Before age 59.5, I did/will pay for retirement by ...

[LOL!]

A poll to see how potential or legitimate early retirees get it done before age 59.5

 

[audreyh1]

90% of my net worth is in taxable investments. The IRAs/401Ks are just "icing on the cake" and we probably won't even withdraw until required to at 71, which is > 20 years away. I don't even count them when computing our SWR!

Audrey

P.S. I voted "other", since there is no "tiding over" involved.

 

[LOL!]

Note that if you use a SEPP/72(t) plan and taxable investments and perhaps "other" that the poll allows you to select multiple options. But if you are using predominantly one source, just go with that one. Thanks!

 

[lazygood4nothinbum]

i'm also mostly taxable. plus i've an inherited ira so not only no early withdrawal penalty on that but rather mandatory distributions.

 

[martyb]

Currently age 50 in 14 days. Following is my scenario:

Age 55: Fully COLA'd Defined Benefit Pension

TSP (govt 401k): May or may not tap it, probably won't have to (DW
still has 3 yrs to work at that point)

Age 60: Fully COLA'd military (reserves) pension

DW is 3 yrs younger, so her 401 will be available when I'm 58

Employer pays approx. 75% of medical

So...barring alien invasion we should be OK financially!

 

[FinanceDude]

i'm also mostly taxable. plus i've an inherited ira so not only no early withdrawal penalty on that but rather mandatory distributions.

Make sure the benies on the inherited IRA are the way you want things to happen in case something happens to you.........

 

[rs0460a]

"Above the line" savings in my 401K along with an Immediate Annuity (purchased with a portion of my former company's cash balance account settlement).

- Ron

 

[Coach]

I'll be using 403(b) money, since I'll be 56 or 57 when I retire.

Coach

 

[W2R]

Ah, you youngsters... I turned 59.5 in December.

Guess that solves that problem.

 

[RunningBum]

I feel stupid not knowing what a SEPP 72(t) is but now that I've looked it up, I still probably wouldn't us it since my IRA/401K is only about 20% of my holdings.

 

[lazygood4nothinbum]

Make sure the benies on the inherited IRA are the way you want things to happen in case something happens to you.........

ya, thanx. already done. per the will & sharing posts, anything that came from mom i automatically listed her grandchildren as benies. but at least part of the monies i worked for will benefit organizations working to fix what i found in my life either difficult or sad.

 

[bbbamI]

Cash and pension.

 

[Walt34]

Fully COLA'd defined benefit pension at age 52 from 29 yrs. in law enforcement. They stopped offering that plan in 1978. Without that I wouldn't have dared retire. It's one of the few agencies that have no unfunded pension liability.

Medical & prescription coverage for life for 30% of the premium, becomes secondary to Medicare at 65.

A deferred compensation account that I have no plans to touch until I have to - not what I'd like in there but I had to start over at age 34 from a divorce that left me with a NW of about $9K.

Wife has some in Thrift Savings from federal govt. time, that's not available for a while.

Small IRA that I opened in 1984 with a one-time deposit of $2K for the tax break. IRS rules changed the following year and I couldn't make any more deposits since I had a pension plan. Then went with deferred compensation account a few years after buying a house.

 

[Goonie]

Fully COLA'd defined benefit pension at age 52 from 29 yrs. in law enforcement. They stopped offering that plan in 1978. Without that I wouldn't have dared retire. It's one of the few agencies that have no unfunded pension liability.

Medical & prescription coverage for life for 30% of the premium, becomes secondary to Medicare at 65.

Pretty much the same boat here. I took advantage of an Early Retirement Incentive, and FIRE'd @ 50 last April after 30+ years with municipal gov't. Also, with the purchase of 5 additional years service, plus cashing in time saved/banked, I jumped out with 37+ years of 'service credit'. I started collecting FULL, COLA'd DB pension in May. My monthly pension, after taxes, was 87.8% of my former monthly NET pay in 2007, PLUS I just got a 3% raise on 1-1-08. (The pay raise at my former employer is 1.5% this year.)

BTW, our pension plan is funded 100% plus!

I have full medical/dental insurance through them for life for 25% of the premium ($151/month as of 1-1-08...was $142 for '07). While still w*rking I paid 20%. It's up to me whether to keep full coverage with them at 65, or switch to Medicare and keep them as secondary....they have nothing mandated either way.

I also have regular and Roth IRA's, plus some taxable accounts.

Life is sweet!

 

[crazy connie]

I feel stupid not knowing what a SEPP 72(t) is but now that I've looked it up, I still probably wouldn't us it since my IRA/401K is only about 20% of my holdings.

Not at all stupid Running. You were simply ignorant and did not need to be finding out how to get at that Bucket O'Bucks.

I wish that my stash outside had been closer to a 50/50 mix. I only had 10% outside of Rollover IRA & 401K when I pulled the trigger 3 years ago. Now have just started a 72T on the Rollover IRA and will wait out another year or two on the 401K.

 

[CyclingInvestor]

Since I retired at 48 with almost 90% of my investment assets in IRAs, I am using 72t
withdrawals (annual calculation method) from my large IRA (80% of assets).This plus
my dividends from after-tax investments less taxes and health insurance more than replaces
my old net paycheck less the mortgage I paid off in 2004, although it does not quite replace
my net after the mortgage payment disappeared.

 

[Alan]

non-COLA pension at 55 topped up with drawing from after tax savings which make up 40% of savings

 

[Khan]

Semi-COLA pension at 54. Haven't touched anything except MMA (for car); looks like retirement accounts will be left to charity.

 

[bigla]

While my wife and I both had a pension, she is disabled and we were able w/o penalty to use some of her IRA money to supplement the pension. I retired at 55 but now I am 59.6 so I can use my IRA's also.
Larry

 

[megacorp-firee]

Non-cola'ed pension and taxable investments (a bunch of preferreds, municipals (non taxable), cds and cash.

 

[dgalbraith100]

I will be retiring around age 45, and will have 80% or so of my funds in 401K/IRA's. My current plan is to move the 401K's to IRA's.. Then for the first five years I will live on my taxable accounts. During those 5 years I will be converting living expenses from my IRA to my R-IRA.

On year 6, I can take out as a contribution the year one's conversion:

year 1:
take 40K from taxable, convert 40K (+ inflation hedge 6 years out) from IRA->RIRA

year 2:
take 40K+Inflation from taxable, convert 40K+Inflation from IRA->RIRA

...
Year 6:
Take 40K+inflation from RIRA (This is tax free since you already paid taxes on it), convert 40K+Inflation from IRA-RIRA (this is where you pay the taxes)

Basically you are using the Roth conversions and the 5 year waiting period to get access to your money. I think it has one HUGE plus over the 72T method. You can stop at anytime, you can take more, take less, take none.

The minus is, you pay taxes 5 years in advance of when you need the money and you need some planning because you can't touch the money for 5 years. This isn't a major minus for me because my "estimated" taxes on current conversion amounts along with my dependants puts my taxes at zero or very very close to it, and I have a plan The one final minus I know if is, state taxes can be different on conversions vs. 72T money.

Anyway, that is how I plan on funding my retirement before 59.5.

Laters,
-d.