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Delayed portfolio withdrawals w/ FIREcalc
Old 07-17-2020, 04:43 PM   #1
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Delayed portfolio withdrawals w/ FIREcalc

If I want to retire in the next couple of years, but can't touch 401K/IRA funds for another ~ten years, what's the best way to use FIRECalc to help with some analysis?
From what I could discern, FIRECalc starts taping portfolio immediately upon retirement.

I've played with the numbers/settings a bit, but I'd like to use existing portfolio, with modest additional savings, but not start withdrawals for a while.
I think I might be missing or misunderstanding a setting on how to do something like this.

I have a military pension and VA disability that covers about 70% of expenses until I can start withdrawals. May work part time to bridge gap until 401K/IRA access.
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Old 07-17-2020, 04:51 PM   #2
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You might be interested to know that there are ways to access 401(k) and IRA funds earlier than you might think. Read up on 72(t), Roth conversion ladders, and the Rule of 55 for three ways to do it.

To answer your question directly, FIREcalc has a "Not retired?" tab (third one from the left, I think) that should do what you want. See image.
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Old 07-19-2020, 12:36 PM   #3
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You might be interested to know that there are ways to access 401(k) and IRA funds earlier than you might think. Read up on 72(t), Roth conversion ladders, and the Rule of 55 for three ways to do it.
I've heard of that, but have not looked into it. Will look it up.

Quote:
To answer your question directly, FIREcalc has a "Not retired?" tab (third one from the left, I think) that should do what you want. See image.
I did some digging, reading the data explanation, and it does what I need it to do. The first X years of the analysis correspond with X years until retirement and then the remaining years (e.g. 40-x) are just retirement years.

Thanks for the help.

Now I just need to get a better handle of expenses (primarily use Personal Capital for that, but open to other suggestions to fine tune when I can actually pull the trigger. I'll dig around the site to see what others do.
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Old 07-19-2020, 01:12 PM   #4
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Thanks for the help.

Now I just need to get a better handle of expenses (primarily use Personal Capital for that, but open to other suggestions to fine tune when I can actually pull the trigger. I'll dig around the site to see what others do.
Sure.

As for nailing down expenses, there are a few ways people do that:

1. Use some sort of tracking software to track all of your expenses for a long while (at least a year I would say). I was very attentive to detail about that and tracked every penny in Quicken for years before FIRE. When you say "primarily", that makes me wonder if you're tracking all of your expenses. Only you get to decide if that's accurate enough, and if whatever spending happens outside of PC is small enough to not matter.

2. Pick a time period, take the difference between your beginning account balances and ending account balances, take your income, and the difference must, by definition, be what you spent. Although sometimes "spending" in that scenario can be investment purchases, which shouldn't count.

3. Estimate by taking a budget and then adjusting it somehow for non-budgeted items. I think this is the least accurate method by far.

In all cases, you'll want to think about any significant changes - plus or minus - that will happen when you FIRE. For me, my income taxes went from my largest expense to pretty much zero because I had a high income but was saving the vast majority of it. Health insurance is another obvious one. Often people find that they spend less on transportation, work-related clothing, and stress-relieving expenses (such as vacations, alcohol, eating out)...the latter because when you're FI and RE, a lot of the stress melts away.
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Old 07-19-2020, 02:21 PM   #5
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Not sure how anchored you are to your location, or the tax status there. We recently moved from a somewhat tax friendly state to a very tax friendly state (for both 62 YO and military retirees). We fit both criteria, so moving was akin to a substantial pay raise. There are numerous threads here WRT geographical arbitrage for retirement purposes.

Tax and COL weren't the key reasons for our relo, but it sure sweetened the deal.

Best.
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Old 07-25-2020, 08:53 PM   #6
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Not sure how anchored you are to your location, or the tax status there. We recently moved from a somewhat tax friendly state to a very tax friendly state (for both 62 YO and military retirees). We fit both criteria, so moving was akin to a substantial pay raise. There are numerous threads here WRT geographical arbitrage for retirement purposes.

Tax and COL weren't the key reasons for our relo, but it sure sweetened the deal.

Best.
Not looking at moving. Virginia gives a large break on property taxes for some disabled vets, plus tuition breaks for dependents. I'm okay paying some taxes if I see what it's going to.
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Old 07-26-2020, 07:03 AM   #7
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Quote:
Originally Posted by alistair View Post
If I want to retire in the next couple of years, but can't touch 401K/IRA funds for another ~ten years, what's the best way to use FIRECalc to help with some analysis?
From what I could discern, FIRECalc starts taping portfolio immediately upon retirement.

I've played with the numbers/settings a bit, but I'd like to use existing portfolio, with modest additional savings, but not start withdrawals for a while.
I think I might be missing or misunderstanding a setting on how to do something like this.

I have a military pension and VA disability that covers about 70% of expenses until I can start withdrawals. May work part time to bridge gap until 401K/IRA access.
FIRECalc will help you determine if you "have enough"... what it won't do is to determine if you have enough that is penalty free for the first 10 years... for that you'll need to do some supplemental analysis.

Do you have taxable account funds equal to 3 years of expenses? 30% * 10 years. Or would a 72t/SEPP fill the gap.... google 72t calculator.
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Old 07-26-2020, 12:25 PM   #8
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Not looking at moving. Virginia gives a large break on property taxes for some disabled vets, plus tuition breaks for dependents. I'm okay paying some taxes if I see what it's going to.
Most States give property tax breaks to disabled, seniors, etc...
About 20-24 States offer free College Tuition.

But you have to look to see if it's worth it to move to a tax free/cheap State, usual reason for not moving is simply nearby family (if they ever visit).
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Old 07-26-2020, 05:00 PM   #9
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as you look at expenses, add estimate for the large one timers, i.e., replacing cars.(dont forget the kids will want them too), maintenance on cars/home, college expenses--tuition maybe covered but room/board, auto insurance. I guestimated each, and set aside cash to cover them. my experience is that I way underestimated my expenses before I retired 3 yrs ago, but had a lot of wiggle room in income and investments so that it didnt tank my retirement. I am also retired military.
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