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Old 03-25-2014, 01:04 PM   #21
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Hehe, that would be an awkward conversation...Mega: Yes Mr. SoClose, we do have a 401k plan and it matches X%!! Mr SC: After I quit in a month, can I have penalty free access? Mega:
More like, Hiya Mega, does your 401(k) allow for over 55 withdrawals? Yes, OK I'm 55 and haven't worked for 8 years. I want to work for you for 3 weeks, just long enough to transfer my IRA and other company 401(k) monies into your 401(k) then I'm retiring.

But then of course I'm stuck keeping my funds invested in their choices for 4.5 years, which are VERY, VERY rarely low cost Vanguard EFT funds.
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Old 03-27-2014, 02:47 PM   #22
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Using the general information you provided ( and there may be more detailed information you used that I don't have) FireCalc gave me a successful return of 99% for 30 years and 96% for 35 years. This assumes no expensive emergencies or long term health care problems that might erode principle. If one of you has a life expectancy of 40 years beyond retirement, that percentage will drop significantly more.

That 4% guideline is just - a guideline, dependent on factors different for each person. A lot of analysts suggesting now it should be the 3% guideline! giving current economic expectations lol.

IMO, you're at the balance point. Barring unforeseen circumstances odd are you probably won't outlive your money, unless someone in the family is long lived, or there are genetics which predispose health problems of an extended nature. Any major expenses you're planning on? College for children? Planning on leaving an inheritance?

Options? What can you do to reduce spending? I would personally be more comfortable with annual expenditures of $80000 with those assets. I am more conservative on my comfort level. But that $20k a year - if left invested - could help cover some unforeseen circumstances. Seniors are expected to pay something along the lines of $280k in health expenses - on average (don't quote the exact figure).

Just my thoughts. The longer your retirement lasts, the more padding necessary to cover any problems early in retirement, such as the economy going into recession a year or so after you retire.


Good luck.
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Old 03-27-2014, 05:02 PM   #23
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Thank you for the input. I've padded our expenses quite a bit so we "could" live
on less. But yes the big healthcare cost unknown! as my name says so close.

I've since read about using only 3% due to our young age. It is a tough decision as I've not counted receiving any SS or inheritance which should be at least 500k but really can't count on it. I'm a saver but don't want to scrimp so much now that I end up passing and leave a bunch of cash.

No kids and no one gets an inheritance except some charity yet to be found if there's anything left when we're both gone.
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Old 06-04-2014, 02:20 PM   #24
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You can do a 72T to get money early or if you have five years expenses of other money in your taxable account you can pipeline your IRA money through a Roth IRA with conversions and then start taking that money out of the Roth after five years with no tax and no penalty.

From another Post - this is an excellent way I could avoid having to 72t. I'm very excited. Thanks Fermion!!!!

I could decide each year how much to convert and manage my tax bill, while living off my after tax or previously contributed Roth money. :-)))))))
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Old 06-04-2014, 05:22 PM   #25
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I could decide each year how much to convert and manage my tax bill, while living off my after tax or previously contributed Roth money. :-)
Be careful there with Roth withdrawal. The law regarding this is a bit screwy, as explained in this article: Distributions After a Roth IRA Conversion - Fairmark.com.
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Old 06-05-2014, 08:13 AM   #26
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Be careful there with Roth withdrawal. The law regarding this is a bit screwy, as explained in this article: Distributions After a Roth IRA Conversion - Fairmark.com.
I don't think it screwy, very strait forward actually. You convert and then don't touch it for five years.

Seems a lot less complicated than, 72t withdrawals for 12 years in which a small error will cause a penalty for all previous withdrawals.
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Old 06-05-2014, 09:59 AM   #27
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I was thinking in the case of someone who has made regular contributions way in the past, and that contribution has generated substantial gains through dividends or capital gains which are now taxable. But upon reading the article again, I saw the following excerpt that is on the retiree's side actually, if one seeks to avoid taxes on the investment gains.

The first distributions you take from any Roth IRA are considered to come from regular contributions you’ve made to Roth IRAs, even if you made them to a different Roth IRA. After that, before you withdraw any earnings, your distributions come from conversions. If you’ve made more than one conversion, money from the earliest conversions will come out first.
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Old 06-05-2014, 03:27 PM   #28
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Hello - A new member here, but have been thinking about ER for a few years now.

Husband 46, Wife 45 - DINKS

Current pretax accounts $1.4 mil, after tax $255k, own home, no debt. Planning on receiving an estimated $1 mil in a profit share plan from employer in 2015. We intend to save and additional $250k, until ER in 2016.

Our 5 year average annual expenses are $60,000. This includes everything a new car purchase, major home repairs, and toys. I expect our costs to increase $39k in ER - due to Health insurance, entertainment, and taxes to cover income.

Every scenario I run in Firecalc says 100% success. I'm confused though when I consider a SWR. Due to retiring so early I read it should only be 3.5%. But to cover our annual ER expenses of $100, we would need $2.8 mil. I put in $120 a year in FIRE and it still says no problem, but a SWR would need $3.4mil?

I'm not counting on any SS or inheritance, just using the monies I estimate us to have right now. Not counting any monies from potential home sale, as we'd need the cash to buy another home.

Due to all the money being in pretax account, ER will require us to 72t our income. Which we want to do in order to stay in the 15% tax bracket. It's a bit scary to lock in 72t for 10+ years, but I don't see any other option.

Lots to consider and plan for, but it's so close I need to delve into the real nitty gritty.
Welcome ! Your situation is a bit like mine. You are planning on having approx $2.9mm when you retire ($1.4 +.255 + 1.0 +.25) and expenses of $99k for a WR of 3.4%.

DH and I are 54/51 and our WR is currently 3.25%. Like you I feel "so close".

For HI I looked at the prices available on the exchange, used assumptions that both DH and I are 63 and then upped the premium by 20% --- plus assumed that we hit the out of pocket maximum each year.

I've recently changed my criteria for ER once again and have decided that I will either (a) wait until I'm at a 3.0 WR or (b) will work P/T to make up the shortfall (currently $7k / year - or 17 hours per week at minimum wage).

Its tough when the decision is not "obvious" .... but congratulations on being able to have to make the decision. Its a good problem to have !
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Old 06-05-2014, 04:30 PM   #29
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We are DINKS 53/51 with assets weighted to real estate and tax-deferred accounts. Planning on FIRE at 55 1/2 with 72t plan to 60 1/2. The account I choose will only generate $34k/yr by current metrics, so I'm not worried about having to withdraw in a down market. With pension, we should be looking at $80k/yr pre-tax.
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Old 06-06-2014, 10:47 AM   #30
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Thanks for the input. Currently everything is on hold due to Company issues and me not being able to know for certain when I can assess my $1m profit share.....grrrrr

I so want out! It is such a struggle to go to work everyday.
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Old 06-06-2014, 01:37 PM   #31
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I so want out! It is such a struggle to go to work everyday.
Totally understand that feeling ! Just think of all the folks who will never feel "so close", not even at 65.
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Old 06-07-2014, 07:39 AM   #32
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What a bummer soclose. Care to elaborate on why company issues would affect your ability to withdraw your profit sharing funds. Is this benefit not"vested" and "funded"? Does your employer have the right to claw back past profit sharing awards? If so then the 1 million is not certain and can't really be considered a definite part of your retirement assets right?
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Old 06-09-2014, 09:34 AM   #33
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Totally understand that feeling ! Just think of all the folks who will never feel "so close", not even at 65.
I know, I have to keep telling myself I don't have it bad at all.
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Old 06-09-2014, 09:40 AM   #34
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What a bummer soclose. Care to elaborate on why company issues would affect your ability to withdraw your profit sharing funds. Is this benefit not"vested" and "funded"? Does your employer have the right to claw back past profit sharing awards? If so then the 1 million is not certain and can't really be considered a definite part of your retirement assets right?
I was hoping the company would terminate the plan, enabling participants to immediately receive their balances rolled over into and IRA. If that doesn't happen I need to wait 5 years from quitting to receive my monies. I'm not comfortable pulling ER when the monies aren't in my hands.
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