Planning an IRA roll over


Confused about dryer sheets
Aug 15, 2004
Hello all, I have been lurking here for a couple of months. What a great bunch of people! I just turned 50 and my wife is 54. We made our last mortgage payment about 6 months ago and we are now completely debt free. Our monthly living expenses are about $1200. I have been thinking lately about ER. Despite our frugal lifestyle, I am afraid we don’t have the assets to support that right now. We have a net worth of about 450K  

250K Home equity
115K IRA
50K Pension Plan
48K Savings

My IRA is currently 100% stocks. I would like to get this balanced better and plan to switch to one of the Vanguard target retirement funds soon. Are there any timing issues I should consider when doing this roll over?  

Thanks, Sach
My IRA is -0- % stocks, and my net worth is way lower than yours (450K). Maybe a little part time work?
You can do it. Motivation is everything and I am the poster boy to prove it.

John Galt

Do you include your home equity in your "net worth".  From a textbook standpoint it is part of the equation, but from the perspective of assets that allow one to pay the bills it just doesn't seem to apply, unless you get a reverse mortgage.


I'll defer to others, but excluding your home equity that amounts to $213K in money generating assets, which should yield approximately $8520/yr via "safe withdrawal" rates.  Some draw a bit more than that rate and I'm sure everyone can cut costs to get expenses and income closer together.  As John mentioned, a part time job could easily fill any gap.
I include everything in my "net worth", including the
popcorn in the pantry (I'm not kidding).
If it can be converted to cash I include it!

John Galt
Sach, it's generally a good idea to avoid buying a mutual fund cap gain right before a distribution. That's no issue in an IRA, of course, and since you mention a rollover, I assume that's what you're doing. Other than that, I can't think of any timing issues except market timing, which I try not to do. But if I had a 100% stock allocation, I'd be scrambling to reduce that.
Those of us with low net worths and working wives should probably identify themselves at some point during the chest thumping.

Honestly Sach, it doesnt look like you have quite enough to comfortably ER. If everything went great for the next 20 years, you might just slip by the skin of your teeth.

Odds are things wont go perfectly great.

Does your monthly budget amount include things like home repairs, appliances, car maintenance and replacement, a new furnace, unexpected surprises, etc?

I've done a real barebones budget and the only way I can get under 1200/mo is to exclude all the capital items indefinitely.

Rolling over the IRA to a vanguard target retirement fund might be a good idea if you believe the index makeups will do well. My personal opinion is that returns on index funds may not be so great for the next 10 years. As far as timing it, you may find that you dont have much control over it...the company who has to release your funds can and will do so on a timetable of their choosing. Might be quick, might take months.

You didn't mention that your job was causing you health problems, or had anything negative to say about your employment situation, so I'll state my opinion based on you're o.k. with the current situation, but have been thinking about retiring.
Congratulations on becoming debt free and paying off your house. (A big plus for a retiree).
I honestly think you have a ways to go before you would be able to live off your assets.
Outside health ins. alone would be anywhere from $5,000 to $7,000 annually.
If you and wife are o.k. with current employment, save like mad in the next 5 years or so, and re-evaluate at that time.
Good luck, jarhead
I have been thinking lately about ER. Despite our frugal lifestyle, I am afraid we don’t have the assets to support that right now. We have a net worth of about 450K

I think the poster knew that he did not have enough assets to retire even though he wanted to. We've all been there!

The question he posed was on timing of the IRA Rollover. Like Bob Smith, I believe that as long as it is in an IRA and you roll it over, the timing should not be a factor. And also like Bob Smith at Age 50 something you might want to rethink that 100% stock allocation.
Thanks everyone for your comments. I have included my home in my net worth. We decided 3 years ago to accelerate our mortgage instead of investing the money. I view the house as an investment. It has doubled in value since we bought it 6 years ago. We are planning to cash out at some point and buy a cheaper house or find a place to rent.

My monthly budget does include home maintenance. I am an electrician by trade and have had many maintenance type jobs over the years. Repairs are one thing we don’t worry too much about.

My Job is OK (for now) I have a few perks that also keep my monthly budget down. A company car, cell phone with free long distance, and health insurance. It all adds up. I know we don’t have enough money to RE now. My short-term goal is to gradually reduce my hours to the lowest level that will still allow me the benefits mentioned above.

My wife is working part time. She makes enough to take care of the household budget, and gas and oil changes for her car.

As far as the index fund….. I like the hands off approach of the Vanguard target retirement funds. It may not produce the highest returns, but my investment history tells me it’s the right approach for us. It’s my sporadic interest in investing that has gotten us to our 100% stock IRA’s.

Top Bottom