coltsfan53
Dryer sheet aficionado
Like many of us here, my wife and I are extremely interested in early retirement. I have gone through the excellent FireCalc exercise and have a few stats and questions so some of the Pros here can shed some light on the exciting, yet somewhat scary, possibility of early retirement. 4% draw down seems dangerous to me and I would like to know what others think with our scenario.
Me: 40
Wife: 31
Assets: $1.25MM invested in 85/15 portfolio (60% taxable; 40% tax deferred accounts)
Attempting to sell McMansion to recoup $215k in equity and buy smaller home outright (we live in very affordable city)
No children at this point, yet planning for one (soon)
Cost of Living: $50,000/year with McMansion; $18,000/year without (hence the lust to sell home)
FireCalc, even with Megahome in tow, is pretty favorable now for 50k per year for 50 years (85% with constant spend; 99% with Bernicke's rules)
My specific questions regarding ER are as follows:
1. How are you drawing down your assets? (Taxable account, then IRA down the road, I imagine)
2. Taxes: Are there any tips regarding minimization of taxes when drawing down? This is an elementary question, but when drawing down the taxable account, do you only pay tax on capital gains? I understand IRA/401k is tax deferred and will be paid much later.
3. Portfolio: did you change your mix of equities to fixed drastically?
4. Inflation: how do you guys account for inflation in your annual withdrawal? Does the amount you take out reflect inflation, which I assume it does, or do you stick with the original set amount, which seems absurd but I need to ask?
5. Health Insurance: how do you currently handle health insurance in early retirement? How much is it costing for couples?
Note: I do not claim to be a proponent of the new healthcare law. In fact, it is in part driving my decision for early retirement. It does seem, ironically, that low cost health plans will be available to those with "lower incomes." $50K between my wife and I ought to qualify as low (until they begin culling our portfolios).
Thanks a million for anyone who has slogged through my post and can offer any pearls of wisdom. If you have been in ER for a while and managed to slip out of the corporate world early, then let me know how this has gone for you. How did your peers react?
Me: 40
Wife: 31
Assets: $1.25MM invested in 85/15 portfolio (60% taxable; 40% tax deferred accounts)
Attempting to sell McMansion to recoup $215k in equity and buy smaller home outright (we live in very affordable city)
No children at this point, yet planning for one (soon)
Cost of Living: $50,000/year with McMansion; $18,000/year without (hence the lust to sell home)
FireCalc, even with Megahome in tow, is pretty favorable now for 50k per year for 50 years (85% with constant spend; 99% with Bernicke's rules)
My specific questions regarding ER are as follows:
1. How are you drawing down your assets? (Taxable account, then IRA down the road, I imagine)
2. Taxes: Are there any tips regarding minimization of taxes when drawing down? This is an elementary question, but when drawing down the taxable account, do you only pay tax on capital gains? I understand IRA/401k is tax deferred and will be paid much later.
3. Portfolio: did you change your mix of equities to fixed drastically?
4. Inflation: how do you guys account for inflation in your annual withdrawal? Does the amount you take out reflect inflation, which I assume it does, or do you stick with the original set amount, which seems absurd but I need to ask?
5. Health Insurance: how do you currently handle health insurance in early retirement? How much is it costing for couples?
Note: I do not claim to be a proponent of the new healthcare law. In fact, it is in part driving my decision for early retirement. It does seem, ironically, that low cost health plans will be available to those with "lower incomes." $50K between my wife and I ought to qualify as low (until they begin culling our portfolios).
Thanks a million for anyone who has slogged through my post and can offer any pearls of wisdom. If you have been in ER for a while and managed to slip out of the corporate world early, then let me know how this has gone for you. How did your peers react?