MW 'I'm worried about cash flow': I'm 71 with a $2.7 million IRA and $470K in stocks. Why can't I relax?
By Quentin Fottrell
'My home is paid for and has an estimated value of $700,000'
"I have contributed to retirement vehicles most of my working years." (Photo subject is a model.)
Dear Quentin,
I am a healthy, active 71-year-old widower and I fully retired last May.
My situation: I have an annual pension, capped at $53,570 ($28,845 taxable) from an earlier law-enforcement career, with lifetime medical benefits. I retired from that career in January 2000 and then entered another profession.
I started collecting Social Security benefits at age 70, in May 2024. For 2026, those benefits amount to $52,800. I receive $10,000 annually for college courses I teach, which I will continue to do for the foreseeable future.
I have contributed to retirement vehicles most of my working years and have a current balance of $2.7 million in a traditional IRA. Investments are allocated 60/40 in equities and bonds, domestic and international, with Vanguard. I will start taking required minimum distributions at 73, in 2027, which are projected to start at $100,000 annually, increasing thereafter.
I also have a taxable investment account - three individual stocks and two mutual funds, held for many years - with a current value of $470,000, as well as a money-market savings account with $75,000.
Home is paid off
My home is paid for and has an estimated value of $700,000. I made many major repairs in the years before I retired - roof, heating/AC, appliances and other updates.
My estate plan has been finalized, with certain assets transferable on death and others (including my house) held within a revocable trust to minimize probate. I am currently living on my pension and Social Security benefits and dipping into the cash reserves when necessary (to pay taxes etc.).
I believe I should be fine once the RMDs start. So why am I still worried about cash flow during my retirement years? Should I be? What am I missing?
Septugenarian
You can email The Moneyist with any financial and ethical questions at qfottrell@marketwatch.com, and follow Quentin Fottrell on X, the platform formerly known as Twitter.
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Distribution - where you start to draw money from those funds, like an expensive wine in your cellar - can be nerve-racking.
Dear Septugenarian,
I have to be brutally honest with you. You're living with a large cushion that should ease any of those financial heebie-jeebies.
Your concerns, while probably baffling to many readers, are not unusual, nor are they unnatural. They are what got you where you are today, and now you are moving from the accumulation phase of your life to the distribution phase. It's a big change, both psychologically and financially. It's often easier, if you've got the resources, to save, manage your money and control your risk allocation. Distribution - where you start to draw money from those funds, like an expensive wine in your cellar - can be nerve-racking.
There's a whole raft of studies showing that retirees your age and older are afraid to touch their retirement savings. Having those savings is the one thing that gives them peace of mind. One piece of research even found that many retirees in their 80s had not touched three-quarters of their savings. "Why aren't these retirees spending their nest eggs?" Ramond James asks. "Some may be spending as little as possible to leave behind a larger sum for their loved ones or philanthropic pursuits. But in many cases, it's because they aren't sure how to determine a sustainable withdrawal rate that accounts for their total lifespan. They worry about the 'what ifs' retirement may throw their way and want to be prepared."
With an annual rate of return of 3% of more, you would be well over 100 before your IRA ran out.
To allay these fears, Raymond James recommends being organized (as you are) and reviewing your finances and plans annually. "There's little doubt your income needs will fluctuate during retirement," the financial-services company says. "The early years may be filled with travel and other big-ticket items that require more substantial withdrawals. As time goes on, you'll likely travel less, but your healthcare expenses may increase. Studies show that spending tends to decline in the later years of retirement, most likely the result of less travel and similar pursuits."
On a lighter note, with this cushy backdrop that you earned with years of hard work, asking, "What am I missing?" is perhaps equivalent to turning to your neighbor at a dinner party and saying, "Tell me about me!" You're obviously doing just fine. When you say that you have more roughly $3.5 million saved for retirement, which you have not yet touched at age 71, and more than $115,000 a year in pensions plus RMDs and a little extra pocket money from a teaching gig, but you are wondering what you are missing, it's hard to treat your case like an emergency.
Related: 'I don't own a house': I'm 50 with $2 million and I'm scared about losing my job. Can I retire early?
Digging into your financials
So let me put your anxieties - I can't help feeling that they're more anxieties than real-world concerns - into perspective. If you took $100,000 a year from your traditional IRA and, in a worst-case scenario, there was no growth in those stocks for the duration of your retirement because of some bizarre turn of events, you still wouldn't run out of money before age 98. With an annual rate of return of 3% of more, you would be well over 100 before your IRA ran out. But you also have a pension, and although you don't mention a cost-of-living adjustment, that pension and your Social Security benefits would see you through lean times even without your IRA.
If you were born in 1959 or later, your required minimum distribution $(RMD)$ begins at age 73 (age 75 if you were born in 1960 or later). The Internal Revenue Service calculates RMDs by taking the balances of your tax-deferred retirement accounts at the end of the prior year and dividing that amount by a life-expectancy factor from IRS tables. At age 71, you are not yet required to take an RMD, but planning should begin now to manage taxes, withdrawal timing and cash-flow needs. At age 73, the IRS life-expectancy factor is 26.5, requiring a withdrawal of approximately 3.77% of your account balance; at age 75, the factor is 24.6, requiring a withdrawal of approximately 4.07% of the balance.
If you were born in 1959 or later, your required RMD begins at age 73 (age 75 if you were born in 1960 or later).
Your RMDs should be your focus in the years ahead. You may be on track, if you're not careful about the timing of your withdrawals, to land in a higher tax bracket. You also open yourself up to potential Medicare income-related monthly adjustment amount (IRMAA) surcharges. One way of avoiding that is to start your Roth conversions ASAP (if/when your adviser OKs such a strategy). A typical Roth conversion window is when you retire and before you claim your Social Security. If you have already made some of these moves, bravo.
You don't have long-term-care insurance, but between Medicare and, if you need medically assisted housing, equity in your $700,000 home - which should be worth a lot more by the time you might need more care - you have enough to cover any unforeseen medical issues. You also have a $470,000 investment account and a $75,000 money-market savings account should you need to deal with any emergencies or sudden repairs for your home. You have set yourself up for longevity: With even a 5% return on your IRA, it would last you until you are 114 years of age.
What do you give a man who has everything? Reassurance, a pat on the back, best wishes for good health and one piece of your favorite candy.
Related: 'They upset me every time I see them': How long do I keep my mother's IRS and medical records? She died 4 years ago.
The Moneyist regrets he cannot reply to questions individually.
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'The house has quadrupled in value': I bought a house with my brother, but he did not contribute. How do I fix this?
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-Quentin Fottrell
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February 04, 2026 01:01 ET (06:01 GMT)
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