Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
IRAs, TSAs - Which is best for ER?
Old 09-27-2004, 11:35 PM   #1
 
Posts: n/a
IRAs, TSAs - Which is best for ER?

Greetings,

Everytime I come to this site I get so overwhelmed with emotion - the energy is so positive - I just know my plan for ER will work - but it is oh so scary to think about not having a paycheck every week.

So - what's my deal? Me - I'm 42, hubby is 48 - no kids, 2 dogs. Love to spend money on toys and are just discovering exotic travel. Still - we save lots and live below our means. I like all the discussion that savers really only need 50% or less of their gross income. I've always thought it but the "experts" all indicated I was wrong. Good thing I found this site - now I will begin to make a real plan. I am already beginning to feel the confidence build. I look forward to discussing and learning from like-minded souls.

We should have about 1.2M to 1.4M when we retire in 7 years (currently at about $750K). Hubby will get a pension of about 30K (inflation proofed), me about 12K when I hit 60 (not inflation proofed). He will not get SS as he has always worked for an organizaation that did not participate (lucky us!). I don't count on any SS for me as it will be at least 20 years before I can draw it. We think comfortable living expesnes will be about $50K with an optimum retirement spend of about 70-$80K.

I am in the process of consolidating accounts from previous employers. My big question is are 403Bs, 401ks or IRAs better for early retirees? I am having trouble finding good descriptions about early withdrawl options. It seems to me that several smaller IRAs are more beneficial than 1 great big one. What are the benefits of having money in one or the other type of account?

Ideas or thoughts are welcome.

Thanks!

Rita






__________________
  Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Re: IRAs, TSAs - Which is best for ER?
Old 09-28-2004, 07:44 AM   #2
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2003
Location: Kansas City
Posts: 7,318
Re: IRAs, TSAs - Which is best for ER?

Find - The Retire Early Homepage - and read about taking money out before 59 1/2 - 72t.

In 1993, I rolled my 401k into a Vanguard IRA and looked into 72t - but it turned out that we didn't need it.

There are pro's and con's to single/mutiple IRA's and in certain circumstances keeping some 401k's.

Since I didn't use it (72t) - I won't comment further --?? perhaps some forum posters' out there did??
__________________

__________________
unclemick is offline   Reply With Quote
Re: IRAs, TSAs - Which is best for ER?
Old 09-28-2004, 09:59 AM   #3
Thinks s/he gets paid by the post
 
Join Date: Feb 2003
Location: Mesa
Posts: 3,588
Re: IRAs, TSAs - Which is best for ER?

Other posters have stated that in some states 401K's are protected from certain kinds of legal actions while IRAs are not. Other than that possible distinction, I'm not aware of any advantages of one over the other.
__________________
sgeeeee is offline   Reply With Quote
Re: IRAs, TSAs - Which is best for ER?
Old 09-28-2004, 10:11 AM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
cute fuzzy bunny's Avatar
 
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,697
Re: IRAs, TSAs - Which is best for ER?

Rolling your money into an IRA allows you to choose where it resides and what your investment options are, vs what the specific 401k/403b plans offer.

Not only can this give you a wider variety of more useful options, the cost structure for investing is also usually quite a bit better.

For example, my wifes 403b is with Lincoln Financial. They offer a reasonably decent range of mostly underperforming managed funds at an average cost of .75% annually. Migrated to a vanguard IRA, I'd have far more better performing options at 1/4-1/3 of the annual prices.
__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
cute fuzzy bunny is offline   Reply With Quote
Re: IRAs, TSAs - Which is best for ER?
Old 09-28-2004, 11:33 AM   #5
Thinks s/he gets paid by the post
 
Join Date: Feb 2003
Location: Mesa
Posts: 3,588
Re: IRAs, TSAs - Which is best for ER?

Here's a link to a previous discussion about legal differences between 401Ks and IRAs. Check out the comments by Martha_M. in particular.

http://early-retirement.org/cgi-bin/...725953;start=9

As TH mentioned, it is obviously better to have the money in a good IRA with low fees and acceptable choices than in a poor 401K with high fees and limited choices. That certainly needs to be considered too.
__________________
sgeeeee is offline   Reply With Quote
Re: IRAs, TSAs - Which is best for ER?
Old 09-28-2004, 12:10 PM   #6
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
cute fuzzy bunny's Avatar
 
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,697
Re: IRAs, TSAs - Which is best for ER?

(rubbing eyes vigorously as I clearly must have misread the above post)
__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
cute fuzzy bunny is offline   Reply With Quote
Re: IRAs, TSAs - Which is best for ER?
Old 10-01-2004, 09:57 AM   #7
 
Posts: n/a
Re: IRAs, TSAs - Which is best for ER?

Although the vehcile is important the actual plan you have seems a bit aggressive. I would recommend you have your H work until he's 60 if you want to get anywhere near the spending limit you seek.
__________________
  Reply With Quote
Re: IRAs, TSAs - Which is best for ER?
Old 10-01-2004, 09:59 AM   #8
 
Posts: n/a
Re: IRAs, TSAs - Which is best for ER?

Read The Four Pillars of Investing by William Bernstein
__________________
  Reply With Quote
Re: IRAs, TSAs - Which is best for ER?
Old 10-01-2004, 07:21 PM   #9
Confused about dryer sheets
 
Join Date: Sep 2004
Posts: 1
Re: IRAs, TSAs - Which is best for ER?

Greetings all,

I know know more about 72t than I ever wished. It's amazing what you can find on the web when you know what to look for. From what I can figure 403Bs or IRAs are both available to access before 591/2. The key for ER ,I think, is to not have all your money in one account. You can tap into the 72T rules for each of your accounts starting in different years. I've ordered the Four Pillars book - it sure has received great reviews. Thanks for the tips.

Quote:
Although the vehcile is important the actual plan you have seems a bit aggressive. I would recommend you have your H work until he's 60 if you want to get anywhere near the spending limit you seek.
Mike - Im curious about having hubby work to age 60. I understand that $80k is an extremely agressive goal but ya gotta dream big. Realistically I think we can get to the $65-$70K arena and still be at about the 4%SWR (at least for the first 20 years). If you think that is unrealistic I would like to know - 'cause that's what I'm really counting on - anything over that is for pure fun. Even the $65K has a good amount of fun built in.

Having hubby work til 60 would be a real drag. I think we would adjust our lifestyle totally before going that route. What the heck - we lived for years in a small cabin with no running water. If we need to go back to our roots and live really simply - I think we can do it.

I'd be interested to know if folks think $65K to $70K is unrealistic. I'd prefer to figure that out now rather than later!

Thanks again.
__________________
Rita-Fire is offline   Reply With Quote
Re: IRAs, TSAs - Which is best for ER?
Old 10-02-2004, 06:11 AM   #10
 
Posts: n/a
Re: IRAs, TSAs - Which is best for ER?

Hi Rita! With the ultimate fallback of a "back to our roots" lifestyle being a possibility (I understand no one wants to do it), I don't understand why either of you would still be working, nor why you need the income
level you have targeted (although I concede "just because we want to" is a valid answer). Bottom line,
when I read your first post, my first thought was
that I'd have been long gone in a heartbeat.
Remember, you can never have too much, but you can wait too long.

John Galt
__________________
  Reply With Quote
Re: IRAs, TSAs - Which is best for ER?
Old 10-02-2004, 08:41 AM   #11
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
mickeyd's Avatar
 
Join Date: Apr 2004
Location: South Texas~29N/98W
Posts: 5,653
Re: IRAs, TSAs - Which is best for ER?

Hey Rita,

In my opinion 401k, 403b, Traditional IRA etc are all about the same in that they are tax deferred savings. You will pay ordinary income tax when you withdrawn the funds and you must begin to RMD the money by age 70 1/2.

Your best option may be the Roth IRA in that you will not have to RMD it and all funds are ultimately are TAX FREE.

With the funds that you have saved so far and your future savings plans, coupled with the guaranteed income streams that you both have (pensions), and your likestyle, you will have no problems with adequate funding for retirement.
__________________

__________________
Part-Owner of Texas

Outside of a dog, a book is man's best friend. Inside of a dog, it's too dark to read. Groucho Marx

In dire need of: faster horses, younger woman, older whiskey, more money.
mickeyd is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Tax Question concerning IRA's riskadverse FIRE and Money 12 04-07-2007 11:22 AM
Speaking of rollover IRAs whitestick FIRE and Money 6 03-01-2007 01:47 AM
Contributing to Roth IRAs while one of couple is FIRE'd LOL! FIRE and Money 4 06-26-2005 02:04 PM
Creditors May Not Sieze IRAs Berkshire_Bull FIRE and Money 20 04-06-2005 04:55 AM
Last Minute IRAs for 2004 Martha FIRE and Money 2 04-04-2005 06:06 AM

 

 
All times are GMT -6. The time now is 04:32 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2016, vBulletin Solutions, Inc.