Join Early Retirement Today
Thread Tools Search this Thread Display Modes
ER...the early years questions
Old 06-08-2015, 11:24 AM   #1
Dryer sheet wannabe
JohnKeating's Avatar
Join Date: Jun 2015
Posts: 13
ER...the early years questions

Here is my early thinking for how to handle the years between ER and RMDs. I'm looking to minimize taxes down the road while maximizing growth. This is probably a given but I figured I'd state the goal.

For reference here's our current standing for ER (removing kids from this picture as by ER they should be taken care of by other accounts).

Today: Me: 40, DW: 49 (retired)
Taxable: $175,000
My 401k: $575,000
My Roth IRA: $50,000
DW 401k: $400,000
DW tIRA: $80,000

I plan to retire at age 52. At that point DW will be 61.

At retirement I hope to start moving DW's (starting with her as she's older) tIRA to a Roth IRA and then start working on her 401k to Roth. I'll move the max amount per year possible to stay in the 15% tax bracket. We'll live off our taxable account @ 15% LTC (We are planning to increase our % of savings allocated here going forward for this reason).

Also, when DW turns 62 she will file and suspend her SS and I will claim the spousal benefit. This will hopefully continue until I turn 72 and start collecting on my SS.

Hopefully, by the time I turn 59 1/2 we'll have all her accounts converted (not expecting it to be done in 7 1/2 years but we'll continue the process) over to Roth and I can start the process with my 401k. At this point we can start using her Roth as another income stream if the taxable account is getting low.

I do plan on staying with my company until I retire at 52 so there is always the possibility of doing a 72t to access my 401k early if needed.

I'm not looking into the details as of yet because we're still 12 years away and a lot can change by then but I would like to have a general understanding of what it might look like at that point given what we know today.

So, from a high level is this a decent plan? Other thoughts/suggestions?


JohnKeating is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 06-08-2015, 12:32 PM   #2
rodi's Avatar
Join Date: Apr 2012
Location: San Diego
Posts: 11,474
Your SS options are wrong.

For you to collect on your spouse's benefit you must be of full retirement age. (You may be able to collect when you're 62, but NOT when she is 62).

Having her file and suspend at age 62 serves no purpose... She is not collecting her reduced benefit - you're not of SS age.

Also, any filings prior to full retirement age (67 for you guys) will reduce benefits going forward.

My husband is almost 10 years older than me, but I was the higher earner.... we looked at this fairly closely in the past and I didn't see any way to take advantage of a file and suspend option. That said - if you have kids who will still be minors when she turns 62 (unlikely unless adoption were involved since women have this darn bio-clock.) you might be able to collect child benefits for minor children of SS retirees. We are taking advantage of this.
Retired June 2014. No longer an enginerd - now I'm just a nerd.
micro pensions 7%, rental income 18%
rodi is offline   Reply With Quote
Old 06-08-2015, 12:40 PM   #3
Dryer sheet wannabe
JohnKeating's Avatar
Join Date: Jun 2015
Posts: 13
Thanks Rodi,

I was assuming I could collect as long as I wasn't working. Thanks for setting me straight. As you said since this isn't possible then there is no benefit.

I am the higher earner anyhow so the impact is minimal but it would have been nice.

JohnKeating is offline   Reply With Quote
Old 06-08-2015, 01:07 PM   #4
Recycles dryer sheets
Join Date: May 2014
Location: Yuma AZ
Posts: 270
For timing of withdrawals from tax deferred accounts an aspect to consider is the difference between your income tax and capital gains tax rates.

My opinion for our current tax-deferred assets we intend to continue to hold for which we anticipate an increase in value is that we are better off distributing the assets now, in such annual amounts as to not jump our tax bracket and let future appreciation become capital gains vs normal income if left inside the account and distributed in the future.

An aspect of this opinion is that I anticipate a significant increase in inflation as politicians attempt to cope with off the books debt coming due…
unno2002 is offline   Reply With Quote

Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off

Similar Threads
Thread Thread Starter Forum Replies Last Post
How to retire early — 35 years early RonBoyd FIRE and Money 135 01-29-2015 10:23 AM
Hi I am Retired for 20 years and still have questions… coachjerry Hi, I am... 0 02-24-2011 02:40 PM
Early Retirement Need Help Lots of Questions diggs25413 FIRE and Money 7 01-31-2009 12:51 AM
Military medical questions and "early retirement": help me write a FAQ archive post Nords Health and Early Retirement 3 09-01-2008 07:34 PM

» Quick Links

All times are GMT -6. The time now is 03:40 AM.
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2020, vBulletin Solutions, Inc.