Support,
I just upgraded to Retirement Planner 2010.3 version.
I was wondering if there is any way to designate distributions from various
assets (401K, savings accounts, stocks and mutual funds)
to cover annual expenses? I understand that most financial planners
recommend a sequence of depleting assets once we are in the retirement
mode without salaries and earnings to cover expenses.
Answer:
This question goes to the "order of depletion" which goes to the order in which investments are tapped or spent in order to meet retirement income needs. In RSP the order is: Taxable first, Tax Free second, and Tax Deferred last.... this is on basis that we try to delay paying the taxes on tax deferred as long as possible. Exception is the RMDs (required minimum distributions) which automatically come out starting at age 70/5 from tax deferred. Does that help?
(note that social security and pensions are applied first, then cash infusions, then the above "order of depletion" of investments)