OK, let,s give this a try...

[YFTUNA]

I am 52 and DW is 51. Plan was always to replace income, no thought of spend. Realized mistake way too late. Current situation:

$350k annual compensation
$348k debt, all in a mortgage, $100k equity
$10k/mo expenses
$1.9M 401k and IRA,s
$425k deferred comp. 2014 $$$, (100k at 55 yrs old, rest over next 9 years)
$225 cash balance (forecast balance to be $325k at 55 yrs old)
Expect approx. 5k/mo SS and 3 small pensions at 67 yrs old
All investments heavy in equities, about 30% in utilities.
2 children, one out of college, other senior, college covered thru cash flow

Plan was to replace income, at $350k - savings w/ lesser taxes (I hope) what should be my plan?

At 55 I will receive $450k if I FIRE plus $30k for next 9 years. 401k and IRA,s will be $1.9M plus 2.5 yrs of contributions and appreciation (hopefully) and 12 years later an income stream of 5k/mo plus/minus SS uncertainties. Should I go for income stream (annuities) and guarantee cash flow or play the appreciation game and have a stash for the kids and charities?

 

[YFTUNA]

Addendum to...OK Let,s Give This A Try, We currently are saving $100k/yr which will give us a stash of approximately $3.0M at 55 yrs old (God willing)

 

[ProspectiveBum]

You said that you are currently spending 10k a month. If you expect to have similar expenses of 120k per year in retirement, I'd say you're in pretty good shape. You're right at a 4% SWR with $3M.

Have you plugged all your numbers into FireCalc? I doubt you'll get too many votes for going the annuity route, particularly if a reasonable amount of your retirement income is already from a deferred comp. plan and SS (which are themselves annuity-ish).

 

[wingfooted]

What is tax status of the deferred income ? Pay when received ? Do you have state income tax ?

It appears most of your savings will be in 401K and IRA upon retirement ?

It is a popular assumption that the deferred income streams will be taxed at a low rate after retirement. In your situation, where you are going to be withdrawing six figures per year from tax deferred accounts - that may not be the case. Have you looked closely at post FIRE tax burden ? What is the impact ?

Is there a plan to pay off the mortgage in the next three or four years ?


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[wingfooted]

Addendum to...OK Let,s Give This A Try, We currently are saving $100k/yr which will give us a stash of approximately $3.0M at 55 yrs old (God willing)

I think the term you are looking for is Inshala (god willing) ?


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[pb4uski]

You're probably ok, but run your situation through Firecalc or Quicken Lifetime Planner to verify.

 

[YFTUNA]

You said that you are currently spending 10k a month. If you expect to have similar expenses of 120k per year in retirement, I'd say you're in pretty good shape. You're right at a 4% SWR with $3M.

Have you plugged all your numbers into FireCalc? I doubt you'll get too many votes for going the annuity route, particularly if a reasonable amount of your retirement income is already from a deferred comp. plan and SS (which are themselves annuity-ish).

Thank you for the advice. Have not run the Firecalc but will soon. Good advice on the annuity-ish aspect of some of the retirement income. I need to get my head around how to monetize the 401k and Ira's each year as they are the bulk of theretirement stash.

 

[YFTUNA]

What is tax status of the deferred income ? Pay when received ? Do you have state income tax ?

It appears most of your savings will be in 401K and IRA upon retirement ?

It is a popular assumption that the deferred income streams will be taxed at a low rate after retirement. In your situation, where you are going to be withdrawing six figures per year from tax deferred accounts - that may not be the case. Have you looked closely at post FIRE tax burden ? What is the impact ?

Is there a plan to pay off the mortgage in the next three or four years ?


Sent from my iPad using Early Retirement Forum

Thank you for the insight. You are correct about the mortgage. Plan was to only be In house for 5-7 years but 2008 economic downturn changed that plan. I have approximately $200k in post tax saved in the 401k and can leverage that or I may just shift savings to paying off mortgage. Either way, will not have a mortgage when retired. I do like the house and neighborhood so have no issue spending future there (plus FL is state tax income free). Still a 50/50 chance for a corporate move and if right challenge, may accept (would solve mortgage issue).

As for tax burden, plan was always to defer taxes now for the future of lower earnings. Currently paying in excess of 60k annually in federal taxes so plan will play out but still the tax burden can be substantial. Question...is there a Roth conversion option after retirement to help this situation? Looked converting all IRA's and 401k's to Roth a few back, but the money savings did not work out.