Hello and Thanks In Advance....

[Spike Forehand]

Hi All -


Really looking forward to diving into some of the info here and am sure it will be hugely helpful as I start to plan the next phase of my life.


Here's my specifics:

• 53 yo
• Wife is SAHM 50
• Two daughters in 9th and 10th grade. Headed for college, older daughter talks about med school. I will be 60 when both finish undergrad.

Current assets:
[REDACTED THE OVERSHARE OF INFO]

I have talked to a couple of financial guys and had some projections run for retiring in 5 years at 58. Both show me as being in a decent spot for that.

In addition to preparing as best I can for that, I also want to look at earlier opportunities, as I am growing pretty tired of the corporate grind and wouldn't mind doing something different with the latter half of my 50's.

So - I'm working on various scenarios/what-ifs:

• Retire at 58 (no severance)
• Retire sometime between 55 and 58 if a severance is offered
• What to do if severance comes sooner than 55
• Retire sooner and replace part of my income - i.e. what % of my current income would I need to replace via a part time job & wife re-entering the work force to maintain my current lifestyle if I went at 55 or 56? (Wife has stated that she wants to re-enter WF once daughters are in college)

55 is kind of a key milestone as that is the age I need to hit to be eligible for the retiree health care plan.



I won't ask the big "Can I Retire" question just yet, as I recognize that I need to get a better handle on my current and projected expenses, but I have a couple of related questions right now that perhaps someone here knows the answer to:

• If I were to go from making current salary to living off retirement withdrawals how is that treated when qualifying for student aid (aka "EFC" part of the FAFSA stuff) mid-way through my daughters' college years?
• What are the vehicles to investigate for avoiding early withdrawal penalties before age 59 1/2?

Any other thoughts on the above are hugely appreciated.


Thanks -

[38Chevy454]

Welcome to the forum. Seems you are doing pretty good on the path you are on, just survive the corporate BS long enough.

Stay working until 55 at least, get the health ins benefit, and you can (possibly, check plan rules) start tapping the 401k without penalties. Or worse case use 72t withdrawals.

At 55 in 2 years, severance of 3 x 30 = 90 weeks! That is like 1 year and 9 months of pay. That would certainly be a lot of incentive to take a package. It would get you very close to your target of 58 years equivalent, about 1 year less if assuming no severance at 58.

Is the pension if you take payments able to start immediately or have to wait until age 60 or more? That could have an effect. On the lump sum just have to figure out what discount rate they are using vs monthly checks.

No idea how retirement withdrawals affect the student aid, someone else with experience in this area can offer helpful info.

As you have identified, the key is to understand and control your expenses. Then figure out what combination of income can give you that level. If it works out mathematically then you can decide to retire.

[Big_Hitter]

Hi Spike - I think the max plus the makeup is $24K a year


Does or did your company have a defined benefit plan?

[Big_Hitter]

Quote:

Originally Posted by Spike Forehand What are the vehicles to investigate for avoiding early withdrawal penalties before age 59 1/2?Any other thoughts on the above are hugely appreciated. Thanks -

Your 401k plan may specify an "early retirement date" prior to 59.5 - that way you can avoid the 10% hickey

[MRG]

Quote:

Originally Posted by Spike Forehand Hi [*]What are the vehicles to investigate for avoiding early withdrawal penalties before age 59 1/2? Thanks -

A 72t will always work, but slightly inflexible.

You said something about stock grants. Depending on what you mean (options probably don't work, my ESOP did) you may be able to do an NUA on those. Depending on your cost basis, vs. price when you sell you may find that attractive.

Rule of 55 in your 401k. There are 2 parts to this.
1. Check your summary plan description (SPD). It needs to have verbage in there. Something to the effect of it qualifes for withdraws if your 55 or older and terminated from service. Mine fell under hardship withdrawals.
2. You must be able to access these funds. Some members report that their ability to make withdrawals is very limited. The one that seems common is it's a one time deal as you roll it over. Not all are like that mine allows for monthly withdrawls. You don't pay the 10% penalty, but they withhold 20% for the IRS.

Welcome to the group, you appear to be doing well on your journey.

Sent from my SAMSUNG-SGH-I337 using Early Retirement Forum mobile app

[Spike Forehand]

Quote:

Originally Posted by 38Chevy454 Is the pension if you take payments able to start immediately or have to wait until age 60 or more? That could have an effect. On the lump sum just have to figure out what discount rate they are using vs monthly checks.

From what I can tell yes - I can take lump sum immediately or take the annuity starting immediately. Will look at the fine print and also talk to others who have recently retired with the same deal.