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Old 01-23-2012, 07:55 PM   #21
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And here I thought you were really "H*cus" ....
There's only 24 hours in a day, and I don't have the carpal endurance!
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Old 01-24-2012, 04:41 PM   #22
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In my gap, I will simply withdraw from a joint taxable investing account tax-free since return of capital is tax-free and carryover losses will take care of any gains. At the same time, we will be converting 401(k) assets to Roth IRAs. I showed my wife today how we can convert between $60K and $70K a year to Roth IRAs and pay no taxes on the conversion. So that's my method.
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Other "gap" solutions:
(a) Withdraw penalty-free from your IRA using a SEPP/72(t) method.
(b) Retire at age 55 from employer, then 401(k) withdrawals are penalty-free.

I am still trying to understand this "gap" thing the OP is writing about.
LOL-

To clarify my question regarding "the gap", it's how to provide adequate income during the time gap btwn ER and collecting pension/SS. What techniques have others used successfully to do this, while minimizing the tax hit, maintaining flexibility, etc.

I think you've understood my question, based on your replies above. But, I'd like to hear more from you and others on this.

Thanks.
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Old 01-24-2012, 04:47 PM   #23
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Originally Posted by Huston55 View Post
LOL-

To clarify my question regarding "the gap", it's how to provide adequate income during the time gap btwn ER and collecting pension/SS. What techniques have others used successfully to do this, while minimizing the tax hit, maintaining flexibility, etc.

I think you've understood my question, based on your replies above. But, I'd like to hear more from you and others on this.

Thanks.
I'm 2 years into the gap between 55 and 59.5 before our IRA funds are available without use of a 72(t).

I started buying I-Bonds and CD's 7 years out from age 55 and am now using them as an income stream to supplement the pension I get. Seems a little strange to not be saving for ER anymore, but I'm sure I'll get over it .
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Old 01-24-2012, 05:44 PM   #24
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Seems a little strange to not be saving for ER anymore, but I'm sure I'll get over it .
+1

Thanks to everyone posting here it made me realize I need to put a plan together around this. DH is just past 59-1/2. As part of ER in 2010, I put aside enough cash to fill the "gap" until I start my (non-COLA) pension in late 2015. But he has significant traditional IRAs (mostly 401K rollovers) that now can to be part of the overall withdrawal plan. Time to crunch some numbers again!
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Old 01-24-2012, 06:52 PM   #25
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Other ideas:

Sell house, live in van down by the river.
Sell house, move in with girlfriend
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Old 01-24-2012, 08:24 PM   #26
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Originally Posted by Huston55 View Post
LOL-

To clarify my question regarding "the gap", it's how to provide adequate income during the time gap btwn ER and collecting pension/SS. What techniques have others used successfully to do this, while minimizing the tax hit, maintaining flexibility, etc.

I think you've understood my question, based on your replies above. But, I'd like to hear more from you and others on this.

Thanks.
Well, this is a bad time to sell real estate but that is my plan. That should give me the 4 year cash I need to fund retirement until pensions kick in. I'll still be withdrawing from my portfolio until SS starts at 66.5, but I'll have bond money to pull from if the stock market tanks.

It is hard to sell the real estate in this market, but I think it is going to be a long time before substantial appreciation occurs. The stock market OTOH, can turn around quickly.
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Old 01-24-2012, 08:29 PM   #27
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My version would probably be more like this:

Quote:
Originally Posted by LOL! View Post
Other ideas:

Sell house, live in van down by the river.
Sell house, move in with girlfriend
DW runs over me with the van and sends me down the river
But, I did say I was looking for additional ideas so, thanks for that.
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Old 01-24-2012, 09:33 PM   #28
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Other ideas:

Sell house, live in van down by the river.
Sell house, move in with girlfriend
A looks pretty cheap.
B could get 'really' expensive
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Old 01-24-2012, 10:22 PM   #29
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What techniques have others used successfully to do this, while minimizing the tax hit, maintaining flexibility, etc.
I retired with a military pension at age 41, and the plan was to spend down our investments for the next 20 years until spouse's military pension kicked in.

Along the way her parents unexpectedly moved out of our rental property, which considerably improved its cashflow.

But otherwise it's been a couple years' expenses in cash, refueled by regular doses of long-term capital gains.
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Old 01-25-2012, 05:14 AM   #30
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Hello rescueme - you did not offend me and your advice is well taken. You are correct, for some reason finances are not my top priority - this is why I keep coming back to this website as I have been learning a lot from everyone, including you. Take care.
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Just my simple POV/opinion.

(Sorry if I offended you)...
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Old 01-25-2012, 05:26 AM   #31
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Originally Posted by Huston55 View Post
LOL-

To clarify my question regarding "the gap", it's how to provide adequate income during the time gap btwn ER and collecting pension/SS. What techniques have others used successfully to do this, while minimizing the tax hit, maintaining flexibility, etc.

I think you've understood my question, based on your replies above. But, I'd like to hear more from you and others on this.

Thanks.
My plan (3 yrs into plan) is each year buy a 5 yr CD that will fund 1/2 of my needs for a year for 7 years. I plan to retire at 58. The CD rate at Penfed is 2.25, so not great considering inflation but lots better than my bank. I should have 1/2 of my NEEDS covered till I can start SS. The other 1/2 would come from my IRA/401K and allow a low draw for the first few years.

Now that little evil voice says keep with this but draw the full expenses from the IRA and use the CD each year to have a great vacation! Hrmmm, I'll have to think about that
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Old 01-25-2012, 05:44 AM   #32
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Rhetorical: how can you RE if you can't fund "the gap"?

I have paid off rentals and dividends coming from a taxable stock account and am also building up cash for my projected retirement of late age 55 in 2014.
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Old 01-25-2012, 12:34 PM   #33
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Rhetorical: how can you RE if you can't fund "the gap"?

I have paid off rentals and dividends coming from a taxable stock account and am also building up cash for my projected retirement of late age 55 in 2014.
Well, you can't. But, my question (which I didn't ask very clearly) was more about gap filling techniques than having/not having the $$$. I have, or am very close to having, the $$$ to fill the gap and wanted to compare what I've read to what others are actually doing to address this segment of ER; and, hopefully, pick up some useful info in the process. Here's what you all have said you're doing:

1. 72t withdrawals from IRAs, SEPPs.
2. Begin 401k withdrawals at 55, if gone from that employer.
3. TIP/CD ladders and other cash approaches.
4. Taxable account withdrawals.
5. Use of ORP, etc. to optimize (minimize taxes) withdrawal/conversion strategy.
6. Annuities.
7. Sell real estate, including current residence.
8. Rental income.
9. Dividend income.

Thanks much for the posts thus far.
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Old 01-25-2012, 12:57 PM   #34
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...although ... some sexual inuendos turn me off a bit sometimes...
We can only discuss paying off your mortgage, or not, a few thousand times...

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And here I thought you were really "H*cus" ....
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There's only 24 hours in a day, and I don't have the carpal endurance!
Not even th CFB was as "prolific" as *****. JG maybe, and equally as asinine...
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Old 01-25-2012, 01:29 PM   #35
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We can only discuss paying off your mortgage, or not, a few thousand times...
Did I mention that I really like not having mortgage payments due every month in retirement? Oh, uh, errrr.....

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