conversationalphrase
Recycles dryer sheets
- Joined
- Jan 8, 2017
- Messages
- 264
What a great board - I found it a few days ago and have been doing lots of reading and have learned a lot. There are clearly many intelligent and well spoken people here. I'm mainly checking in and saying hi but I would appreciate any comments on what to me seems like an obvious but perhaps uncommon planning scenario.
Background: married, both are 59, planning to retire at 62. Will have two pensions, a lot of 401k and IRA money and virtually zero non retirement savings. We are debt free. I've spent a lot of time with Fidelity's retirement planner, and also recently the Pralana retirement calculator.
After retirement we could cover all essential expenses with the pensions and social security if I chose to start it. We want to travel extensively for 8-10 years after retirement, meaning high non-essential expenses, and then expect to slow down. Hopefully our health will support this - we are both healthy with no medical conditions now and good family health histories, but since everyone's health declines with age we want to enjoy ourselves sooner rather than later.
If we withdraw heavily, 8-10%+ per year, from our 401k/IRAs and defer social security to age 70 the calculators show we are better off than taking SS earlier and reducing our withdrawal rate. Once SS kicks in, the withdrawal rate would go down to 1-2%. I know that 10% per year for 8 years would leave almost nothing left, unless we get reasonable market returns, but if the market goes south we can always change strategy. The calculators show we'd have about 40-50% of savings left at age 70, assuming balanced investments in a significantly below average market. This seems to make sense, but is much different than the 3-4% safe withdrawal rates many seem to suggest. Again it is a dynamic situation so I can always adjust real time if it doesn't work out.
A side benefit is getting the IRA/401k balances spent down by age 70 the MRD isn't more than needed. Also I may do some Roth Conversion between 62 and 70 to optimize taxes.
Comments?
Background: married, both are 59, planning to retire at 62. Will have two pensions, a lot of 401k and IRA money and virtually zero non retirement savings. We are debt free. I've spent a lot of time with Fidelity's retirement planner, and also recently the Pralana retirement calculator.
After retirement we could cover all essential expenses with the pensions and social security if I chose to start it. We want to travel extensively for 8-10 years after retirement, meaning high non-essential expenses, and then expect to slow down. Hopefully our health will support this - we are both healthy with no medical conditions now and good family health histories, but since everyone's health declines with age we want to enjoy ourselves sooner rather than later.
If we withdraw heavily, 8-10%+ per year, from our 401k/IRAs and defer social security to age 70 the calculators show we are better off than taking SS earlier and reducing our withdrawal rate. Once SS kicks in, the withdrawal rate would go down to 1-2%. I know that 10% per year for 8 years would leave almost nothing left, unless we get reasonable market returns, but if the market goes south we can always change strategy. The calculators show we'd have about 40-50% of savings left at age 70, assuming balanced investments in a significantly below average market. This seems to make sense, but is much different than the 3-4% safe withdrawal rates many seem to suggest. Again it is a dynamic situation so I can always adjust real time if it doesn't work out.
A side benefit is getting the IRA/401k balances spent down by age 70 the MRD isn't more than needed. Also I may do some Roth Conversion between 62 and 70 to optimize taxes.
Comments?