Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
extra expenses? lowered expenses? 72t?
Old 01-08-2008, 05:48 AM   #1
Recycles dryer sheets
 
Join Date: Dec 2007
Posts: 79
extra expenses? lowered expenses? 72t?

Spoke w/Fidelity yesterday. setting up appt to go in and speak w/them. Have money in Fidelity but cant answer anything else as I really dont understand whats going on
Girl did say however that I can replace more than my current gross salary w/a 72T. Im 50, I know I'll be commited for 9/9.5yrs
Also need to consider 4yrs college for my highschool freshman

Did you find you needed your last gross salary to make the money work? were there extra costs when you first left work? were you able to cut expenses?
__________________

__________________
retiringat50 is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 01-08-2008, 09:32 AM   #2
Full time employment: Posting here.
kaudrey's Avatar
 
Join Date: Feb 2006
Location: Alexandria, Va
Posts: 737
Hi retiring,

Do you have a spreadsheet that estimates your future expenses and income? I have found it the best way to try to figure out when I can retire. That, and punch your numbers into Firecalc (see link at bottom of page).

A 72T is a way to get money out of your IRA before 59.5. Some people use it, I don't intend to - rather, I intend to save enough in taxable accounts to get me to 59.5. Whether you can replace your current salary depends on how much you have saved in your IRA, as there are rules as to the amount you can withdraw.

As far as how much you need to live on (I think that is what you mean by your last 2 questions), the spreadsheet will help with that. There are many adjustments you can make to your current expenses:

Since you are retiring at 50, I assume you save a big chunk of your salary now. When you are retired, you won't be saving anymore, so you can take that out. You won't have to pay SS taxes anymore. Will your mortgage be paid off? You won't have commuting costs or work clothes expenses, but maybe you will travel more? Will you be taking up an expensive hobby?

Start from what you spend today, and then think about where things will change. Add in an estimate of college costs in years 4 through 8 of your spreadsheet, and see what that does. Estimate inflation and the growth in your portfolio over time, to see how much income you can get out of it.

You don't actually live on 100% of your gross salary now, so it is unlikely you'd spend that much when you retire.

Hope this helps a little. If you have any specific questions, let us know.
__________________

__________________
kaudrey is offline   Reply With Quote
You may want to split the account into two
Old 01-08-2008, 12:22 PM   #3
Recycles dryer sheets
aenlighten's Avatar
 
Join Date: Apr 2007
Posts: 275
You may want to split the account into two

Use one for the 72t and leave the other for emergencies so you don't face back taxes for not following the 72t rules. You may also want to take out more than you need and use the excess for Roth conversions from the other one assuming your tax bracket is low. Be sure to account for inflation over that time. Find out if they require withholding or you can just rely on quarterly tax payments. My expenses changed little, but they were always far below my income.
__________________
aenlighten is offline   Reply With Quote
Old 01-08-2008, 01:42 PM   #4
Thinks s/he gets paid by the post
 
Join Date: Jul 2005
Location: Los Angeles area
Posts: 1,350
I retired last year at 48 with most of my $$ in IRAs. I take 72t payments from the big IRA,
but keep a seperate smaller IRA in case I encounter some big unexpected expenses in the next
10 years. My spending is slightly higher than my pre-retirement spending, which is quite a bit
higher than a few years earlier due to pre-paying off my mortgage in 2004, but this is intentional
and could be cut back considerably since most is on travel / wine / entertainment / toys.
__________________
learn, work, save, invest, fire
CyclingInvestor is offline   Reply With Quote
Old 01-08-2008, 02:45 PM   #5
Moderator Emeritus
Khan's Avatar
 
Join Date: Aug 2006
Location: Greater Dayton area
Posts: 6,666
Send a message via AIM to Khan
My gross salary in '04 was $75K. Retired 30 Dec '04 (age 54). Spent less than $25K every year since (not including buying a used car).

Initially I was researching how to get money out of retirement accounts; my needs have not exceeded my pension.

But then, I'm rather frugal and don't have a family .

You probably won't need your gross salary.

Previous advice was good: track your spending and think about inflation.

Just because you're withdrawing money, doesn't mean you have to spend it all.

I think there is a way to refigure the 72T withdrawal every year based on age and amount; but someone else will have to recall details.
__________________
"Knowin' no one nowhere's gonna miss us when we're gone..."
Khan is offline   Reply With Quote
Old 01-08-2008, 05:38 PM   #6
Thinks s/he gets paid by the post
 
Join Date: Jul 2005
Location: Los Angeles area
Posts: 1,350
Quote:
Originally Posted by Khan View Post
I think there is a way to refigure the 72T withdrawal every year based on age and amount; but someone else will have to recall details.
Yes, that is the easy method, which I use. The percentage goes up a bit each year, and is specified
by an IRS approved table. This year I withdraw just under 3% of my balance on Dec 31 2007.
__________________
learn, work, save, invest, fire
CyclingInvestor is offline   Reply With Quote
Old 01-08-2008, 09:30 PM   #7
Thinks s/he gets paid by the post
 
Join Date: Apr 2007
Posts: 1,304
I have no opinion on where to draw your funds from as I did not have that issue. I have a pension and have set up income from parts of my taxable portfolio which will cover my expenses. So I don't have to draw on my 401k yet (I believe I 'over-engineered' my retirement funding by being overly conservative).
As to expenses, I have found that our expenses are about the same (as before retirement). We just spend it on different things. We have exchanged work expenses for travel expenses. If needed (for additional initial travel) we have budgeted for it from our taxable accounts. In our case we continue our LBYM ways by NOT spending more than we have in our budgets, while enjoying travel while we are still young enough and healthy enough to do so.
Best of luck on your upcoming retirement.
__________________

__________________
Life is GREAT!
megacorp-firee is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Optimizing Expenses chinaco FIRE and Money 14 08-19-2007 10:36 PM
Expenses Vincenzo FIRE and Money 11 05-13-2007 08:48 PM
Expenses at 85+ citril FIRE and Money 11 03-16-2007 09:38 AM
Expenses KM FIRE and Money 6 02-07-2007 09:27 AM
Monthly expenses eyetri2 FIRE and Money 27 04-16-2006 09:35 AM

 

 
All times are GMT -6. The time now is 05:25 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2014, vBulletin Solutions, Inc.

Early Retirement News right to your Email!

Stay up-to-date with all the latest news to your inbox!

unsusbcribe at anytime with one click

Close [X]