How does Safe Spending Rate (SSR%) differ from Required Minimum Distribution (RMD%)?
Posted on July 27, 2017

RMD% is the the IRS stated percentage that those 70 1/2 and older must distribute from their IRAs in a year based on their balance at the end of the prior year. It’s designed to eventually capture taxes on the amount that was initially tax deferred and all subsequent growth that was tax deferred. Your RMD% increases with age. The amount of RMD will also vary depending on the year-end value of your IRA accounts.


SSR% is calculated to give you the safe amount you can spend – in constant dollars; it adjusts for inflation independent of variations in your Investment Portfolio. (You have to follow a couple of key investing rules.) Your SSR% is always greater than your RMD% in the year you start your plan. (Patti and I now are at a SSR% of 4.6% for 2017 spending as compared to my RMD% of 3.91% for 2017 and 0% for her.) And, obviously, since you are applying your SSR% to your total, your Safe Spending Amount is far more than the amount you withdraw from your retirement accounts using your RMD%.

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