Hi all! First-time poster.
I have a question about the Roth Conversion ladder plan - not so much about how to do the conversions (saw those threads) but how to manage my stash for the 5 year wait period. I may be missing something really obvious - if so, please let me know (or point me to appropriate thread).
Let's say get $1,000,000 and retire, with a plan to use the 4% safe withdrawal rate of $40,000. And let's say that, given my Roth conversion plan, I have to wait 5 years to start taking money out of my retirement accounts. This means that once I retire, I have to come up with $40,000 per year, for 5 years, to live, ($200,000 total)
My question is, where do I get this $200,000? If I sell part of my $1,000,000, this will obviously cut into my stash and then my withdrawal rate. But I can't get it from returns because presumably my taxed investments won't that much. Do I have to save up $1,200,000 so I can have that $200,000 buffer (this would obviously delay my retirement, and it just doesn't make sense to burn through cash that could be invested, just to save on taxes).
This seems so basic a question that it might be obvious; or perhaps I'm missing something fundamental. If so, please enlighten me. Thank you!