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Old 09-19-2016, 08:12 PM   #61
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If I take multiple withdrawals from a tax deferred account (IRA or 401k) will Fidelity send just one 1099 per account or do I get one for each transaction?


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Old 09-20-2016, 06:10 AM   #62
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I get one 1099R statement in January.
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Old 09-20-2016, 09:36 AM   #63
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Minimizing taxable income before Medicare can be huge. Besides qualifying for subsidies, medicare rate paid is dependent on the reported income 2 years prior to filing for Medicare.

One of nice things about delaying filing for SS, is the ability to change ones mind at any time and either start immediately or even get up to 6 months retro, which can be a powerful tool to avoid taxable income in the year it would have been received and move it to the later year. Most people can not afford to delay filing SS, anyway, especially if they FIREed early, because that income stream was part of the plan all along. So unless one COULD have filed easily at FRA or 70, their "reasons" to not delay filing are superfluous, moot, and of no consequence.
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Old 09-20-2016, 10:40 AM   #64
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Our monthly gozin exceeds our gozout -
I love the way you express this, as this is how it works for us, too.



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Old 09-22-2016, 04:24 AM   #65
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Not FIREd yet...but plan is...


Annually transfer an amount from Vanguard to Credit Union account equal to what we will spend for the upcoming year. In Vanguard we have "buckets", one of which is low risk...so no capital gains or "selling low" implications. Then rebalance Vanguard as needed annually.


In the Credit Union, we have a MM account that pays about 1.2%, so we park it there....and I will do electronic transfers as needed to keep checking at about $12k balance...which gives us a comfortable "float" amount....typically that means I would make a transfer about every 6-8 weeks.
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Old 09-22-2016, 10:59 AM   #66
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...



In the Credit Union, we have a MM account that pays about 1.2%, so we park it there....and I will do electronic transfers as needed to keep checking at about $12k balance...which gives us a comfortable "float" amount....typically that means I would make a transfer about every 6-8 weeks.
Which credit union is that (and can I join)?
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Old 09-22-2016, 01:40 PM   #67
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Which credit union is that (and can I join)?

You beat me to it...
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Old 09-22-2016, 02:19 PM   #68
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Which credit union is that (and can I join)?
+1

... err, 1.2
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Old 09-24-2016, 03:15 PM   #69
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Maybe Alliant? They pay like 1% on savings accounts and a little less on checking accounts.

Frankly, at current interest rate levels, the actual dollar amount between 1% and ~1.2% is peanuts. An extra Starbucks coffee.
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Old 09-24-2016, 08:44 PM   #70
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Frankly, at current interest rate levels, the actual dollar amount between 1% and ~1.2% is peanuts. An extra Starbucks coffee.

Very true. I feel awful about groveling for crumbs, but then I do it anyway.


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Old 09-25-2016, 02:10 AM   #71
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We withdraw when our checking account gets "too low". No particular timing.

I have an idea of our "normal" monthly expenses. Then add in anything unusual that's coming up.

When I was working, we had regular paychecks, but we rarely spent the whole amount. We always spent "what seemed reasonable" rather than "what's in the paycheck". So retirement didn't really change our spending decision making.

We always had "enough" in the checking account to handle a surprise expense. We continued that approach in retirement.

The exact timing of withdrawals isn't a big deal. It's easy to get money quickly from Vanguard mutual funds. There's very little loss in having "too much" in a checking acct these days. So we've got room to err on either side.
I'm 6 mo from RE but otherwise this describes DW and I so well it's spooky.
I also plan to end reinvestment of dividends and cap gains. That plus a small pension will be much of our income. We will make adjustments as needed, and I do not see a need to generate additional periodic withdrawls.
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Old 09-26-2016, 11:40 PM   #72
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Thanks for all the responses. My takeaway is that a lot of different methods can work depending on one's budget, income sources, and preferences. Since I've been used to a paycheck for so long, I think I'll do monthly withdrawals based on average "recurring" spending, and then supplement with larger withdrawals to fund big ticket occasional purchases.


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Old 09-28-2016, 07:14 AM   #73
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Thanks for all the responses. My takeaway is that a lot of different methods can work depending on one's budget, income sources, and preferences. Since I've been used to a paycheck for so long, I think I'll do monthly withdrawals based on average "recurring" spending, and then supplement with larger withdrawals to fund big ticket occasional purchases.
There's a couple of problems with this. I know about these because I started off the way you said.

* You still have to stay, on average, within your planned SWR, 4% or whatever. If you take sporatic large draws, how will you know that you are still on track?

* When a big-ticket item comes early in the time-period rather than later, where does the money come from? If you are doing "paycheck-like" draws, then you have to effectively borrow the money and then pay it back by taking smaller draws afterwards. How do you know when it balances out?

* Let's say your 4% SWR is $5000 and your average recurring expenses are $3500. Treating this like a paycheck, what do you do with the remaining $1500? Probably save it, maybe to a savings account. But then you say, "Hold on, when I was working I'd just invest (some of) that money in my investment account." So you draw $5000, spend $3500, and put $1500 back in. After a month or two you realize that taking out $1500 and putting it right back in is kinda silly.

* There are many advantages to treating your SWR like a paycheck. But I never had a paycheck where I could only take half-pay now and the rest of it later whenever I wanted to. Or a paycheck where I could take triple-pay now and then half-pay for the next 6 months.

* Every once in a while your expenses will line up such that you have enough cash-on-hand to handle them without withdrawing ANY money. So you leave the $3500 in, and make a note that in a month or two you can spend that $3500. Effectively, you will spend the April draw in May. Or in July and August. Or in July, September and December.

* When you are FIRE, you can do things you never could before. Like: Get a last-minute great deal on a Galapagos cruise/tour. $30,000 for the two of you, compared to the regular price of $50,000. Or pay for your son's unexpected wedding: $10,000. Or your daughter's unexpected $15,000 divorce legal bill.
You've got plenty of money, just not the lump sum. So you take out the large draw now and pay it back by taking smaller draws for the next year or two.

After awhile it becomes obvious that you have to keep track, both to see how you are doing compared to your target SWR, and to know when you have finished the paying back the large one-time expense, and to know if you have saved enough (by lower draws) to pay for a large expense.

* When your wife looks at the portfolio statement and says, "We have $1 million dollars, so why can't I buy this $3000 diamond necklace?" You'd better have an answer!
Or maybe it's you asking why you can't buy this $5000 bass boat.

If you are keeping track, you just look at the spreadsheet and see how much over/under you are.
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Old 09-28-2016, 10:13 AM   #74
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Thanks for all the responses. My takeaway is that a lot of different methods can work depending on one's budget, income sources, and preferences. Since I've been used to a paycheck for so long, I think I'll do monthly withdrawals based on average "recurring" spending, and then supplement with larger withdrawals to fund big ticket occasional purchases. ...
Actually, despite rayvt's concerns, that is exactly what we do and what we would have done when working. We have a regular paycheck that, along with taxable account dividends, covers our normal expenses (including some lumpy items within home maintenance like replacing a $500 heat exchanger that went kaput). We do other withdrawals for things like cars, a garage we built, winter condo, etc.

We are not wed to a specific WR and over the period we have been retired our WR has fluctuated some. As long as our expenses (including depreciation that implicitly provides for car replacements) is ~3.5% I sleep well at night. Also supplemented by periodic updates of Quicken Lifetime Planner and Firecalc that we continue to "have enough". If that started to turn sideways we would begin belt tightening.
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Old 10-01-2016, 08:34 PM   #75
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I'm definitely in the same camp as rayvt. Our monthly paycheck includes our estimate for big ticket items that come up once in a while. Most months we have more money than we need and the cash accumulates in a savings account. Big ticket expenses for us are in the several thousand dollar range - new roof, $7k, new AC/heat $5k, basement waterproofing $12k and so on. In any given year we don't know specifically which item will raise it's ugly head and need repair/replacement.

If you decide to do special withdrawals for big ticket items you should definitely consider some sort of tracking to ensure you're not in trouble. Watch the trend from year to year to make sure there is some consistency in your withdrawals and you're not spending too quickly. FIREcalc and other tools can help with this.

Best wishes. It's an exciting time but there is some angst.
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Old 10-02-2016, 08:08 AM   #76
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I agree with the need to track. The good news is that I've been tracking our spending for years. Our retirement spend budget is higher than current spend, as I know we'll have more time to travel and entertain ourselves, plus we will spend more on healthcare. Of our total budget, about 60% is essential and 40% could be reduced or cut out completely for months or even years if things don't go as planned. Our WR is planned to be higher in the early years before SS kicks in, but can be reduced if the market drops substantially. Also I have a pension I can start taking anytime that will cover about half of our mandatory costs, but want to defer as long as possible as it goes up 7-8% for every year I don't take it.


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Old 10-03-2016, 08:48 AM   #77
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Also I have a pension I can start taking anytime that will cover about half of our mandatory costs, but want to defer as long as possible as it goes up 7-8% for every year I don't take it.
Don't forget to factor in that it costs you 100% now to get that extra 7%-8% later.
It takes 14.25 years (100/7) to 12.5 years (100/8) to get back to even. That's an awful long payback period.
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Old 10-03-2016, 10:46 AM   #78
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We are on year 3 in this position. Fortunately I have a pension that provides about 1/3 of our monthly needs. We keep 2 years of expenses in a money market account with Discover bank that pays 1%. We transfer funds to our checking account quarterly. Watching our budget, we found that we are expending more than we anticipated, but still a manageable amount.
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Old 10-03-2016, 12:44 PM   #79
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Well, if you think of your SWD as your "means" then if you keep living below your means, you should have plenty of money for non-monthly or larger ticket items (including vehicle replacement) as needed.
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Old 10-03-2016, 09:34 PM   #80
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To rayvt, I hadn't thought of it that way. If our investment portfolio can't be counted on to generate 7-8% each year, isn't it better to take from that vs start the pension? What am I missing?


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