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Single No kids.....How much $$$$ do i need?
Old 08-21-2017, 09:12 PM   #1
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Single No kids.....How much $$$$ do i need?

I am a never married, no kids 55 YO. (I am looking for an answer to the last paragraph i have on this post- got long winded introducing myself in the next couple paragraphs)

I have always enjoyed the several jobs i have had, but have twice taken $$ cuts, and moved due to on the job changes. This, and getting older has really got me itching to pull the plug. i have always been a go-getter at work, and my go-getting is just plain GONE!
So.... I have about 1.1 mil in an IRA- rolled over from previous 401k's. I have taken all previous jobs pensions in lump sum and rolled into IRA also. I will have a small pension from current employer ( approx 40 k now- 50 k in 2020).

My present 401k has 115k in it, and i am contributing 25k a year (includes employer contribution).
I have 170k home loan, and will get 22k Social Sec @ 62YO.
I have done Firecalc, and several other retirement spreadsheets, and almost all say i have enough $$ to retire now- But i cannot access it without a 72t. Due to cost of healthcare and possible market downturn i plan to stick it out about 2 more years.
I still have the IRA in fairly aggressive mutual funds, figure if the market crashes i just work 4-5 more years, retire then.

IF i retire and the market dives, i can always eat beans for a year or 2 - no family to worry about. I dont WANT to do that - so i will work several more years.

My employers 401k DOES allow you to retire in the year you turn 55, and collect your 401k and pension without penalty. That right now would only be 145k, so i am NOT retiring on that $. I cannot access the IRA before 591/2, except for a 72t distribution, so i am hoping with the 50k i add in the next 2 years i can swing retirement at age 57 1/2 without the IRA $. It seems unreasonble to me that the govt will not let me access my IRA before 59 1/2 except for 72t. what if i had 2 mil in there- as a single no kids person surely that would be enough! But i would still be locked into the requirements of a 72t. I do realize the $ amounts would be enough to retire in that case, but then i would be locked into the 5 year requirement also!
Great site! I'm learning a lot.
So my ? is - If you had access to only enough $ from a 401k to finance (for sure) the last 2 years BEFORE 59 1/2 (when you can access plenty of $ for retirement) would you do it??

Thanks!
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Old 08-21-2017, 10:07 PM   #2
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There are people here who know much more than I do about finances, so hopefully someone will comment. I'll give you my gut take.

I'm in a somewhat similar situation, though I may be headed for involuntary retirement very soon, so I have to figure out a way to make it work, even if it means financial penalties. I'm not sure my non-retirement funds will last me until I'm 59.5. But, my understanding is that I could tap the original contributions in my Roth IRA before I reach that age, though that might still not be enough for me. It sounds like you don't have that option.

I'm assuming that, if I don't have any sources of funds other than my traditional IRA, then I'm going to be in a very low tax bracket. So, even with the penalty, I might end up paying Uncle Sam no more money if I take it early than I would if I took it after age 59.5. That's been my calculus when deciding whether I should cut back on my retirement contributions.

Only you know just how unhappy you are at work and whether it's worth the tradeoff. For me, if I were very unhappy working, but was pretty confident that I could afford to retire by tapping the IRA even with the penalty, I probably would retire early and pay the penalty.

If you know that you're going to retire in a year, then maybe reduce the amount you're putting in the 401K by a little, so you can use that money in early retirement-- especially if you're going to be in a lower tax bracket in your retirement year anyway and won't benefit as much from putting it in your 401k. Then you won't have to tap as much of the IRA early and you might keep the taxes/penalty lower when you do tap it.
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Old 08-23-2017, 05:39 AM   #3
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Originally Posted by brainsagolfer View Post
I am a never married, no kids 55 YO. (I am looking for an answer to the last paragraph i have on this post- got long winded introducing myself in the next couple paragraphs)

So my ? is - If you had access to only enough $ from a 401k to finance (for sure) the last 2 years BEFORE 59 1/2 (when you can access plenty of $ for retirement) would you do it??

Thanks!
If I had enough money to retire comfortably but needed to access it from a 401k without penalty for a couple years before touching other funds then I'd be perfectly happy to retire at that point as long as the 401k balance was sufficient to cover my needs. If you have access to the money without penalty, then it doesn't matter much where it comes from imo (for deciding if you have enough to retire now, other things like tax considerations etc are a separate issue from if you can pull the plug now or not).
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Old 08-23-2017, 06:13 AM   #4
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Not an expert by no means but really not enough information to give any advise. If you think you know what your expenses are going to be then see if you can swing it.
Good luck
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Old 08-23-2017, 06:47 AM   #5
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Originally Posted by brainsagolfer View Post

So my ? is - If you had access to only enough $ from a 401k to finance (for sure) the last 2 years BEFORE 59 1/2 (when you can access plenty of $ for retirement) would you do it??

Thanks!
My answer to your "?" is "yes".

But I'm not confident that I have enough data to conclude that your "stated" question captures your "real" question.

The key uncertainty is whether the 401k can "for sure" cover your two years of costs.
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Old 08-23-2017, 06:58 AM   #6
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Agree with the others: the answer to your question will become obvious, once you have determined accurately what your expenses will be that you are trying to cover
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Old 08-27-2017, 12:30 PM   #7
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Can one roll from IRA back into a 401k and have access and RE immediately? I have not looked into this myself.
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Old 08-27-2017, 02:20 PM   #8
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Can one roll from IRA back into a 401k and have access and RE immediately? I have not looked into this myself.
I believe it is entirely up to the specific rules for your 401(k).

http://www.kiplinger.com/article/ret...to-a-401k.html
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Old 08-28-2017, 11:17 AM   #9
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I believe it is entirely up to the specific rules for your 401(k)
Rolling money from my IRA to my 401K allowed me retire at 55. Not all plans allow it. Learned about it on this forum.
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Old 08-28-2017, 12:23 PM   #10
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OP needs to find out withdrawal options under the 55 rule throgh his current 401k. Some plans require all at once, other plans allow periodic distributions. OP also needs to find out if his 401k allows transfers in.

Ideally, his 401k allows transfers in and periodic distributions. If so, he could transfer from IRAs to 401k enough to bring the 401k to cover 4 1/2 years of spending, retire NOW, and take periodic distributions of spending.

If his 401k only allows penalty free withdrawal of his entire balance, then he could retire in early 2018 and do the penaty free withdrawal and pay the tax, and do a 72t from his IRAs and see if those collectively would provide enough to his spending until he is 59 1/2.

Another temporary source of liquidity to fund the 55-59 1/2 gap period would be to do a cash out refi on his house and use that cash for the gap period and then pay off the loan after he turns 59 1/2 with penalty-free withdrawals from his IRAs.

Or some combination thereof... requires carel planning and assessment of tax cost.
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