Regarding RMDs, I think the change that was needed was a simple one that doesn't stand a chance to pass Congress. Make RMDs optional if total of pre-tax accounts is less than than $100k (round number, could be something else but adjust for inflation over time). However, require total of ALL pre-tax and Roth retirement accounts to be less than $10 million (another round number) per person and require the excess to be withdrawn within two years without the 10% penalty for early withdrawals. The bottom end waiver lets people without a lot of savings pick and choose when they take money out. The top end cap limits the benefits to the mass affluent and below . It prevents the gaming by the very wealthy where they put penny stocks from pre-IPO shares into tax advantaged accounts and then let the value explode if the stocks are successful. This eliminates the $100+ million Roth IRAs some of these people have. They don't pay penalties; they just have to release the money into the taxable world.
Regarding investment advice: Successful investing is pretty simple as a diversified primarily equity low cost index fund based portfolio will grow quite well over a working life. The two hard things are figuring out how to budget and save during working years to put enough money into the investments; and then how to withdraw the money in retirement to not run out while still spending enough to enjoy life. Unfortunately, the advice industry is largely focused on portfolio management and less on the other questions, probably because they are complex and difficult. It is laughable that much of the professional retirement withdrawal advice is still Bill Bengen's original 4% rule that he came up with in 1994. He asked a brilliant question that nobody else seemed to have focused on and then did a good simple simulation to begin to answer the question, thereby reframing withdrawal advice completely from the haphazard advice before. Bengen himself has largely moved on from the original recommendation. The financial advice industry needs to focus on good advice related to the complex and difficult questions. A decent, effective investment portfolio is not one of them.
Regarding RMDs, I think the change that was needed was a simple one that doesn't stand a chance to pass Congress. Make RMDs optional if total of pre-tax accounts is less than than $100k (round number, could be something else but adjust for inflation over time). However, require total of ALL pre-tax and Roth retirement accounts to be less than $10 million (another round number) per person and require the excess to be withdrawn within two years without the 10% penalty for early withdrawals. The bottom end waiver lets people without a lot of savings pick and choose when they take money out. The top end cap limits the benefits to the mass affluent and below . It prevents the gaming by the very wealthy where they put penny stocks from pre-IPO shares into tax advantaged accounts and then let the value explode if the stocks are successful. This eliminates the $100+ million Roth IRAs some of these people have. They don't pay penalties; they just have to release the money into the taxable world.
Regarding investment advice: Successful investing is pretty simple as a diversified primarily equity low cost index fund based portfolio will grow quite well over a working life. The two hard things are figuring out how to budget and save during working years to put enough money into the investments; and then how to withdraw the money in retirement to not run out while still spending enough to enjoy life. Unfortunately, the advice industry is largely focused on portfolio management and less on the other questions, probably because they are complex and difficult. It is laughable that much of the professional retirement withdrawal advice is still Bill Bengen's original 4% rule that he came up with in 1994. He asked a brilliant question that nobody else seemed to have focused on and then did a good simple simulation to begin to answer the question, thereby reframing withdrawal advice completely from the haphazard advice before. Bengen himself has largely moved on from the original recommendation. The financial advice industry needs to focus on good advice related to the complex and difficult questions. A decent, effective investment portfolio is not one of them.
all good points, well said