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Old 01-19-2015, 09:18 AM   #41
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Seraphim alluded to SS reductions from having a pension.

As gov't. retirees, you may find your Social Security amounts could be affected by WEP and GPO reductions.

Have you checked into that?
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Old 01-19-2015, 09:34 AM   #42
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Yes as mil retire my pension is not reduced. I have not
Entitled the small 6k annual GS pension

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Traditonal Pensions
Old 01-19-2015, 10:21 AM   #43
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Traditonal Pensions

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Originally Posted by cnocmmz View Post
I think I need to clarify a few things. First and foremost the firecalc has us at 100%
Secondly: the 4500 is our pension cola'd as of today if my wife would retire tomorrow. She is 61 in March. (I am 55)That being said, this does not count our investments as of today about 500K in 401k and annuities. Also, does not count ss if wife took her ss 62? (Most likely won't).
At age 59.5 we will take 35K from those investments annually, that plus the 54k from pensions should be good enough. Two years later at age 62, I will have the option of pulling ss.
What I have NOT considered is what the taxs will be? The above mentioned pensions are net take home.


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It's sometimes difficult to know if a person is speaking gross or net on certain aspects of income; and Im sure you're familiar with the military definition of 'assume'. Lol Same with the $35k - net or gross?

And I understood the pension, but I thought you also said your expenses were 4500 a month. Actually, you said 4500k *grin*. If that's actually true, you're screwed lol.

But since the pension matches your budget, and you have SS and a .5M portfolio, you're good to go, IMO. I'm wondering why you're going to start pulling $35k out of investments - that doesn't seem necessary. Unless you plan on reinvesting the majority in a taxable account for some reason. Just curious. That's $35k more than your projected expenses. If that $35k is pretax money, assume a 10% withholding. That's what my tax preparer advised. Seems to work. Personally, I'd take as little out as necessary and let the balance grow against the possibility of LTC expenses down the road. That's just me.

I double checked, and you're correct - military pensions do not reduce SS distributions.

Retire and go have fun. Who knows what tomorrow brings...



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Old 01-19-2015, 10:45 AM   #44
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Seraphim,

DW will have no SS, but has paid into Medicare. I will have a minimum SS - maybe $500 before any reductions from having a pension - but I don't calculate that into my figures. It's gravy. I never paid into MediCare.

If this is true you can qualify for Medicare based on your spouses QC's and get part A for free and part B for the monthly premium.


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Old 01-19-2015, 10:49 AM   #45
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Seraphim,

DW will have no SS, but has paid into Medicare. I will have a minimum SS - maybe $500 before any reductions from having a pension - but I don't calculate that into my figures. It's gravy. I never paid into MediCare.

If this is true you can qualify for Medicare based on your spouses QC's and get part A for free and part B for the monthly premium.


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Great! Thanks for the info. I hadn't looked into it, yet, since it was a few years away, but I fee much better knowing this. I think the part A premium was about $450 last I checked.


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Old 01-19-2015, 11:23 AM   #46
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Your point ts are valid. My expenses today are 4500, retirement will be more if I consider travel twice year, emergency account, taxes, and of course grandkids -.
One of my annuities is a Roth Ira so my of my income will not be taxed. The annual 35K would be starting at 59.5, so like you said, enjoy life! I have been shot at, missed the kids growing up and so we just want to travel back and forth to Asia and save a little for our family when we move on. The firecalc tells us that with the pensions, 400K and the mrs ss I can pull 35K annually for 35 years. That still leaves us with my SS and small 500.00 gov pension and leaves us still investing. I was just wondering about taxes, I think you explained it at a 10% reduction in pretaxed account

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Old 01-19-2015, 12:00 PM   #47
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Forgot to answer to important question, is this pre-tax ed money? The monthly pensions (4500) are net take home and most of the investments are not
So tax tax tax will eat a lot. That is why I trying to build our 401k to 650K prior to 59 and of course if the mrs keeps working until I retire, if she retires next year then I am hoping to have close to 600K total in both.

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Old 01-19-2015, 12:54 PM   #48
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Our pensions have negatively impacted our SS due to WEP. Glad that is not true for the military.
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Old 01-19-2015, 12:58 PM   #49
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So how long were you both teachers? Great profession

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Old 01-19-2015, 02:56 PM   #50
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Traditonal Pensions

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Seraphim
Your point ts are valid. My expenses today are 4500, retirement will be more if I consider travel twice year, emergency account, taxes, and of course grandkids -.
One of my annuities is a Roth Ira so my of my income will not be taxed. The annual 35K would be starting at 59.5, so like you said, enjoy life! I have been shot at, missed the kids growing up and so we just want to travel back and forth to Asia and save a little for our family when we move on. The firecalc tells us that with the pensions, 400K and the mrs ss I can pull 35K annually for 35 years. That still leaves us with my SS and small 500.00 gov pension and leaves us still investing. I was just wondering about taxes, I think you explained it at a 10% reduction in pretaxed account

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Gotcha lol. You're going to use the investment account as we do - extraneous travel and gratuitous gift giving!

At 2% withdrawal, FireCalc suggests, on the average, our portfolio could double ( or triple or stay the same) over a 25 year period. It seems you will also have the flexibility to stop withdrawals, if necessary, and be a little more frugal. It's a good option to have. No grandkids yet. Told my son if I was a grandfather before 60, he was disinherited... One question a lot of us face is whether we want to leave money for our kids, or die broke.


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Old 01-26-2015, 04:11 AM   #51
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Well the big question for me is if I can really retire a little earlier, say at age 57. I will still have a 4700 monthly expenses, that includes 500.00 to cash savings and is inflated for 1k a month for entertainment.
My income without investments are pretaxed are 6k, so I think the answer is work a few more years and build 401k and ss?

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Old 01-26-2015, 05:34 AM   #52
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Well the big question for me is if I can really retire a little earlier, say at age 57. I will still have a 4700 monthly expenses, that includes 500.00 to cash savings and is inflated for 1k a month for entertainment.
My income without investments are pretaxed are 6k, so I think the answer is work a few more years and build 401k and ss?

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Maybe it is a dumb question, but why do you need to save $500 >10% every month when you're retired?

Would you rather have one more year of your life and be forced to take some reduced withdrawals if you have to, or lose one more year of your life slaving away, but feel safer?

You'll be square in the 15% tax bracket filing jointly, $20,000 tax free standard and personal deduction. This gives you taxes of $350/ month, maybe less than you expected...

Being in the 15% bracket also means that all long term capital gains and qualified dividends are not taxed at all.

Just my $0.02
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Old 01-26-2015, 07:30 AM   #53
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Maybe it is a dumb question, but why do you need to save $500 >10% every month when you're retired?

Would you rather have one more year of your life and be forced to take some reduced withdrawals if you have to, or lose one more year of your life slaving away, but feel safer?

You'll be square in the 15% tax bracket filing jointly, $20,000 tax free standard and personal deduction. This gives you taxes of $350/ month, maybe less than you expected...

Being in the 15% bracket also means that all long term capital gains and qualified dividends are not taxed at all.

Just my $0.02
Thanks for the quick response. I think the $500.00 a month thing is more for a security blanket :-) Seriously though, more for a emergency issues, i.e. car breaks down, house issues and who knows maybe a car payment down road. The 6K quote I gave you was my DW and my Pension and her SS. I will hold off on my SS until 65. If I leave current gig at 59 (55 July), then at 62 I will get another annual 6K at age 62 for my present gig. Really do not want to dip into the investments until early 60-62.
-Not sure what this means though? " $20,000 tax free standard and personal deduction. This gives you taxes of $350/ month, maybe less than you expected..."
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Old 01-26-2015, 08:40 AM   #54
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What I meant to say was that if your gross income is $54,000 a year, $4,500/month, then your taxes will not be that much. $12,200 standard deduction, $3,900 personal deduction per person. This equals $20,000, that leaves you $34,000 taxable
The first $17,850 of the $34,000 will be taxed at 10%, and the remainder at 15%. This means paying about $4,200 in taxes annually, or about $350 a month.

In the 15% tax bracket, LTCG and qualified dividends are not taxed at all.

Does that make sense?
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Old 01-26-2015, 08:57 AM   #55
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I think I need to clarify a few things. First and foremost the firecalc has us at 100%
Secondly: the 4500 is our pension cola'd as of today if my wife would retire tomorrow. She is 61 in March. (I am 55)That being said, this does not count our investments as of today about 500K in 401k and annuities. Also, does not count ss if wife took her ss 62? (Most likely won't).
At age 59.5 we will take 35K from those investments annually, that plus the 54k from pensions should be good enough. Two years later at age 62, I will have the option of pulling ss.
What I have NOT considered is what the taxs will be? The above mentioned pensions are net take home.


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Just a thought here. If you pull $35,000 from your investments, that represents 7% of your current investment portfolio. It's anyone's guess how much your portfolio will grow over the next 4.5 years - some hopefully, but with a conservative real return of 4%, it might not exceed $585,000. Pulling $35,000 a year from a $585K portfolio represents a WR of 6%. Depending on how long this aggressive draw down continues, you might not be able to keep from running out of money over the course of a 35 year retirement.
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Old 01-26-2015, 10:19 AM   #56
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What I meant to say was that if your gross income is $54,000 a year, $4,500/month, then your taxes will not be that much. $12,200 standard deduction, $3,900 personal deduction per person. This equals $20,000, that leaves you $34,000 taxable
The first $17,850 of the $34,000 will be taxed at 10%, and the remainder at 15%. This means paying about $4,200 in taxes annually, or about $350 a month.

In the 15% tax bracket, LTCG and qualified dividends are not taxed at all.

Does that make sense?
Gross income prior to dipping into investments is about 65K, my output is 54K (as of today) should be less retired,,I think?
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Old 01-26-2015, 10:56 AM   #57
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Not entirely sure of what you are asking... But here are some thoughts...

Leave the $500 (savings) in investments rather than withdrawing them and then saving them into an emergency fund.

It would be great if you could stay inside the 15% bracket, that way you don't have to pay capital gains or qualified dividend taxes.

If you have $65,000 gross
Deductions for married couple is $20,000, leaving $45,000 to be taxed

Up to $18,450 taxed at 10%-->$1845
$18,451-$74,900 taxed at 15% ($45,000-$18,450)=$26,500
$26,500 at 15%-->$3,975

Total tax is $5,820


Should give you about $59,000 net after taxes before any social security...

I'm not a tax expert, so do your own investigations before taking the plunge.
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Old 01-26-2015, 11:28 AM   #58
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Not entirely sure of what you are asking... But here are some thoughts...

Leave the $500 (savings) in investments rather than withdrawing them and then saving them into an emergency fund.

It would be great if you could stay inside the 15% bracket, that way you don't have to pay capital gains or qualified dividend taxes.

If you have $65,000 gross
Deductions for married couple is $20,000, leaving $45,000 to be taxed

Up to $18,450 taxed at 10%-->$1845
$18,451-$74,900 taxed at 15% ($45,000-$18,450)=$26,500
$26,500 at 15%-->$3,975

Total tax is $5,820


Should give you about $59,000 net after taxes before any social security...

I'm not a tax expert, so do your own investigations before taking the plunge.
Yeah, I could probably swing it, but living on 4800.00 a month with a mortgage of 1550.00 is cutting it close. Now, I guess I could pay off the home (210K) by dipping in to our 401Ks and just pay the darn thing off and free up that bill? It would then be about 6,300 guaranteed monthly income without my small pension at age 62 and of course SS and our annuities at age 65......
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Old 01-26-2015, 11:31 AM   #59
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It would be great if you could stay inside the 15% bracket, that way you don't have to pay capital gains or qualified dividend taxes.

If you have $65,000 gross
Deductions for married couple is $20,000, leaving $45,000 to be taxed

Up to $18,450 taxed at 10%-->$1845
$18,451-$74,900 taxed at 15% ($45,000-$18,450)=$26,500
$26,500 at 15%-->$3,975

Total tax is $5,820


Should give you about $59,000 net after taxes before any social security...

I'm not a tax expert, so do your own investigations before taking the plunge.
When SS is added to the mix, having 85% taxable blows him out of the 15% bracket.

When I look at DW and my SS, we pretty much max out the 15% tax bracket without anything else except my small pensions counted as income.
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Old 01-26-2015, 03:51 PM   #60
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When SS is added to the mix, having 85% taxable blows him out of the 15% bracket.

When I look at DW and my SS, we pretty much max out the 15% tax bracket without anything else except my small pensions counted as income.

Fair enough. I haven't read the thread carefully enough. I thought the OP was content with $4,500 in expenses. Adding the taxable above that before they pull SS should enable them to retire earlier than initially thought, delay SS if needed and still be well off. I'll have to read the thread more carefully.
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