Originally Posted by jwr62
I think that we wait the 22 months to put husbands pension so that means that we will have to pull from our IRA. I think we could get by with taking 2.5% of the portfolio which would be 27,000.
So this is the question...... when we set up the 403b into a IRA should we have one years worth in cash or in a short term bond or where do we have it..... I know of a 70 year old that pulls money for home equity line of credit when the market has turned down.
I am in the learning stages of heading into retirement in 10 months.
hope to hear.
If I understand you correctly this is what you are asking:
"Husband has a pension coming and we have decided to wait 22 months before collecting on it. In the meantime, we will rollover his 403b into a self directed IRA. We will take 2.5% from the IRA portfolio. Should some of this money be invested conservatively in short term instruments to draw from until the pension kicks in?"
Some important information needed. First what are your ages? If you withdraw any money from a traditional IRA before 59 1/2 you will not only pay ordinary income taxes on the withdrawal but also a 10% penalty. Not good. The withdrawal rate of 2.5 % is fine but is there any money in a taxable account you could use? Perhaps do some tax loss harvesting from equity funds in taxable to minimize taxes?
I would not draw from a HELOC in retirement. Accumulating more debt with no earned income seems like a bad plan.
BAsed on your information, it looks like the value of the 403b is $1,080,000. Perhaps an asset allocation of 45/45/10 ( equities/bonds/cash) would be acceptable to you ....but again a lot depends on your ages/ risk tolerance, debt situation, taxable accounts, etc.
Another option might be to utilize the "72t rule" allowing you to make early IRA withdrawals penalty free if you are under 59 1/2 but this is a complicated process which should be discussed with a tax professional before implementing.