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Setting up a Withdrawal Plan
Old 09-28-2014, 11:18 AM   #1
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Setting up a Withdrawal Plan

I am beginning to plan for withdrawing from my retirement assets in a few years.

I will retire with 4 income streams - one from account withdrawals, 2 pensions and SS.

This part of the journey (spending) rather than saving, is new to me.

I will draw one of the pensions immediately (in order to leave with healthcare benefits). The other pension grows the longer I wait to start taking it, until reaching the max amount when I reach 65.

Of course, the SS amount grows larger too, the longer I wait to start taking it.

Based on these facts, it seems I should try to first live on 2 of the income streams - the one pension and account withdrawals, in the early years of retirement, then wait until the later years of retirement to take the other two.

In this way, it seems I can take more from my account nest eggs in the early years, while having steady, secure income in the later years.

In light of the US Treasury's decision this summer, I also expect that my 401K plan will soon roll out an option to set up a deferred annuity.

Are there any good books or websites or articles that discuss this type of planning? I am so used to seeing info on wealth accumulation, this other topic seems less common.

Thanks!
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Old 09-28-2014, 11:55 AM   #2
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TresBelle65,

You think like I do!

Your plan sounds very similar to that of DW and mine. Start with 1 pension (which is heavily subsidized for early retirement). Take second pension when it maxes out at 65 and delay both SS until 70. Supplement when necessary from WD of investment assets.

I have found the I-Orp tool useful to model and optimize over a lifetime the particular withdrawal and transfers of assets. There are 2 caveats however with the I-Orp results that you should be aware of:
#1) It does not explicitly model the pre 59 1/2 10% early withdrawal penalty
#2) It assumes smooth consistent annual returns (unless Monte Carlo option is used)

-gauss
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Old 09-28-2014, 12:30 PM   #3
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Are you sure you have to start drawing the pension to get the retiree healthcare? I was able to start retiree HC at age 55 without starting my DB pension (which would have incurred a significant reduction, exceeding the actuarial reduction).

Some employers define "retirement" by accumulated service and not whether you are taking a pension.
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Old 09-28-2014, 01:16 PM   #4
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Quote:
Originally Posted by jebmke View Post
Are you sure you have to start drawing the pension to get the retiree healthcare? I was able to start retiree HC at age 55 without starting my DB pension (which would have incurred a significant reduction, exceeding the actuarial reduction).

Some employers define "retirement" by accumulated service and not whether you are taking a pension.

My casual reading of the Federal Employee retiree health care system implied to me that you could not have a gap between service and pension checks unlike many private plans. Not sure about OP's situation however.

-gauss
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Old 09-28-2014, 01:27 PM   #5
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yes, it is because I am a federal employee.
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Old 09-28-2014, 03:52 PM   #6
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I am a federal retiree (retired almost 3 months ago). I am retired under the old CSRS DB pension plan. I am almost 57 yrs old. I will also begin drawing a military reserve retirement in 3 yrs, at age 60. Until then, my wife will continue to work. When she stops working at age 55 (my age will be 60), my military retirement that begins will essentially just replace her working pay...so no net gain there, besides the fact that she doesn't go to work anymore. She has no pension, but is contributing 30% of her pay to her 401k. Because I'm under CSRS, I won't draw much SS, only around $200-$250 per month. I do have the required "quarters" to draw the bare minimum but no more than that. Wife will qualify for her own SS when she reaches the age to file for that. I have not started taking any withdrawals from my TSP yet, and don't plan to anytime soon, but it's there if needed. Even with a mortgage, we are able to live just fine on my CSRS pension and her paycheck, and will continue to so after she stops working & I start drawing my military retirement. At some point, we'll begin taking withdrawals from TSP & her 401k, but for now, there's no real need to do that. Best wishes in your upcoming federal employee retirement!
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