I would like to do a three bucket strategy in retirement. We only have about $40K in cash now and would expect that to be about the same in three years. I'd like $120K-$150K cash to fund my first bucket. As far as I see it, the only options to raise cash are:
1) Drop 401K contributions except for employer match:
Adds only around $65K in three years after taxes.
2) Wait until retirement and withdraw big $$$ from 401K:
(not sure what tax problems are associated with that)
3) Sell off some of my long term taxable investments:
Try to stay in the lower two tax brackets to take advantage of 0% tax.
We will have about $2M net worth when I retire:
401K - $1.5M (half stocks / half fixed)
Roth - $150K
Taxable - $250K
HSA - $100K
I make around $90K per year and invest more than half of it. I don't really see how to get my $150K cash without a huge tax hit. Maybe I can't get there in the next three years but it doesn't hurt to try.
Suggestions
1) Drop 401K contributions except for employer match:
Adds only around $65K in three years after taxes.
2) Wait until retirement and withdraw big $$$ from 401K:
(not sure what tax problems are associated with that)
3) Sell off some of my long term taxable investments:
Try to stay in the lower two tax brackets to take advantage of 0% tax.
We will have about $2M net worth when I retire:
401K - $1.5M (half stocks / half fixed)
Roth - $150K
Taxable - $250K
HSA - $100K
I make around $90K per year and invest more than half of it. I don't really see how to get my $150K cash without a huge tax hit. Maybe I can't get there in the next three years but it doesn't hurt to try.
Suggestions