Traditonal Pensions

[cnocmmz]

Quote:

Originally Posted by nun Mr Mcawber says you are ok to go. "Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery." In fact you should still be accumulating in retirement.

I guess what I am contemplating is whether to pay off the 210K mortgage by dipping into our 401K's? The issue is that if the 401'sK are at 500K and I drew @4% it would be the same as if I had a 1,550.00 mortgage; however, not sure it is wise to do that. I will still have my SS and 1,500 in annuities at age 62? So, now at age 55 if I wanted to retire at 57 this what I am thinking. I guess some thoughts out there would be appreciative

[NgineER]

What is your interest rate?

[NgineER]

Why don't you check out I-orp.com

It could help you play with different scenarios a bit.

[cnocmmz]

Quote:

Originally Posted by molof What is your interest rate?

Interest rate is 3.5% a very good rate

[Teacher Terry]

So how long were you both teachers? Great profession -Actually neither of us was-my hubby was an engineer & I was a psychologist for the state. I have a PhD & always wanted to teach so now teach p.t. at the univ. I really love it!

[Chuckanut]

I would not pay off a 3.5% rate at this time. You can always change your mind and pay it off later.

[seraphim]

Quote:

Originally Posted by cnocmmz I guess what I am contemplating is whether to pay off the 210K mortgage by dipping into our 401K's? The issue is that if the 401'sK are at 500K and I drew @4% it would be the same as if I had a 1,550.00 mortgage; however, not sure it is wise to do that. I will still have my SS and 1,500 in annuities at age 62? So, now at age 55 if I wanted to retire at 57 this what I am thinking. I guess some thoughts out there would be appreciative

Ever consider selling the house and downsizing? Not sure of your equity in the home, so I don't know if there's an advantage there for you.


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[Hermit]

Quote:

Originally Posted by Teacher Terry So how long were you both teachers? Great profession -Actually neither of us was-my hubby was an engineer & I was a psychologist for the state. I have a PhD & always wanted to teach so now teach p.t. at the univ. I really love it!

I taught a couple different technical classes at megacorp. They were equivalent to college-level courses. Some days I taught for 4-hours in the morning, 4 hours in the afternoon, and then a 3 hour evening class. I would be pretty tired by the end of the last class, but I always enjoyed the classes and students.

[cnocmmz]

Quote:

Originally Posted by Chuckanut I would not pay off a 3.5% rate at this time. You can always change your mind and pay it off later.

Thanks and that is what I am thinking. My wife is from the Philippines and we travel there every few years and this year we are heading back later in year. Our thought would be to live their 3-4 months out of the year when we retire. Cost is relatively cheap about 1400 monthly and so that is one thought because we are not fond of the cold weather anymore.

[NgineER]

It seems like you are good to go, and you can probably go earlier as well.

You say you have $500k in annuities, 401k and cash.

What is the split? How much is taxable each month and how much is tax free? How much is the cash and 401k portions?

When do your annuities start paying out?

The $35k you are talking about withdrawing, is that the annuity payouts, what you desire to withdraw or what firecalc says you can withdraw with 100% success rate?

What is the term on your mortgage?

I think that there is a great chance that you could very well retire at 57, but we need some clearer answers.

If you have sufficient amount in your taxable accounts, you might be able to retire early and do Roth conversions to eliminate the additional taxes when you pull SS for both and both pensions.

Someone also mentioned pulling spousal SS early for you, if your wife is taking hers earlier than you, that is a great idea to get extra cash as well.

[cnocmmz]

Quote:

Originally Posted by molof It seems like you are good to go, and you can probably go earlier as well. You say you have $500k in annuities, 401k and cash. What is the split? How much is taxable each month and how much is tax free? How much is the cash and 401k portions? When do your annuities start paying out? The $35k you are talking about withdrawing, is that the annuity payouts, what you desire to withdraw or what firecalc says you can withdraw with 100% success rate? What is the term on your mortgage? I think that there is a great chance that you could very well retire at 57, but we need some clearer answers. If you have sufficient amount in your taxable accounts, you might be able to retire early and do Roth conversions to eliminate the additional taxes when you pull SS for both and both pensions. Someone also mentioned pulling spousal SS early for you, if your wife is taking hers earlier than you, that is a great idea to get extra cash as well.

All great questions: According to Firecalc I could go at 60 with a total of 80K total, I am 55yrs old now. I was figuring it out wrong! I would need 35K additionally aside from pensions and SS listed below. The frustrating part is that most income does not come until at least 62
Breakdown
-Mortgage is 1,515 monthly @3.5% rate and owe 220K for 20 more years,
-Yes, spouse is 61 and she will wait until I retire (between 57-59) and her SS should be 900.00 monthly Taxable
-I have a military pension that I get now Monthly 3,300 net.
-Spouse has 1,100.00 monthly net pension at age 62 (more if she waits until I walk away)
-500K in investments-cash as of today with majority taxable only 50K in Roth and cash, 360K in 401Ks and 100K in taxable annuity. I am now maxing out TSP annual contribution (18K) not catch-up.
-Annuities pay out at 62 or after (longer I wait the larger number) According to charts Annuities will pay out at least $1,500.00 monthly (same as mortgage)
Thanks

[NgineER]

Could you include the gross numbers for your pension, that should change considerably.

You say you need $80k from firecalc, what is that based on? I thought you said your expenses are only $4500/month.

[cnocmmz]

46k annual pension wife's should be 14k would like to,eat out and travel -

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[NgineER]

Income:
Between your age 55-62
Your pension: $46k
Her pension: $14k
Her SS: $11k

Total: $71k


After 62
Your pension: $46k
Your pension: $6k
Her pension: $14k
Her SS: $11k
Your SS: $
Annuities: $18k

Total: $95k+your SS

What are your guesstimated expenses, everything included?

Core expenses, mortgage, utilities, groceries, transportation and taxes.

Travel expenses

Extra expenses, eating out etc

What is your SS?

I would not pay off the mortgage.

If your expenses are $80k including taxes, then you don't have much shortfall, and only between 55-60.
It would probably be beneficial to withdraw from your 401k at 55, which is allowed by IRS, but not necessarily allowed by your company. It is worth investigating.

[cnocmmz]

Molof
Thanks for all the work on this.
I think to really enjoy, with traveling over seas for 3-4 months I would feel comfortable with 80K after taxes until 62.
Yes, I could pull fr 401k at 56
But the taxes with all will be at be only 69k after all taxes?

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[NgineER]

Here is just a rough calculation...

Withdraw $23,900 from your 401k. This gives you $94,900 gross

Deductions for married couple is $20,000, leaving $74,900 to be taxed. (Top of 15% bracket, you might have more deductions based on your mortgage payment to be better off using itemized deductions)

Tax calculation...

Up to $18,450 taxed at 10%--> $1845

$18,451-$74,900 taxed at 15% ($74,900-$18,450)=$56,450

$56,450 at 15%--> $8,467.50

Total tax is $10,312.50

Net cash in your pocket: $84,587.50

Your WR would be close to 7% from your 401k, and you'd draw it down substantially, withdrawing $100k+ from it.

However, when you hit 62, you pull out about the same with the annuities,eliminating the need to withdraw any more at all from the 401k, thus your SWR is 0% on the remaining 401k. Even if the market tumbles 50%, you will not use up your 401k, but there won't be any left for your heirs.

I strongly suggest you meet with a financial planner to lay out your plan.

Run I-orp.com and firecalc with your plan to see what it says for tax planning and success rate. It might be better to withdraw more now because at 70.5, you'll have RMDs on top of your $95k, so your taxes will go up.


Bottom line, I think you are set to quit now!

[cnocmmz]

Numbers tell me that our pensions alone over 30 years if taken next year are worth 1.6m and they're cola'd so that's good. That is without ss and investments. Certainly a lot to consider. To much stress at work and I really want to do my own thing -

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[NgineER]

I think you should not worry about the "cash value" of your pension, it is only a metric of someone else's perceived success. What you have is great security of not running out of money.

The only thing you'll need to worry about is not running out of money in your bridge years before you hit 62.and keeping your expenses at the level where you don't exceed your take home.

Depending on what your current tax bracket is, it might be good to save money, cash, after tax to enable you to do some Roth conversions your first years rather than doing the TSP thing.

Most importantly, you need to find a fee only CFP to help you review your plan and make recommendations...