New Here

[Sarah in SC]

Hello all, I've been lurking here for a while, on and off.* Am an avid reader of retirement-related books for years and enjoy reading about the soon-to-be-RE as well as envious of the already RE.*

I am 34, husband is 42. Have $50k in retirement, no debt except mort of $50k to be pd off in 5 yrs, annual income of $116k, expenses of $36k yr.* Will max out 2 401(k)s in 2006 (just eligible) and Roths, plus remainder of savings in brokerage acct.* Needess to say, no kids.*

Perhaps of interest is that through my interest in retirement planning, I went to work for a CFP (no commission, of course) that does consultative wealth management and am now working on my CFP certification.* I'd like to use the CFP to go into business with another CFP candidate in my hometown when we finish the program (several years away).*
Two questions I'd like input from the sages...

I'd like to shoot for his retirement at 50-55, mine a little further out (age difference)--I've run most of the calculators and my real concern is how we'd need to use taxable dollars first.* I work for an extremely conservative 69 yr old planner who is an family friend and I trust his advise thus far, but he's no fan of early retirement, I assure you!* He's a "die with your boots on" kinda' guy.

Other question is that eventually I'd like for the business to evolve into a part-time sort of thing--where we each worked part of the year and took off part of the year.* Because a lot of financial planning is doing the original plan and then reviewing it 12 months later, I think this type of schedule would work if it was the right partner.* Is this a pipe dream?* We know of a boatyard where the two owners detested each other and each worked for a month at a time so they wouldn't have to see each other--and it actually worked pretty well!*

I'm not known for brevity, but there you go!* Thanks for any help hurled my way!* * *Sarah

[brewer12345]

Hi, mclesters, welcome to the board.

Couple of thoughts:

- If most of your assets are in tax-deferred accounts, you can still tap them prior to age 59 1/2 via a 72(t) exemption. You'd still have to pay income taxes on withdrawals, but you wouldn't pay a penalty. There are rules that would have to be followed, but its not a big deal.

- I think a part time planning business makes a lot of sense. I am thinking about it myself as a possibility, depending on where my career goes in the next several years. I believe we have a poster (NFS) that does exactly this.

[Nords]

Quote:

Originally Posted by mclesters I've run most of the calculators and my real concern is how we'd need to use taxable dollars first.

Welcome to the board, Sarah. What's the concern about using taxable dollars first? The tax-deferred/free accounts will compound that much longer and your taxable profits will be cap gains & dividends at attractively low rates, right?

[Sarah in SC]

Thanks for the comments. Mostly my concerns are that the 72(t) rule won't provide enough income if I use retirement accounts and that using the taxable accounts first is at best an inexact program, ie: do I "use-up" all of those funds before tapping the retirement funds?
*
It really is just my INTP trait for wanting to have all the information before it is available.* Freewheeling husband says just save the money now and it'll all work out, but I want to know what we'll be using on November 12, 2019 for spending money.* * *

[SteveR]

Quote:

Originally Posted by mclesters Mostly my concerns are that the 72(t) rule won't provide enough income if I use retirement accounts and that using the taxable accounts first is at best an inexact program, ie: do I "use-up" all of those funds before tapping the retirement funds?

The taxable portion should be the first to go so your pre-tax stuff can continue to grow tax free. You may want to cut back somewhere to get more in your after tax accounts or stash some cash in some short term MM or CDs that you can tap when you want as long as your needs are less than a couple of years.

The 72(t) has three options you can take for distributions but once selected you are locked in (with one exception). Also, this distribution will be taxable as income not as capital gains or dividends so plan on the higher tax bill if you do a 72(t). A home equity loan to yourself might make sense depending on your needs and desires.

IMHO, the after tax stuff is there so you can use it before the pre-tax stuff. Don't be afraid to use it.

[Repairmanjack]

I agree with Steve R and am doing that just now - living off my taxable savings. I have found that I am spending far less than I did when I was working, so my taxable savings are lasting much longer than I imagined. (I thought I'd be SEPPing by now, but it looks like I won't have to!) If you get your house paid off, you might find this the case also. Down the road you could look into doing a reverse mortgage on your house for extra income to help with inflation. The 'no kids' bit really helps!

[Calgary_Girl]

Hi Sarah! Welcome to the board.

Our plan is to RE and live off of our taxable savings also, while leaving the retirement accounts alone in order to keep growing. In Canada, we have to start withdrawing from our RRSP's (similar to IRA's in the States) by age 69.

[retire@40]

Quote:

Originally Posted by Calgary_Girl In Canada, we have to start withdrawing from our RRSP's (similar to IRA's in the States) by age 69.

How appropriate, for Canada.