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Soon to be retired in Colorado
Old 09-15-2007, 01:00 PM   #1
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Soon to be retired in Colorado

I am planning full retirement in March of 2008. My question is tax related pertaining to what accounts to tap into and in what order. Not sure if there is a simple rule, but we will need to withdraw approximately $3000 per month. We have a non-retirement account, Traditional IRA's, Roth IRA, and 401K. Do we need to look at tapping into the accounts that have the least capital gains or is that significant? I understand that everything but the Roth will be taxable as ordinary income, but I am confused about how the gains are taxed. Any input will be greatly appreciated.
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Old 09-15-2007, 01:57 PM   #2
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Typically, experts recommend using taxable accounts first, then 401Ks/IRAs, and finally Roth IRAs. They want people to let their tax-deferred accounts compound as long as possible, and the reason why the Roth should be the last account to be touched is mostly for estate planning reasons as I understand it (your heirs won't have to pay taxes on an inherited Roth, but they will have to on a inherited IRA).
However, this might not be the most suitable order for your particular situation.
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Old 09-15-2007, 02:05 PM   #3
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Congratulations and welcome to the board

We plan on retiring to Colorado too.

Capital gains within a 401(k) aren't really a consideration but those in the taxable accounts. I don't think that the lower capital gains tax will be renewed so I am keeping this in mind. Also, because I am going to be taking money out through a 72(t), I will have to pull some funds from my IRAs. You don't mention your age, it will impact how you withdraw your money.

Anyway, good luck and welcome.
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Old 10-09-2007, 08:47 AM   #4
Confused about dryer sheets
 
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I am less than 6 months before early retirement - need some advise on how to stay focused on work during these last months. My patience is pretty much gone and knowing I am a short timer, having difficulty staying engaged. Any advise would be appreciated.
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Old 10-09-2007, 09:49 AM   #5
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Originally Posted by udenmkh View Post
I am less than 6 months before early retirement - need some advise on how to stay focused on work during these last months. My patience is pretty much gone and knowing I am a short timer, having difficulty staying engaged. Any advise would be appreciated.
I think every about-to-be-retiree goes through this...I know I did. I found it best to try to concentrate on the tasks that needed to be done today and ignore the stuff that was long term (i.e., past my last day!) So, for example, I continued to work on current budget stuff, but not on the next year's budget planning. Also, I spent a lot of time purging files, dumping old notes, writing instructions for whoever was going to inherit my work, cleaning email folders, etc. Each day I tried to do one such "personal" task that got me closer to my retirement date. And I tried to keep my own counsel -- I learned that my soon-to-be-ex-co-workers really didn't share my joy about my impending freedom!
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Old 10-09-2007, 10:06 AM   #6
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I am less than 6 months before early retirement - need some advise on how to stay focused on work during these last months. My patience is pretty much gone and knowing I am a short timer, having difficulty staying engaged. Any advise would be appreciated.
Six months out is a good place to be. Despite the perceived long time until retirement 6 months is really not all that long considering how long it has taken to get to where you are now. Focus on your w*rk and getting all your ducks lined up and put to bed. You will be able to leave with a feeling of closure which will help you in your post-retirement transition period. Focus on what you want to do in the days and weeks after retirement. Keep busy so you don't dwell on the time left to retire.

It is a tough time; much like the month before Christmas for a kid. I even made a calendar with days I could mark off for the final 3 months of w*rk. The last 2 weeks are tough as you want it all to be over but you still have work-related responsibilities so I held off cleaning out files until then to keep my mind busy and to remove me from some of the office activities because I was occupied with cleaning out my desk. The last day will be great! You are done and the smile on your face will be huge.

Hang in there and keep your nose to the grindstone...you are getting closer all the time.
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Old 10-09-2007, 11:32 AM   #7
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udenmkh, check out the "Best of Boards" Forum. There's some good advise in there on your question. Good luck. I'll be hanging it up about the same general time period.
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Old 10-16-2007, 05:42 PM   #8
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Thanks - good words of wisdom from all of you. Thanks.
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Old 10-16-2007, 07:20 PM   #9
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I am less than 6 months before early retirement - need some advise on how to stay focused on work during these last months. My patience is pretty much gone and knowing I am a short timer, having difficulty staying engaged. Any advise would be appreciated.
Welcome! Do what I did the last 6 months(actually the last 2 years), I clicked onto this website several times a day.
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