Great site! Alot of very smart people here. Thanks in advance for any wisdom.
I posted a long time ago in the "I am" section, but stayed at work for a few more years to build up the portfolio. Now I am getting closer to ER and things are getting real and not just hypothesis.
Me: 51 years old - $6M net worth: $4.4M in after tax Vanguard investments (50/50), $800K in Fidelity 401K and rest in my house that is paid off. No debt. No pensions or anything else coming down the road. I need $150K a year to live comfortably (I don't need to adjust for inflation for 5 years, can just cut spending alittle each year and I will be fine)
My question is with the "bucket" strategy. I have read several places that buckets is a good way to start on ER, and one strategy is to take out 5 years of living expenses and put it in safe place (laddered CDs) and that supposedly allows any market fluctuation to work itself out before you have to dip back into your portfolio. For me that is $750K in my bucket leaving $4.45M five years to re-build back.
Did any of you deploy this 5 year bucket system to get started and how did it work for you? I am just really nervous about starting ER and hitting a nasty recession right out of the gate. Double whammy. At least with this 5 year bucket set aside away from the risk, I can ride out 5 years and even go back to work if it gets really ugly.
The other question I have about the bucket is that it *appears* that for 5 years I will literally not pay any income taxes or SS except for dividend income that are reinvested. Correct? Kind of nice benefit from that...after paying $400K a year in taxes, hard to believe I will go 5 years without paying...
And it's kind of crazy to think that a guy with $6M would be getting breaks on ObamaCare because I would be showing such a small income for 5 years, or at least that is the way I understand how ObamaCare works.
Just wanted to check with you guys on the bucket system and the tax situation that comes from it because I am getting closer to pushing the button on FIRE. It is really interesting, I would love to be done, but I just cannot figure out the best way to get started.
Thoughts?
I posted a long time ago in the "I am" section, but stayed at work for a few more years to build up the portfolio. Now I am getting closer to ER and things are getting real and not just hypothesis.
Me: 51 years old - $6M net worth: $4.4M in after tax Vanguard investments (50/50), $800K in Fidelity 401K and rest in my house that is paid off. No debt. No pensions or anything else coming down the road. I need $150K a year to live comfortably (I don't need to adjust for inflation for 5 years, can just cut spending alittle each year and I will be fine)
My question is with the "bucket" strategy. I have read several places that buckets is a good way to start on ER, and one strategy is to take out 5 years of living expenses and put it in safe place (laddered CDs) and that supposedly allows any market fluctuation to work itself out before you have to dip back into your portfolio. For me that is $750K in my bucket leaving $4.45M five years to re-build back.
Did any of you deploy this 5 year bucket system to get started and how did it work for you? I am just really nervous about starting ER and hitting a nasty recession right out of the gate. Double whammy. At least with this 5 year bucket set aside away from the risk, I can ride out 5 years and even go back to work if it gets really ugly.
The other question I have about the bucket is that it *appears* that for 5 years I will literally not pay any income taxes or SS except for dividend income that are reinvested. Correct? Kind of nice benefit from that...after paying $400K a year in taxes, hard to believe I will go 5 years without paying...
And it's kind of crazy to think that a guy with $6M would be getting breaks on ObamaCare because I would be showing such a small income for 5 years, or at least that is the way I understand how ObamaCare works.
Just wanted to check with you guys on the bucket system and the tax situation that comes from it because I am getting closer to pushing the button on FIRE. It is really interesting, I would love to be done, but I just cannot figure out the best way to get started.
Thoughts?