You know When it is Time

[pacergal]

Welcome to the forum! The folks here are so knowledgeable and willing to help, I have learned so much.
You are set financially, as several people have pointed out.
It looks like you have plans for the first year or so with selling, moving (twice!) to your planned retirement home, and you mention gardening.

I recommend Ernie Zelinski's book "How to Retire Happy, Wild, and Free". It is a great book to get you thinking about life after work, and how you will spend your time.
His Get a Life Tree exercise is thought provoking and good to review and revise over time.

Best wishes to you and I look forward to hearing more from you over time.

 

[TickTock]

OP,

You look to be in a good financial position. Your ability to keep gov't healthcare at current prices is *huge* - congratulations!

There's a lot of financial knowledge on these boards. I recommend making sure you keep that 'safety blanket' (being able to sleep well) and be cautious, make sure you understand what changes you decide to make (if any), and ease into it.

For example, going equities in your taxable account and rebalancing (assuming you rebalance) in tax-deferred makes financial sense. But you may not be comfortable with that. Maybe take a portion and try the strategy, see how it works in real life.

DW retired 2 years ago. I retired earlier this year. For now, I find that having a larger taxable MM account than might be theoretically 'optimal' helps me to sleep well at night.

 

[Purslane]

OP, you have roughly $5M in investible assets and roughly $150K in expenses... call it $120K after pension. That's under 3% annual withdrawal rate, which is within accepted guidelines for what's "safe" for perpetually sustaining a portfolio. We can quibble on numbers, priorities and percentage-odds of success, but the gist, is that financially you're in good shape.

The deeper question isn't finances, but psychology. Do you feel ready to retire? Not "have you saved enough", but... "have you done enough"? Is it time to hang-up the stethoscope? Firecalc won't tell you that! Fortunately, you have the forcing-function of a defined benefit pension, that commences at some point. This offer neat and definitive demarcation for when a "proper" retirement can begin... not because the money is tremendous (it's not), but because, like graduating from med school, it's an event laden with meaning, passing from one stage of life to the next.

Welcome to our little group of helpful friends!
Not sure if this applies to you, but I would consider looking into the "2 out of the last 5 years" provision of the capital gains rule. If you can wait the 2 years before moving into your age-in-place home, (maybe spend the time readying the existing home for sale and fixing up the age-in-place home and the garden to your liking) you might be able to avoid the capital gains tax. Of course, you'd be paying the utilities and taxes on the new home for those two years, but if you found a place you liked for a decent price, and it needed some finishing touches, this might be a worthwhile option for you.

Personally, that's what I would do, but I like fixing up houses.

Again, Welcome! And best of luck.

Welcome to our little group of helpful friends!
Not sure if this applies to you, but I would consider looking into the "2 out of the last 5 years" provision of the capital gains rule. If you can wait the 2 years before moving into your age-in-place home, (maybe spend the time readying the existing home for sale and fixing up the age-in-place home and the garden to your liking) you might be able to avoid the capital gains tax. Of course, you'd be paying the utilities and taxes on the new home for those two years, but if you found a place you liked for a decent price, and it needed some finishing touches, this might be a worthwhile option for you.

Personally, that's what I would do, but I like fixing up houses.

Again, Welcome! And best of luck.

That was the plan initially. Move back home. Steep in the new retirement reality. Paint, patch, etc. Watch the market for the right time to list. Run down the two year capital gains clock.
You know that feeling when something you have waited for is so close it starts to feel like it is moving away from you? I caught that feeling and I started thinking about my life passing by while I was doing what--waiting?? I decided I would not wait for two years to go by just so I could save, what in the long run, ought to be an inconsequential amount of money. And then I had other thought.
How likely was it that my 'perfect' little forever house was sitting there with its perfect little price tag, just waiting on me? Not. And I don't think I would be doing myself any favors to hurry the process.
So after all that analysis, I ended up right where you started. Take some time, fix a house, find a house, sell a house, buy a house. I don't mind taking care of some finishing touches especially for the right house and doubly so for the right price.

 

[Purslane]

Welcome to the forum! The folks here are so knowledgeable and willing to help, I have learned so much.
You are set financially, as several people have pointed out.
It looks like you have plans for the first year or so with selling, moving (twice!) to your planned retirement home, and you mention gardening.

I recommend Ernie Zelinski's book "How to Retire Happy, Wild, and Free". It is a great book to get you thinking about life after work, and how you will spend your time.
His Get a Life Tree exercise is thought provoking and good to review and revise over time.

Best wishes to you and I look forward to hearing more from you over time.

Thanks for the book recommendation. I have started making a list.
Regarding the knowledgeable, helpful folks on the Forum, I am 56 years old and I have never tweeted, facebooked, tiktoked, myspaced or whatever other social-y thing they have these days-- until now. When I stumbled on this site I thought to myself, I have finally found my people.

 

[Purslane]

You did much better at explaining than I did! It's a confusing concept at first, so it's great you took the time to lay it out much more clearly.

Three things:

• I am really sorry for what is coming next
• Talk to me like a 5-year-old
• It seems to me I would be better off continuing with mutual funds in 401k/IRA.

I added more specific account information in case it was needed.

Retirement Accounts: 1.86M

• Fidelity Rollover IRA 1.2M = 94% TM/500/TDF, 6% MM/CD
• TSP taxable 401k 660k = 96% SP500, 4% TDF2040, current allocation is 100% SP500 (50k per year for the next 16 months-ish)

Individual Accounts: 3.35M

• Fidelity/Vanguard Brokerage 2.4M = 74% TM/500/TDF, 26% MM/CD
• Brick and mortar banks 950k = 17% cash, 83% CD

1. You still get to keep your sense of safety (AA) by holding a large portion of CD/MM/Tbills
If the CD/MM/Tbills were in the retirement accounts and I needed the money before I retired, the tax bill would be obscene. It is hard to imagine with 950k in brick-and-mortar banks and an estimated equity harvest of 150K when I sell my west coast house in less than 2 years that I would need that much money handy---and yet, I have a vivid imagination.

2. You are paying marginal/higher tax rate on the returns from CD/MM/Tbills.
This is an unfortunate fact that is made worse by NIIT and high California state taxes. Right now, I am working so NIIT applies to me in my brokerage and bank accounts no matter what investment instruments I chose. That's why I have started buying more Tbills. At least with those I can offset some state tax and still have my money handy.

3. Your 401K/IRA will grow at a slower pace because CD/MM/Tbills return less on average which will reduce your eventual RMDs.
I have read about this recommendation before, but I don’t understand why it is a good thing. I have been thinking about it for two days and my brain hurts. In fact, I made a spreadsheet which did not clear the issue up at all. See below. It seems to me I would be better off continuing with mutual funds in 401k/IRA.

Basically, I considered 4 simple scenarios that all begin with $100,000, span a 30-year period, assume an ordinary income tax rate of 35% and a capital gains tax rate of 20%. NIIT were ignored in all scenarios. CDs assumed a 5% rate of return; Mutual Funds assumed a dividend rate of 10%. Share price was ignored (not sure if that made a difference).

1. After tax brokerage account, investing in a CD that pays 5% per year. Gains are taxed yearly at a rate of 35% (ordinary income tax rate).
Year 0 = $65,000 (after tax amount available to buy the CD)
Year 1 = $67,113 ($3250 interest income earned - $1137 taxes due = $2,113)
Year 30 = $169,674 This is the final account value, and no additional taxes are due because they have been paid yearly for 30 years.

2. Tax deferred 401k, investing in a CD that pays 5% per year. Investment and gains are taxed 35% in year 30.
Year 0 = $100,000 (pretax amount available to buy the CD)
Year 1 = $105,000
Year 30 = $432,194
Final account value = $280,926 ($432,194 x 65%)

3. After tax brokerage account, investing in a Total Market Fund (TMF) that returns 10% per year in dividends. Dividends are reinvested. Gains are taxed yearly at a rate of 20% (capital gains tax rate).
Year 0 = $65,000 (after tax amount available to buy TMF)
Year 1 = $70,200 ($6,500 DIV income - $1,300 taxes due = $5,200)
Year 30 = $654,073 This is the final account value, and no additional taxes are due because they have been paid yearly for 30 years

4. Tax deferred 401k, investing in a TMF that returns 10% per year in dividends. Dividends are reinvested. Investment and gains are taxed 35% in year 30.
Year 0 = $100,000 (pretax amount available to buy the TMF)
Year 1 = $110,000
Year 30 = $1,744,940
Final account value = $1,134,211 ($1,744,940 x 65%)

after tax brokerage CD	$169,674​		tax deferred 401k CD	$280,926​
tax deferred 401k TMF	$1,134,211​		after tax brokerage TMF	$654,073​
30 Year Account Value​	$1,303,885​		30 Year Account Value​	$934,999​

 

[Purslane]

1. I would trust your Firecalc results.

2. I wouldn't do Roth conversions while working at your current income level. And it may not make sense even after you retire at your $31k annuity + $50k DIV/INT.

3. You mention wanting to live a better life in retirement. Then I would not consider any retirement option that plans for less expenses than you have now. Living it up will certainly cost as much as your current HCOL area expenses.

4. You've planned this out well, but maybe there is some way to further planning, advance paperwork etc to get the early retirement annuity and retirement healthcare in line so that there are no snags when you retire.

5. I would do some serious planning as to what you are retiring to. What are you going to do all day when you retire?

Yeah totally agree on the Roth points.
I figure a 3/10 retired life will cost about 65K. I think I would be pretty happy with 7-8/10 life. I think that would cost about double.
Point #5 is a real mystery. I love to read what other people are up to, thinking I could adopt some of what they do. I feel like I would be fine for the first 6 months because I am really tired of work and all the bs that goes with it. It is a toss up on whether I will find my footing and say, I wish I could have retired sooner, or whether I will say I am rested and bored now, and I want to work a couple of days a month. I have a good friend who just retired after 42 years on the job. A real company man. Last of his kind. I truly thought he would die at his desk and in fact he would have if ageism hadn't pushed him out the door. You can get rid of anyone if you treat them bad enough. I checked in with him recently to see how he was faring. I could not believe the remarkable adaptation. Says he doesn't miss work one iota and admitted to me that he had been suffering anxiety every Sunday night in the months leading up to retirement. That story gives me hope. If that work-a-holic can figure it out, I think I can too. Maybe.

 

[Purslane]

OP,

You look to be in a good financial position. Your ability to keep gov't healthcare at current prices is *huge* - congratulations!

There's a lot of financial knowledge on these boards. I recommend making sure you keep that 'safety blanket' (being able to sleep well) and be cautious, make sure you understand what changes you decide to make (if any), and ease into it.

For example, going equities in your taxable account and rebalancing (assuming you rebalance) in tax-deferred makes financial sense. But you may not be comfortable with that. Maybe take a portion and try the strategy, see how it works in real life.

DW retired 2 years ago. I retired earlier this year. For now, I find that having a larger taxable MM account than might be theoretically 'optimal' helps me to sleep well at night.

I have been working hard to forgive myself since I got serious about trying to get my financial life in order. I had thrown my energies into making money and did not see that was only half the battle. Now I know it is not enough to make money. You have to learn to keep it, too.
I was great at bringing home the paycheck and knocking out the bills. But left over money sat lazily and safely in low yield checking accounts. My fear and ignorance were nourished by proverbs and pundits; a fool and his money are soon parted, analysts fear recession is just around the corner.
Some people genuinely tried to help me see past my discomfort but I was ready for them. Regarding investing I would tell them, I have time, so it doesn't matter and if i don't have time, it matters even less. But one day my world turned a peculiar way and I realized I had to change.
I will always need my safety blanket but I think over time I can shrink it. There is a good showing of equities in my taxable accounts now, which is what I think you were saying. The retirement accounts are essentially all index funds. I am not sure what I would change. Some have suggested I would be better off keeping MM/CD/Tbills in retirement accounts but I am not yet convinced. Even if I became convinced, I don't think I would do it because I am willing to bear the cost of my security blanket.

 

[Purslane]

You have plenty of assets to retire with no worries. What you should focus on are the intangibles--where will you live in retirement, what fun things will you do, will you travel, how will you make more friends. One thing to think about is long term care issues. If you need help as you age, what will be your options. Will your children be able to help you? I live in a Continuing Care Retirement Community (moved in at age 72) and it has been wonderful for me. Once you decide where to live in retirement you might want to look into CCRCs in the area and get on some waitlists. In my area the wait lists are 10 plus years. Good luck and have some fun! And post more here on this Forum so we can get to know you.

These are all really important issue--as important as the money. I figure I will get back to the middle part of the country where I still have a house and a daughter. The other daughter says she will never voluntarily leave the state of California so there is that. My thought was after retirement I could try to do a yearly 4-8 week sublet or short term rental so I could still see her.
I do want to travel but I have tried a solo trip here and there, and it is always better in theory than practicality. I don't want to miss out of seeing and doing things just because I am single so I will need to investigate how others solve this problem.
Making friends is difficult without a social media presence, which I don't have and don't want. This is the very first thing I have ever signed up for. I have moved a lot in my career and that has not helped the friend issue either.
As an employee/annuitant I will have the option to purchase long term care insurance. Currently the program is not accepting new enrollees but it is expected to open back up soon. I understand that most folks sign up in their early 60's at about retirement time. If it is not outrageously expensive and the benefits are good, I will strongly consider it. Only one of my children would bend her life to take care of me. The other one just doesn't have it in her DNA.
The issue of needing help is not new for me, it will just become more problematic as I age. I already have to take the bus home if I need to drop my car off for service.
I did not know about CCRC's. I will start educating myself. Options are good. Knowledge is power. A 10 year wait list is gold mine.

 

[Kings over Queens]

3. Your 401K/IRA will grow at a slower pace because CD/MM/Tbills return less on average which will reduce your eventual RMDs.
I have read about this recommendation before, but I don’t understand why it is a good thing. I have been thinking about it for two days and my brain hurts. In fact, I made a spreadsheet which did not clear the issue up at all. See below. It seems to me I would be better off continuing with mutual funds in 401k/IRA.

​

I didn't read the prior comments so this may have been answered or I'm responding to a different type of question.

My understanding is that if we assume a balanced portfolio, and you are looking to hedge against higher RMD's, it makes sense to hold your lesser aggressive or more conservative funds in that balanced portfolio in the tax deferred account, and the more aggressive funds in the taxable or tax free.

 

[marinauser]

Personally, I think you are fine with those total assets. I just think that your allocation to various accounts is not very tax efficient. I would move 90% of your CD/Bond $1MM allocation to your 401k or IRA. I would do that by over time selling the equivalent amount of equities and buying the CDs/Bonds. Concurrently, I would start buying your equity allocation using you taxable account CDs/Bonds. That way you convert interest income to dividend/capital gain income in the taxable account that is taxed at a more preferable rate. The interest earned in the 401k will eventually be taxed but in the same manner it is currently and you are not converting equity gains in the 401k from capital gains into ordinary income. I try to keep no more cash in a taxable account than I can spend in one year. I keep another year of very short duration CD/Bond in a tax deferred account that I could tap if necessary due to a prolonged market downturn where I don't want to sell equities - I just have to pay regular income tax on the tax deferred withdrawal.

 

[Purslane]

Personally, I think you are fine with those total assets. I just think that your allocation to various accounts is not very tax efficient. I would move 90% of your CD/Bond $1MM allocation to your 401k or IRA. I would do that by over time selling the equivalent amount of equities and buying the CDs/Bonds. Concurrently, I would start buying your equity allocation using you taxable account CDs/Bonds. That way you convert interest income to dividend/capital gain income in the taxable account that is taxed at a more preferable rate. The interest earned in the 401k will eventually be taxed but in the same manner it is currently and you are not converting equity gains in the 401k from capital gains into ordinary income. I try to keep no more cash in a taxable account than I can spend in one year. I keep another year of very short duration CD/Bond in a tax deferred account that I could tap if necessary due to a prolonged market downturn where I don't want to sell equities - I just have to pay regular income tax on the tax deferred withdrawal.

I can see how that is smart but I get super nervous without a big security blanket. I probably will feel better about taking some steps toward a more tax efficient mix after I actually retire. All the spreadsheets in the world are no match for reality. I need to live it before I am willing to make big changes. Another thing I am thinking about is whether partial Roth conversions could make sense from ages 58-68, so after retirement but before SS. I would need my cash to pay down the tax bills.
I am not ruling out doing some contract work maybe 12 weeks a year after retirement but if I did that I probably could not do any Roth conversions. On the other hand, that trickle of income could help push me to switch my CD/MM/Tbill positions to the 401k.
If you have read any of my other comments you've seen that fear is a huge driver for me. Let me offer this perspective. In the first 8 weeks of 2024 I moved $1.2M from checking accounts to the market. It took me a decade to do that. By the grace of God this was a great year to decide to be bold.
You keep essentially two years worth of living expenses handy. I get it intellectually that if markets were terrible another year or two after, it would mean selling securities. I would probably be crying, the sky is falling! I am too inexperienced to be well adjusted.

 

[Surewhitey]

You're likely fine almost any way you slice it. We're an efficient bunch around here when we talk Roth conversions, taxes & RMD's.

I agree with the flipping of pre & post tax accounts, but DW also wants her blanket with about the same amount as you. We also are ~4.5% for the next 5-7 years & taxable mostly.

Roth conversions after leaving employment makes sense to me and is our plan...

 

[Gumby]

Welcome aboard, Purslane. I'm happy you're here. It looks like you will do well in retirement.

I just want to agree with those who advise adjusting your accounts to be as tax efficient as possible. It's something that took me far too long to do. One simple example is my holding of Altria stock (MO), which pays a very large dividend (currently $4.08/yr or about 7.5%). I've had it for many years, but it was in my taxable IRA account. I'm ashamed to say that it was only last year that I sold the shares in my tIRA and bought the equivalent number in my taxable account.

Let me just lay out how that helps me. Suppose I have 1000 shares, so at the current rate I get $4080 in dividends per year. Suppose I am a single filer, that my pension and other income is $50,000 and I take the standard deduction of $14,600. So my taxable income is $35,400 and I am in the 12% marginal tax bracket. Finally, suppose I need to use the Altria dividends to supplement my pension and support my spending in retirement.

If my Altria stock is in my tIRA, the $4080 in dividends pay out over the year and sit in my settlement account. To get them out and use them, I need to make an IRA withdrawal, which is taxed as ordinary income. So I withdraw the $4080, pay 12% of it in income taxes and net $3590 to help pay for my groceries. However, if that Altria stock were instead in my taxable account, for tax purposes the $4080 in dividends are treated as Qualified Dividends and the tax rate is 0%, so I net $4080 to help pay for my groceries. I just improved my financial position by $490 merely by choosing to hold my dividend paying stock where it would be most tax efficient.

 

[Purslane]

I am curious why it took you a long time to make your accounts tax efficient. For me I think it probably boils down to an age issue, and of course being very new at thinking about these things. Thank you for sharing the example.

Let’s look at two (simple) scenarios
Retired not 59.5: My annuity won’t cover living expenses and taxes. I must get money from somewhere. Here are my options.
Checking: earns nothing, eroded by inflation but otherwise zero risk, stands ready to pay bills.
Non401K CD/MM: earns some money that is taxed as ordinary income (22% I am guessing), small investment risk, stands ready to pay bills.
Non401K Dividend producing product in a nonretirement account: pays a dividend, probably taxed at the 10% rate, highest risk option, but also can be used to pay bills.
Anything in taxable 401K: not a real option, would be subjected to taxes and age penalties.

Retired over 59.5:
All money is fair game. Makes a lot of sense to keep CD/MM in taxable 401K. If I needed it, I could have it at the ordinary income tax rate, with no age penalty. Tax-wise that is equivalent to having it in non401K accounts.
Non401k would be more tax efficient with dividend producing products. My aversion to risk will be better borne knowing low risk interest income is available in the taxable 401K if I needed it.

If I am understanding everything you are saying, I could see implementing that strategy after age 59.5, if I wasn’t planning to do partial Roth conversion. If I was, of course I would need to keep my lower risk profile in my nonretirement accounts to pay the tax bills.

 

[Gumby]

I am curious why it took you a long time to make your accounts tax efficient......

A lack of free funds in my taxable account to make the initial investment many years ago, and then just sheer inertia.

 

[brett]

I was in a financial position to retire several years prior to retiring early.

Why? I was not ready, I loved my job/excellent employer. It was simply not time for me. I retired 3-4 years later I was ready. Walked away completely from my former life. Much to my spouses amazement!

What did I /we do in those four years? We shopped for and found an FA firm and a professional advisor that we could both agree on. Fired our bank, our stock broker, consolidiated our assets. Slowly we arrived at a decision of what our first years in retirement might look like.

What surprised me was when I asked colleagues for FA or wealth management recommendations was how very few of them were happy with their FA's or would recommend them to me!

The next thing we did was to re- engage a tax professional. We realized that our retirement investment management and tax advice went hand in hand. The professional fees were slight compared to the benefits. We re-filed our taxes for the previous four years and we both had refunds. Then we worked on a tax plan for retirement.

These basic steps made the financial and the personal transition to retirement rather straightforward. No angst whatsoever, so second guessing, no stepping off a cliff so to speak.

One other benefit was that my spouse, who had previously not participated in our investments, was now fully up to speed, aware of our finances, and prepared to move forward should I get hit by a bus.

 

[Koolau]

A lack of free funds in my taxable account to make the initial investment many years ago, and then just sheer inertia.

Wow, I thought I was the only one! Couldn't have said it better.

 

[Koolau]

I was in a financial position to retire several years prior to retiring early.

Why? I was not ready, I loved my job/excellent employer. It was simply not time for me. I retired 3-4 years later I was ready. Walked away completely from my former life. Much to my spouses amazement!

What did I /we do in those four years? We shopped for and found an FA firm and a professional advisor that we could both agree on. Fired our bank, our stock broker, consolidiated our assets. Slowly we arrived at a decision of what our first years in retirement might look like.

What surprised me was when I asked colleagues for FA or wealth management recommendations was how very few of them were happy with their FA's or would recommend them to me!

The next thing we did was to re- engage a tax professional. We realized that our retirement investment management and tax advice went hand in hand. The professional fees were slight compared to the benefits. We re-filed our taxes for the previous four years and we both had refunds. Then we worked on a tax plan for retirement.

These basic steps made the financial and the personal transition to retirement rather straightforward. No angst whatsoever, so second guessing, no stepping off a cliff so to speak.

One other benefit was that my spouse, who had previously not participated in our investments, was now fully up to speed, aware of our finances, and prepared to move forward should I get hit by a bus.

Are you willing to share how your FA was paid (fee per hour or % of AUM?) It seems most want AUM and I'm not okay with that but YMMV.

 

[Purslane]

Are you willing to share how your FA was paid (fee per hour or % of AUM?) It seems most want AUM and I'm not okay with that but YMMV.

I am not ok with AUM either. I might not know much, but I know when I have been burned. Trust is a hard thing to regain.

 

[mebden]

I am curious why it took you a long time to make your accounts tax efficient. For me I think it probably boils down to an age issue, and of course being very new at thinking about these things. Thank you for sharing the example.

Let’s look at two (simple) scenarios
Retired not 59.5: My annuity won’t cover living expenses and taxes. I must get money from somewhere. Here are my options.
Checking: earns nothing, eroded by inflation but otherwise zero risk, stands ready to pay bills.
Non401K CD/MM: earns some money that is taxed as ordinary income (22% I am guessing), small investment risk, stands ready to pay bills.
Non401K Dividend producing product in a nonretirement account: pays a dividend, probably taxed at the 10% rate, highest risk option, but also can be used to pay bills.
Anything in taxable 401K: not a real option, would be subjected to taxes and age penalties.

Retired over 59.5:
All money is fair game. Makes a lot of sense to keep CD/MM in taxable 401K. If I needed it, I could have it at the ordinary income tax rate, with no age penalty. Tax-wise that is equivalent to having it in non401K accounts.
Non401k would be more tax efficient with dividend producing products. My aversion to risk will be better borne knowing low risk interest income is available in the taxable 401K if I needed it.

If I am understanding everything you are saying, I could see implementing that strategy after age 59.5, if I wasn’t planning to do partial Roth conversion. If I was, of course I would need to keep my lower risk profile in my nonretirement accounts to pay the tax bills.

Hey Purslane get your money out of a 0% earning checking account and at least put your bill paying money in a online high interest savings account and link it to your checking account and just transfer money to checking when needed to pay bills at least your money is gaining some good interest while waiting for bills to come due. My hardest part with retiring is you need to remember most bills only come once a month and budget for them.

 

[Midpack]

Making friends is difficult without a social media presence, which I don't have and don't want. This is the very first thing I have ever signed up for. I have moved a lot in my career and that has not helped the friend issue either.

The trick is to join everything you might be even remotely interested in. You never know unless you try it. Even if it turns out you don't love the activity, that's where you find your new friends. If you love the activity, all the better. If you don't, you just quit that activity, no harm done.

How do I know?

When we retired DW and I moved 750 miles to a state we'd never lived in, to a city we'd never even visited, where we didn't know a single person. But we did know from experience what we wanted/needed in terms of climate, COL, culture, shopping, attractions, proximity to larger metro, health care, etc. We are not extroverts in any sense. We've been here for over 5 years, and we love it! We both made it a point to join activities and say yes to every invite, and it has paid off. We actually have more friends now than we did while working. I thought I would make my new friends through sailing, and DW thought she would make her new friends with various fitness activities. Neither panned out - but it led us to other activities where we did find good friends!

Best of luck.

 

[53anddone]

Your net worth is around $6M and your forward going expenses are all within your control. You can definitely pull the trigger, its the intangibles you need to be prepared for. You seem like a very organized person so I think you can go for it and be fine.
My life was more complicated when I retired at 55, but for the past 7 years I have been able to keep my spending between 3-4% of my NW so I'm feeling OK. You will too.

 

[Mansderm]

You've already received great advice. I'm older than you and retired I 2017. I also worried about the money. The only thing I got from using the FA that approach MD's was that my investments would continue to grow even in retirement despite spending. It's unlikely you'd go on a crazy binge and deplete your assets. They were right, since retirement, traveling, building, weddings for kids, my net worth has continued to grow. I have had a few acceptable FA in the past that I found on my own but my goal was always to learn and do it on my own. You can too. The biggest fear when I actually did retire in August 2017 was that my mind would go to mush. I panicked and thought I need to take a class. In September I saw an ad for a Tax class sponsored by HR Block so I signed up. The class started in October and I was offered a job for the 2018 tax season. Ok..the contract was Jan 1- April 17. I made the commitment thinking ok...this is expanding my brain. What an eye opener. First, I never had a desk job. Everytime I got up to walk around, they asked if I was OK. 2nd, the people. I thought I saw all walks of life in practice...wrong. , 3. I made $7 Bucks an hour. Lesson learned and I no longer fear my brain going to mush. Pull the trigger, it takes time to "slow down", relax and plan your next adventure. Taxes won't be your worst nightmare, but they could be your kids so you will likely need to find someone you can trust for tax advice. Don't know if you are a woman, but if you are, there are some wonderful women's groups that get together for socializing, camping, travel etc.

 

[almost there]

"If you've won the game, stop playing."
"The day you stop racing, is the day you win the race."

I could go on and on. LOL LOL
Step back, take a deep breath and just smile.
There are a 1000 ways you can go. And they all work.

No need for risk, all you have is a tax problem. Like several folks I know.
Not a terrible spot to be in. Ditch the Financial advisors
and focus on Tax advisors. And enjoy.

 

[indiajust]

Thank you putting this in the words! I was thinking about the same. How can OP keep her "sense of safety" without incurring undue tax penalty?

OP,

What Exchme is referring to is that your positions of CD/MM/Tbills which sits in brokerage/after-tax account currently should be held in 401K/IRA accounts. And the stocks/index funds which are held in 401k/IRA accounts. Basically swap the accounts. This would have multiple advantages:
1. You still get to keep your sense of safety (AA) by holding a large portion of CD/MM/Tbills
2. You are not paying marginal/higher tax rate on the returns from CD/MM/Tbills
3. Your 401K/IRA will grow at a slower pace because CD/MM/Tbills returns less on average which will reduce your eventual RMDs.

To execute above strategy, you may have to wait until you stopped working because the CD/MM/Tbills you hold in your brokerage/bank may not be available in your 401k today. First you transfer your 401K to a rollover IRA. Then you can swap CD/MM/Tbills and rollover IRA positions. You can take a year or two to complete this move.

This may sound confusing but money is fungible so they should be parked where they are most efficient.

Once you swap your positions in the proper accounts, every year you do the following to fund your annual expenses and keep your AA the same:
1. Calculate how much interest you earned or would earn annually in your rollover IRA. We call this number 2x.
2. Sell 2x amount of stocks/index fund in brokerage to fund your living expenses for a year. A significant portion of this sale would be principle (and hence tax free) and the gains will be taxed at 0/15%/20% depending on your bracket (still a lot less than your otherwise marginal tax bracket).
3. To balance your AA: Sell 1x amount of CD/MM/Tbills in your 401k/IRA account. Buy 1x amount and same (as #2) kind of stock/mutual funds back in the 401k/IRA account.

You can do any variations of above if you want to change AA over time. I would personally do equity glide path.

I did something similar this past year, putting income in the roth and cap gains in taxable. The only proviso I would add is I keep my commodity gold silver btc allocation inside the roth to avoid punitive taxes, above std income tax obligation. I set my cash allocation by months of spending in reserve, a time buffer, not any particular amount.