Bestwifeever
Moderator Emeritus
- Joined
- Sep 17, 2007
- Messages
- 17,774
I've been reading this forum for more than a year and learned so much from so many--thanks! I have a couple of stupid question that I haven't seen the answers to within this forum (and haven't done much research outside of it!), so here goes, oh masters of the FIREverse:
Retirement is looming in the next two years, close enough to start the worrying machine. DH (now 58 ) and I (57) now have just over $1.2mil in 401k, all before tax: 25% in bonds/moneymarket, 75% in several stock funds. Also have a pension that would pay $20K/year in two years, and also plan to collect SS at 62 for each of us. Mortgage would be $225K. Health ins. would be continued through DH's employer (we pay 100% but expect it would be more reasonable as a group plan--and have a couple of pre-existing conditions). We plan to sell our current house and move to a small town in the midwest, buying a replacement house with the equity from the current house. We will move the 401k for the most part into Vanguard or Fidelity funds (which is where the 401K is invested right now anyway).
With 4% withdrawal rate on $1.2mil (at today's value) and pension and eventual SS, I don't anticipate any problem living below our retirement income, which will be pretty much equal to our current income--so here come the stupid questions.
We have never had stocks or bonds outside of retirement accounts, so we are blissfully ignorant about the mechanics of how they work in terms of generating income instead of gains being reinvested. Do typical retirement funds (not funds for saving for retirement, but for using in retirement) generate dividends that are sent to you periodically? Or do you have to sell holdings to generate income? If you start out with a couple of years' worth of $ in a money market fund, how do you replenish that? And in terms of taxes--are they withheld as or do you make quarterly payments? Are taxes due only on withdrawals as we take them? Is there a book you could recommend about how to access your retirement $?
Thank you in advance--
Retirement is looming in the next two years, close enough to start the worrying machine. DH (now 58 ) and I (57) now have just over $1.2mil in 401k, all before tax: 25% in bonds/moneymarket, 75% in several stock funds. Also have a pension that would pay $20K/year in two years, and also plan to collect SS at 62 for each of us. Mortgage would be $225K. Health ins. would be continued through DH's employer (we pay 100% but expect it would be more reasonable as a group plan--and have a couple of pre-existing conditions). We plan to sell our current house and move to a small town in the midwest, buying a replacement house with the equity from the current house. We will move the 401k for the most part into Vanguard or Fidelity funds (which is where the 401K is invested right now anyway).
With 4% withdrawal rate on $1.2mil (at today's value) and pension and eventual SS, I don't anticipate any problem living below our retirement income, which will be pretty much equal to our current income--so here come the stupid questions.
We have never had stocks or bonds outside of retirement accounts, so we are blissfully ignorant about the mechanics of how they work in terms of generating income instead of gains being reinvested. Do typical retirement funds (not funds for saving for retirement, but for using in retirement) generate dividends that are sent to you periodically? Or do you have to sell holdings to generate income? If you start out with a couple of years' worth of $ in a money market fund, how do you replenish that? And in terms of taxes--are they withheld as or do you make quarterly payments? Are taxes due only on withdrawals as we take them? Is there a book you could recommend about how to access your retirement $?
Thank you in advance--