We are doing a kitchen remodel this spring. We are 68 & 66, so no RMD's yet. I know this is a subjective question but would you take the money out now at Mkt High or wait until needed? I'm leaning towards taking our gains now, even if we don't need it for a few month's. Looking at taking out between 25k and 40k. Don't need major changes so this might be high. From what I have read remodels can range from 25k to 50k. I would think we would fall in the lower range. This amount should not rise our tax rate. To fill in we could take credit card loan at 0% interest for a year. Just would like some opinions.
When to Withdraw From IRA
- Thread starter Idnar7
- Start date
Do you have access to HELOC? Perhaps its cheaper to let the markets gain +6,7,8% and use a HELOC for the remodel. Save money by doing some work yourself. Remodels usually cost 1.5x so if you think it'll cost 20k, it will actually be 30k.
What other options do you have?
I'm happy to sell at a market high, that's the dream! The trouble is, are we at a peak or will the market continue higher. We don't know.
As far as the withdrawal part, you could sell stocks in the IRA and hold the proceeds in cash or bonds still within the IRA. Then withdraw only when you need to.
I might lean to selling $25k now (or over the next few months) and then selling more if it turns out the remodel costs more than that. Either way, saved as cash in the IRA until needed.
I'm happy to sell at a market high, that's the dream! The trouble is, are we at a peak or will the market continue higher. We don't know.
As far as the withdrawal part, you could sell stocks in the IRA and hold the proceeds in cash or bonds still within the IRA. Then withdraw only when you need to.
I might lean to selling $25k now (or over the next few months) and then selling more if it turns out the remodel costs more than that. Either way, saved as cash in the IRA until needed.
CRLLS
Thinks s/he gets paid by the post
I don't think anyone here has a crystal ball. What you are asking is to "time the market" which most here do not agree with. One never knows the future.
I assume that 25-40K is not a major part of your retirement stash. So I'd say follow Nike and "Just do It". You have nothing to lose but possible gains, which will be compensated by the gains on the rest of the stash. Waiting to take the money out will possibly increase the cost of the remodel as prices of material and labor increase. Lock in your pricing early. And if the market goes down afterwards, pat yourself on the back for being so proactive.
Actually, I think it makes no significant difference either way, given that it is a "now or later" decision and not a "should I do it" question. We just bought a new-to-us vehicle based on the same analysis. The purchase was inevitable and timing the market was impossible. So why not "Just do It", which we did.
I assume that 25-40K is not a major part of your retirement stash. So I'd say follow Nike and "Just do It". You have nothing to lose but possible gains, which will be compensated by the gains on the rest of the stash. Waiting to take the money out will possibly increase the cost of the remodel as prices of material and labor increase. Lock in your pricing early. And if the market goes down afterwards, pat yourself on the back for being so proactive.
Actually, I think it makes no significant difference either way, given that it is a "now or later" decision and not a "should I do it" question. We just bought a new-to-us vehicle based on the same analysis. The purchase was inevitable and timing the market was impossible. So why not "Just do It", which we did.
joylesshusband
Recycles dryer sheets
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Take the money now. The more - the better.
This way, if equities go up, you are sure to miss all the gains, which would ultimately result in having lower RMDs in a few years.
And if the market goes down later in the year, I don't want you to have any sort of second thoughts about this remodel, so this will guarantee that you will pay a nicely sum of 2018 income taxes. This helps both with fueling the economy, and with the solvency of the SS, which altogether has a positive effect on my own retirement.
Win-win as they say...
This way, if equities go up, you are sure to miss all the gains, which would ultimately result in having lower RMDs in a few years.
And if the market goes down later in the year, I don't want you to have any sort of second thoughts about this remodel, so this will guarantee that you will pay a nicely sum of 2018 income taxes. This helps both with fueling the economy, and with the solvency of the SS, which altogether has a positive effect on my own retirement.
Win-win as they say...
jazz4cash
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
I would take the money out of equity/bond investments but leave it in an IRA until needed. I would use an IRA money market or online savings account to hold the cash until needed. If the withdrawal would bump me into the next tax bracket, I would split the total over 2 years and/or use a bridge loan. I'm planning to have some work done so I secured a larger HELOC as a contingency and will use 0% line of credit from Home Depot.
DEC-1982
Full time employment: Posting here.
Selling when the market is relatively high.
Selling at relatively low tax rates.
Reducing RMD.
Sounds good. Trying to find the PERFECT time to sell may not be possible.
Selling at relatively low tax rates.
Reducing RMD.
Sounds good. Trying to find the PERFECT time to sell may not be possible.
+1, enjoy your remodeled kitchen!
Koolau
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
How does all this fit with your overall tax management plan? Are you taking money from IRA rather than taxable to "get rid" of some IRA money before RMDs kick in? Can you take some now and some Jan 1 next year to split the tax years? Lots of questions and no advice. As far as timing the market, that's probably a fool's errand (no offense!). Just make certain whatever you do, it fits into your overall strategy of spending down your nest egg over time in the most efficient manner possible.
If the markets are the issue, I'd take half now and half when you need the rest. But that's just me. YMMV
If the markets are the issue, I'd take half now and half when you need the rest. But that's just me. YMMV
jazz4cash
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Dow down 666 (yikes) as I type. A day like today is reason enough for me to not use equities for any expenses planned for the next 12-24 months. If I was trying to time my withdrawal from equity assets I'd be caught between selling now to guard against further declines vs trying to hold on to recover. I'm using CDs and Online Savings accounts (1.3-3%) to meet these needs.
jollystomper
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
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It depends on what your starting point is. The markets are still up over 3% YTD after a very good 2017, so from a long term perspective one is still ahead taking the money out now.
To the OP, I would enjoy the gains I have already and take the money out. If the market falls, you are still ahead. If it goes up, so what? You still have other money in the market. Should a 10% gain between now and May, what you might have missed on 25-40K would not be anything to get upset over.
