• About our "monthly safe withdrawal" advice

    Last Updated: June 03, 2015 4:57PM EDT
    The "Monthly Safe Withdrawal" recommended amount on the Advice Tab for retirement income goals is based on our retirement income model that assumes you update your withdrawal amount and allocation at least annually according to our recommendations, and that your age and lifetime horizon are correct. The recommendations will vary based on market performance, your cashflows and allocation changes. If you follow this advice, updating at least annually, we estimate that there is a 1% or less chance of depleting your portfolio before the end of your designated time horizon.

    This is based on our research which uses Monte Carlo simulation. Withdrawal amounts are not guaranteed income. You should consider all of your sources of income both guaranteed and variable, as well as your expected cost of living, to make a cohesive income plan.

    You can read more in our resource center article about retirement income.
  • How do I add a retirement income goal?

    Last Updated: January 22, 2016 11:22AM EST

    To see our Safe Withdrawal advice, you first need to have a Retirement Income goal. Once created, use the tools on the Advice tab to see recommended safe withdrawal advice even before you fund your account.

    To add a retirement income goal, simply click "Add New" at the top right hand side of your Summary page. After you choose your account type (individual, joint, trust or IRA), you will choose the "Retirement" option and pick "Income".


     

     

  • How much do Betterment’s Retirement Income features cost?

    Last Updated: January 22, 2015 5:11PM EST
    Retirement Income is a service that comes at no additional cost for our qualified retired customers. Customers will simply need to set their goal to be a "Retirement Income" goal and set their withdrawal amount accordingly. You can choose the goal type on your advice page. This process is very similar to when you create auto-deposits in your account.

    Learn more about Betterment's pricing
  • Do I have to take withdrawals monthly or can I change the schedule?

    Last Updated: April 09, 2014 5:42PM EDT
    You can customize your automatic withdrawals to your own schedule, including frequency and day of the month or week. You can make changes or stop and start the payments on the Transfer tab. You can also take withdrawals manually, and you withdrawal advice will adjust accordingly.
  • Can I get income from multiple accounts?

    Last Updated: April 09, 2014 5:45PM EDT
    Yes—if you plan to draw income from both a Traditional IRA and a Roth account, for example, you will need to set up an automatic withdrawal from each one.
  • I'd like to just "live off the gains" and not use my principal. Is that possible?

    Last Updated: June 11, 2015 1:55PM EDT
    In today's low-rate environment, this is not possible unless you are willing to significantly reduce your withdrawals and therefore standard of living. "Yield chasing", or seeking other sources of higher interest beyond CDs and risk-free treasuries, can result in unwanted risk concentrations in high-yield bonds and high dividend stocks.

    ​We recommend a total-return investing strategy, which manages risk through broad diversification, and delivers income through the dividends and capital appreciation of the underlying portfolio.
  • What if I want to plan to leave investments to my heirs?

    Last Updated: June 16, 2016 1:40PM EDT
    Our advice model does not currently account for leaving assets to your heirs, but we plan to add this in the future.  For now, you can use the graphing capabilities on the Advice tab to estimate how much will be left at the end of the horizon given the withdrawals you enter.

    That being said, can also add beneficiaries to any of your Betterment accounts, which would supersede any will or trust.  
  • Given that my withdrawals will likely change from year to year, how do I plan to cover my expenses? What if my expenses rise next year?

    Last Updated: April 09, 2014 5:54PM EDT
    This depends on your personal situation and your other potential income sources.  If your investments provide the majority of your income and your lifestyle is very sensitive to changes in that income, you may want to consider keeping an emergency fund in a bank account that does not fluctuate with the markets. This can fill in the income gaps in years when withdrawals drop below normal.


    Our safe withdrawal advice assumes that future withdrawals will increase by 3% per year for cost-of-living adjustments due to inflation.
  • What if I know that I’m going to be spending less during certain months, and more during others (because of travel, the holidays, etc.). Can I adjust my withdrawal rate from month to month or season to season?

    Last Updated: April 09, 2014 5:55PM EDT
    Yes, you can stop, start, change your withdrawal amount or frequency at any time from the Transfer tab.
  • Why would my dividends re-invest if I'm taking withdrawals?

    Last Updated: May 19, 2015 7:50PM EDT
    Your dividends from the stock and bonds ETFs in your portfolio are immediately re-invested in the portfolio. This helps maintain the risk level of the portfolio, since pooling cash will make the portfolio conservative until a payout is made. For taxable accounts, our tax lot selection algorithm chooses the oldest tax lots to sell first, so this will reduce the taxes paid as much as possible.
  • Can you send me my Required Minimum Distributions (RMDs)?

    Last Updated: April 09, 2014 5:58PM EDT
    We calculate RMDs for Traditional IRAs annually, and show the amount on your tax statement at the end of January. You can take this amount and set up automatic withdrawals at the frequency you like using the Transfer tab, or take the withdrawal manually.
  • Can I have taxes on my IRA distributions withheld?

    Last Updated: April 09, 2014 5:59PM EDT
    No, per your customer agreement, Betterment does not currently withhold taxes from distributions.  You will need to figure your taxes separately and ensure you are making any required payments to the IRS.  We recommend speaking with your tax advisor if you are unsure how to meet the IRS requirements.
  • How should I take withdrawals if I have both IRAs and taxable accounts?

    Last Updated: April 09, 2014 6:00PM EDT
    This depends on your tax situation for the year, so you should speak with your tax advisor. You may consider only taking your withdrawal once per year based on the income you expect to have. You can always start, stop or change amounts of your automatic withdrawals during the year if your tax situation changes.
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