RMD Withdrawl Strategy

[Beach_Stache]

Hi All,
I'm trying to help my Mom w/her investments as they have been moved around a bit over the years by my Father who is into the latest fads or tries to time the market, etc.  I recently started getting involved as my Mom turns 70 in June 2017 and I was trying to help setup her Social Security withdrawls and was talking to her about taking RMD's from her IRA's next year.  My Father has a CCRS pension and their house is paid off so they are in good shape, but I want this money to last my Mom as long as possible.  She has about $90k in a Fidelity Roth and $350k in a Principal IRA (I think Principal).  In her Fidelity she has about half in Cash and half in a Biotech (FBIOX) fund, in Principal she has half in small cap and half in mid cap which is fine for her investments, however she is paying like 1.4% and 1.1% in the Principal funds which just made me sick...  At this stage in her life do I just let it be or is it worth having her transfer all of her Principal amount to Fidelity and put it in S&P and Total Market funds which are like 0.045% and just leave it all and take RMD's from that starting next year when she turns 70?

I am 36 now so am in the phase of just throw as much money in 401k & ROTH IRA and let it ride the ups and downs, however I have no experience at all in strategy for withdrawl's and need some assistance.  Should she go 70/30 stock/bonds or just leave it all in S&P 500 or Total Market and deal w/the ups and downs over retirement?  Any guidance or articles I should review or have her review in terms of withdrawl strategy and what mix to have and how to withdrawl?  I want to make it as easy as possible for her and obviously maximize her gains.  She has long term care insurance, will get 55% of my father's pension if he goes so I'm not really worried about her needing this money but it will obviously be nice to have for her, especially b/c she likes doing projects on the house and taking trips.  Any advice to simplify and maximize benefits would be much appreciated!

[lizzzi]

Following.

[seattlecyclone]

Your mother could have 20 or more years of life left. If the thought of paying 1.4% on your 401(k) for a job you plan to have for 20 more years makes you sick, the thought of your mom's IRA money invested in that manner should make you feel just as bad.

RMDs won't be a significant percentage of her account balance for several years. They start out at just under 4%, pass 5% at age 79, and 10% at age 93. Since Roth IRAs don't have RMDs, you may wish to do some Roth conversions up to the top of your mom's current tax bracket, just to reduce the RMDs in future years.

A 70/30 mix seems very reasonable for a retired person, allowing withdrawals to come from bonds in years when the stock market is down so you don't have to sell in a down market. It all depends on your risk tolerance. I don't think having such a large percentage in a biotech-focused fund is a great option. That's making a bet that the biotech sector will do better than everyone else expects it to. That could happen, or the opposite could be the case.

[Spork]

Your mother could have 20 or more years of life left. If the thought of paying 1.4% on your 401(k) for a job you plan to have for 20 more years makes you sick, the thought of your mom's IRA money invested in that manner should make you feel just as bad.

^This.  I'd move that IRA to Fidelity (since she already seems to like them) and into low cost stock/bond funds.

[DavidAnnArbor]

It may help to provide a graph that shows what a substantial amount of a portfolio is lost due to high expense ratios, it's a visual that enables her to easily grasp what could be at stake.