve saved but inflation, taxes and uncertain returns now have me questioning that.
My wife will be 66 this year and currently draws social security and I’ll be 64, planning to work until 65 (longer or part time as needed) and wait until 70 for social security. At 70, I expect to earn 40k/year gross or 35k net (roughly 2900/mo for me) from social security. I currently earn 75k/year gross and my wife, 26k/year gross (social security). Of that we average 78k/year take home or 6500/month. Unfortunately, our expenses typically exceed that amount on average by 1500/month due to home improvements etc. making our annual needs 96k/year. Our total investments include, tax deferred (401k & IRA) $2.7 million, Roth $354k and brokerage account with $200k (mostly money market) in it. The latter I tap to make up the shortfall when we overspend the income and it was how I was going to pay myself from 65 to 70. We still have a mortgage at 3.625% for another 20 years. My assumptions/formulas include 2.5% inflation and 5% return (too low?) on the Roth and tax deferred accounts. The brokerage account which is the emergency fund slowly erodes with inflation. Our annual expenses climbing from current $96k/year to $120k @ age 72, $153k/year @ age 82 and $196k/ @ age 92 based on 2.5% annual inflation. Our max RMD hit of $154k (8.7%) will come at age 89 and our balance then will be $1.7 million (tax deferred), $660k Roth and brokerage $117k. This is all based on RMD withdrawals only, not withdrawals to help us get by. Maybe, with the max RMD coupled with our social security income, we’ll never really face huge tax bills as the brackets get adjusted etc. Thanks again, Jim”

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