I have some questions about funding ER starting at 51 and specifically about good strategies for dealing with an inherited IRA. I am expecting to no longer work full-time after the end of this year.
I have about $300k in a taxable account at Vanguard (VTSAX, VTIAX, and Intermediate-Term Tax Exempt). I also now have an inherited IRA worth about $800k. My overall asset ratio, including my 401k and personal IRA, is about 70/30 stocks.
A generous estimate of my annual spend is about $80k (nearly double my fixed expenses). It's possible I may work part-time at my same Megacorp for a few more years (maybe making, I dunno, $50k?), mainly to keep health care. I already receive about $11k from DH's pension (non COLA). I do not have any terribly expensive hobbies, though travel will probably be a big portion of it (and traveling comfortably, since I'd be alone for a lot of it).
In another eight years, my own 401k and IRA will be available (currently together worth about $600k). I will also have my own non-COLA pension at 65 for about $25k. And I'm assuming I'll have SS, probably starting with my survivor benefits and then switching to my own, which will be in the neighborhood of $20k-$30k/year (current value) depending on whether I start early or wait.
On the inherited IRA, the RMDs will start next year at about $26k. It's about 60% invested in Wellesley and the rest in VTSAX. (spouse was 55 at death, btw)
My thought had been that the inherited IRA should be touched as little as possible, other than the RMDs, even though I can withdraw from it without incurring the 10% penalty. My spreadsheet seems to indicate that the RMDs will remain pretty low, relatively speaking, for the early years.
* Should I be making more of an effort to withdraw from the inherited IRA beyond the RMDs and reinvest the money into my taxable account? I ask this because I've read people talking about how gains in IRAs are just then taxed as ordinary income when you withdraw, versus at CG rates as the gains are distributed in a taxable account. Is it just all about the tax brackets when considering how to handle this?
* Should I not bother reinvesting dividends in the inherited IRA, and use those to fund the RMDs?
* Should I then reinvest the dividends in the taxable account? (I had figured I would just let those go to the settlement account, either for expenses or for rebalancing.)
I have no direct heirs, and my mortgage is about $2,100 a month in a very HCOL area (yay for buying and holding!), and I don't intend on selling the house soon, but there's a pile of equity in it as well. I have no other debt.
I recognize that I am in a very good position despite being in a very bad position, so to speak. I have no desire to leave a huge estate for nieces and nephews and cats
, but of course since I am now on my own I need to be mindful of perhaps having to spend a large chunk in my later years on assisted living, nursing care, etc. Or around-the-world cruises if I find myself still very healthy at 80!
If this were you, what would you do? I'm interested in all ranges of opinions.