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going from weekly paycheck to monthly 72t
Old 04-29-2008, 05:13 AM   #1
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going from weekly paycheck to monthly 72t

how did you go from weekly paycheck to monthly 72T?
how did you change your banking, pocket money, etc?
I'm starting to do this July 15 - any adjustment tips appreciated - thanks

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Old 04-29-2008, 06:45 AM   #2
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First, you need to determine how much you need to withdraw from your investments.

Then, from your investment list, you need to determine how much you will be withdrawing from each of those investments (an Excel or Lotus spreadsheet works well for this since you may be doing a lot of "what if" calculations).

This exercise will help you determine when you need to start a 72(t) and if you need to break down your IRAs into different accounts so you can do a 72(t) from each account as you need it instead of one large 72(t) from one account.

Part of the goal includes tax minimization. Take enough from your taxable accounts to stay $1 shy of the next tax bracket and take the rest from non-taxable accounts.

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Old 04-29-2008, 08:23 AM   #3
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I don't know anything about the 72t, but I'm very familiar with living with a monthly paycheck. After 35 years I got it down to a fine science.

The secret was reserve funds in the checking account. My paycheck always came on the last working day of the month but over the years due dates for utilities, credit cards and other bills moved around. The trick is to keep enough money in the checking account to cover everything for a month in advance.

The last few years all our bills have gravitated toward the end of the month but all are due before the end of the month. All it takes is a little planning and budgeting over the month to get things to come out even. It also takes a little restraint in spending to keep funds available for the recurring expenses.

As for pocket money, when I was working, I had access to my credit union at work and would take cash out on a weekly basis. Now that I'm retired access to the credit union is a little further than I like to drive so I cash a weekly check at our neighborhood bank where our checking account is.

Currently our checking account balance runs about $8k-$10k and I keep another $10k in slush funds at our credit union.

Now that I'm retired keeping the check book balanced is a pain in the neck, I get a pension check on the first of the month and DW gets her SS check on the second Wednesday of the month. Now everything is out of date twice a month.........The pain of retirement
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Old 04-29-2008, 10:06 AM   #4
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I second keeping a months expenses on hand. I get paid 2X a month now, I have things set up to do the following:

1) I keep 1 months expenses in my accounts already
2) I have 3 90 day CDs with a months expenses in them (so every 30 days a CD with a months expenses matures).
3) I pay as many bills at end of month as I can IRA deposits are all at end of month, for example
4) I use this week's paycheck to pay next months expenses.

Based on IRA size and bill amounts, I have a 1 month buffer from current paycheck, plus 1 months expenses in the bank, plus 1 months expenses maturing every month in a CD.
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Old 04-29-2008, 06:15 PM   #5
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I just do my 72t once a year (from my big IRA to my regular stock account), then
transfer $5k or $10k at a time into my checking account as needed.
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