Subject: Re: Thoughts on Berkshire withdrawal strategy
Note that the IRS tables are more conservative than people's true life expectancy. Actuarial tables show a life expectancy of 17 years at age 65 for men and 20 years for women. So you'd be starting with 5%+ withdrawals at age 65. The IRS mandated RMD is only about half of the true life expectancy.

Elan


It's even worse than that. Life tables look at the life expectancy of ALL people at a given age (say, all males 65 years old) and tell you how long they will live, on average. But this includes everyone, including people literally on their deathbeds, and should not be used to calculate the life expectancy of a 65 year-old who has no known serious risk factor or life-threatening illness.

For instance, in a group of 100,000 65 year old men living in the USA, life table calculations may tell us that they will live for an average of 17 more years. For the sake of illustration, let's say these 100,000 people include 1,000 people with a serious, advanced disease, like metastatic cancer, let's say with an average life expectancy of 2 years and 39,000 people without such a diagnosis but with a serious risk factor for death (diabetes, smoking, aortic aneurysm, emphysema, whatever), with an average life expectancy of 8 years. Then it is easy to calculate that in the 60,000 people without those serious risk factors, average life expectancy will be (100,000*17-1000*2-39,000*8)/60,000 = 23 years of remaining life.

Of course this is an oversimplification - there all all sorts of intermediate risk groups, not just these 3 broad groups. But the point is that if you are a relatively healthy 65 year old, your life expectancy will be much longer than the average for ALL 65 year-olds. When you are planning how much you can safely remove from your savings each year, this can make an important difference.

Regards, DTB