Here's the plan...(moved from FAQ)

[TallCotton]

I put this post in the wrong forum. I'm new.....
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Hey all, Noob here. Here's my situation:

230K in Self directed IRA. 110K in the bank. 96K in gross equity in the house. Early out pension at 55 = $1100/mo. SS at 62 = 1200/mo.

I'm 49. The goal is to retire somewhere after the middle of this year with about 2500/mo income and living in a small home newly built in my home town.

Time line: April. go to home town and purchase property with 35K of the 110k. Pick the modular home and garage disign.

May, june and july: Contractor completes site improvements. I spend another 30k of the 110k. I start a 72(t) distribution of my IRA(i'll be 50) and I take a 50K HELOC on the remaining equity of the house. I purchase the house, spending the rest of the 110k and after moving expenses etc. have 10k left from the HELOC.

Aug. sell the house i'm in now and pay off the HELOC. leaving me about 38k left from the sale.

Using the SEPP payments from the IRA and supplementing as needed from the 38K I make it till I'm 55 and can begin my pension payments.

the combination of sepp and pension gets me to 62 when I can add SS.

Question: Think It'll work? If I begin sepp 72(t) from IRA and sometime in the next 9 1/2 years the value inside the SDIRA substansially increases(this is a real possibility) can the sepp payments be re-evaluated, thereby increasing my monthly distributions?

Thanks for having me. I look forward to your responses.

TC

 

[brewer12345]

Couple of thoughts:

- As I understand it, you will be locked into your SEPP payments until age 59 1/2. However, SEPPs are a very complex topic, so I'd suggest more research on the subject.

- What you are proposing is basically a 12 year withdrawal period after which (I presume) the pension and SS will cover all your needs. 5 years into the deal, the pension kicks in and redces your withdrawal needs. This should be pretty easy to model in FIRECalc (hint, hint). The big risks I can see are that SS won't be there for you, and that your expenses will be higher than you estimate (health insurance, for example).

 

[TallCotton]

the SEPPs will continue after 59.5 years is reached. so the Ss is added onto the other payments when I reach 62. And I DO worry a LOT about health care. I can only guess what it will cost in 5 years but I'm planning on 400 per month to cover insurance premiums. I can only hope it's enough. HC is truley my bigggest worry.

 

[brewer12345]

the SEPPs will continue after 59.5 years is reached. so the Ss is added onto the other payments when I reach 62. And I DO worry a LOT about health care.  I can only guess what it will cost in 5 years but I'm planning on 400 per month to cover insurance premiums.  I can only hope it's enough. HC is truley my bigggest worry.

If I were you, I would go out and get a quote for current insurance exposure. You can then inflate that number by 11 or 12% a year and get at least a ballpark idea of what future healthcare costs will be.

 

[John Galt]

Health issues and health care costs were not among my
big worries back when the ER seeds took root in my
fertile brain. If they are not at the top of my "worry list"
now, they are surely close.

JG