Author Topic: Cash Stockpile  (Read 5608 times)

Roadsidetreasurehunter

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Cash Stockpile
« on: May 10, 2016, 04:26:48 PM »
I need Your opinion please.  I've recently received advice from my CPA to stockpile cash in preparation for my job layoff which will happen in 2020.  I currently contribute 24000 to my 401k and 6500 to my roth and will continue to fully contribute until my job sunsets.  No debt, house paid for.  Networth including home is 650,000.  The thought is that I won't be old enough to access my retirement accounts when I lose my job and the cash will allow me to support myself until I can draw on my retirement accounts.

Thoughts?

Gin1984

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Re: Cash Stockpile
« Reply #1 on: May 10, 2016, 04:38:06 PM »
How much have you contributed to your Roth?  Do you have an taxable investments?  And what is your annual spending?

Roadsidetreasurehunter

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Re: Cash Stockpile
« Reply #2 on: May 10, 2016, 04:50:12 PM »
$60,000 in Roth, $50,000 in taxable investments.  Annual spending is $22,000.

johnny847

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Re: Cash Stockpile
« Reply #3 on: May 10, 2016, 05:42:35 PM »
If you will be at least 55 when you leave your employer (which seems likely since you're making catch up contributions now) you can withdraw from that employer 401k without penalty.

http://www.obliviousinvestor.com/the-age-55-rule-for-401k-accounts/

Gin1984

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Re: Cash Stockpile
« Reply #4 on: May 10, 2016, 05:46:18 PM »
If you will be at least 55 when you leave your employer (which seems likely since you're making catch up contributions now) you can withdraw from that employer 401k without penalty.

http://www.obliviousinvestor.com/the-age-55-rule-for-401k-accounts/
Assuming your employer allows that.

johnny847

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Re: Cash Stockpile
« Reply #5 on: May 10, 2016, 05:52:20 PM »
If you will be at least 55 when you leave your employer (which seems likely since you're making catch up contributions now) you can withdraw from that employer 401k without penalty.

http://www.obliviousinvestor.com/the-age-55-rule-for-401k-accounts/
Assuming your employer allows that.

If you could provide a link to something that shows in either IRS documentation or the US Code where somehow the employer can deny you this option, that would be great. I was under the impression that you always have this right regardless of what your employer does.

Janie

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Re: Cash Stockpile
« Reply #6 on: May 10, 2016, 06:08:35 PM »
My understanding from earlier posts was that OP was 55 currently and would be 60 upon retirement. Withdrawing from the 401k shouldn't be an issue.

johnny847

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Re: Cash Stockpile
« Reply #7 on: May 10, 2016, 06:10:41 PM »
My understanding from earlier posts was that OP was 55 currently and would be 60 upon retirement. Withdrawing from the 401k shouldn't be an issue.

I suggest you read the OP again.

I need Your opinion please.  I've recently received advice from my CPA to stockpile cash in preparation for my job layoff which will happen in 2020.  I currently contribute 24000 to my 401k and 6500 to my roth and will continue to fully contribute until my job sunsets.  No debt, house paid for.  Networth including home is 650,000.  The thought is that I won't be old enough to access my retirement accounts when I lose my job and the cash will allow me to support myself until I can draw on my retirement accounts.

Thoughts?

Janie

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Re: Cash Stockpile
« Reply #8 on: May 10, 2016, 08:25:57 PM »
My understanding from earlier posts was that OP was 55 currently and would be 60 upon retirement. Withdrawing from the 401k shouldn't be an issue.

I suggest you read the OP again.

I need Your opinion please.  I've recently received advice from my CPA to stockpile cash in preparation for my job layoff which will happen in 2020.  I currently contribute 24000 to my 401k and 6500 to my roth and will continue to fully contribute until my job sunsets.  No debt, house paid for.  Networth including home is 650,000.  The thought is that I won't be old enough to access my retirement accounts when I lose my job and the cash will allow me to support myself until I can draw on my retirement accounts.

Thoughts?

Yes, I read the OP and also read OP's earlier posts, including this one from April 2nd:

Quote
I'm 55, single, I expect my long term job to end in 2020, I'll be 60.

Here's a link to that post http://forum.mrmoneymustache.com/ask-a-mustachian/looking-for-directionadvice-to-preapre-for-future-job-loss/msg1035093/#msg1035093

Rocket

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Re: Cash Stockpile
« Reply #9 on: May 10, 2016, 08:39:53 PM »
If you leave your job in the year that you turn 55 you can withdraw from that employeers 401k.  I'm not aware of any limitations on this

johnny847

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Re: Cash Stockpile
« Reply #10 on: May 10, 2016, 08:43:00 PM »
My understanding from earlier posts was that OP was 55 currently and would be 60 upon retirement. Withdrawing from the 401k shouldn't be an issue.

I suggest you read the OP again.

I need Your opinion please.  I've recently received advice from my CPA to stockpile cash in preparation for my job layoff which will happen in 2020.  I currently contribute 24000 to my 401k and 6500 to my roth and will continue to fully contribute until my job sunsets.  No debt, house paid for.  Networth including home is 650,000.  The thought is that I won't be old enough to access my retirement accounts when I lose my job and the cash will allow me to support myself until I can draw on my retirement accounts.

Thoughts?

Yes, I read the OP and also read OP's earlier posts, including this one from April 2nd:

Quote
I'm 55, single, I expect my long term job to end in 2020, I'll be 60.

Here's a link to that post http://forum.mrmoneymustache.com/ask-a-mustachian/looking-for-directionadvice-to-preapre-for-future-job-loss/msg1035093/#msg1035093

Well sorry for not reading his earlier posts. Clearly I'm supposed to read all of the OP's earlier posts before responding.

bobechs

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Re: Cash Stockpile
« Reply #11 on: May 10, 2016, 10:43:47 PM »


Well sorry for not reading his earlier posts. Clearly I'm supposed to read all of the OP's earlier posts before responding.


Either that, or don't bear down on someone who does, for not reading.  Your choice.

Goldielocks

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Re: Cash Stockpile
« Reply #12 on: May 10, 2016, 11:09:24 PM »
You have several years to build an amusing and interesting, part time, lifestyle career.
I would look at that -- to generate a small income stream today (for savings) and after your layoff, both.

It does not need to cover all your expenses...

Could be anything that interests you...  once you get one part time "gig" going, keeping it or building on it is surprisingly easy.   Could be contract work, your own mini business, or work part time / seasonal for others.



frugaliknowit

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Re: Cash Stockpile
« Reply #13 on: May 11, 2016, 01:30:39 PM »
Congratulations on your wealth accumulation, you're a rock star!!!

Priority #1:  Look for another comparable or better job.  You have plenty of time.  Network, network, network!  Unless you no longer want to work after 2020, don't sit and wait for the job to expire.

Best of luck!

Roadsidetreasurehunter

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Re: Cash Stockpile
« Reply #14 on: May 11, 2016, 05:06:17 PM »
Thanks everyone.  I tend to overthink and overworry and I'm a little scared.  Goldilocks, I like the idea of a lifestyle career aka hobby job to supplement me now and in the future.  I need to figure that out.

I've been at my job 17 years and don't want to leave until I need to.  I feel I make decent money, plus it's conveniently located and I know the good, bad and ugly there.  I have been trying to network and put myself out there a little.  I'm quiet and reserved so sometimes it's uncomfortable.

I'm so glad I found this community, I feel right at home. 

Mother Fussbudget

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Re: Cash Stockpile
« Reply #15 on: May 11, 2016, 06:22:56 PM »
Roadsidetreasurehunter, as other responders have said:  You'll Be Fine. 
Don't look for another job - look for ways to retire earlier than 2020.
TODAY, you have enough taxable savings/investments to cover just over 2 years of expenses, and if my calculations are correct, that's all you'll need in taxable accounts to carry you from age 58 to age 59-1/2.  After age 59-1/2 you can withdraw from your Roth-IRA without penalties.

Recommendations:
Continue maxing your 401k, and taking the company match (if any). 
Once you leave your current job, rollover the 401K into a rollover traditional-IRA.
Start a Roth-IRA-Conversion-Ladder converting the t-IRA into the Roth.  BUT... wait until after age 59-1/2.
Over the 10 years between age 59-1/2 and age 70, gradually convert your rollover-IRA into the Roth-IRA - paying taxes on any gains on the converted amount so that by age 70 everything is in the Roth-IRA [and nothing remains in the t-IRA which would be subject to annual minimum payment distributions]. 

Knowing that in FI, your biggest expenses will be taxes, and utilities, will your expenses be the same in FI? 
If your expenses remain at $22k/year in FI, your FI number is $550K.  You've saved $110k to date - $440K to go. 
Can you save ~$90K / year between now and 2020?  (in a combination of 401K, Roth, and Taxable accounts)

Roadsidetreasurehunter

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Re: Cash Stockpile
« Reply #16 on: May 11, 2016, 06:39:19 PM »
I also have 220,000 in my 401k.  And yes, I can save 90,000 in 4 years, I'm very focused, but cannot save 90,000 each year. 
« Last Edit: May 11, 2016, 06:58:31 PM by Roadsidetreasurehunter »

Mother Fussbudget

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Re: Cash Stockpile
« Reply #17 on: May 12, 2016, 12:03:08 AM »
I also have 220,000 in my 401k.  And yes, I can save 90,000 in 4 years, I'm very focused, but cannot save 90,000 each year.
Even better!  330K total - only 220K remaining.  If you keep saving at your current rate, and get an average return rate of ~8.5% over the next 4 years, you should reach your FI number around the time of the 2020 layoff. 

Just keep planning your savings/investments and working your plan.

BFGirl

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Re: Cash Stockpile
« Reply #18 on: May 12, 2016, 10:11:33 AM »
i'm looking to lay off my employer in 2020.  I'm planning to keep 2 years of expenses in cash to weather any downturns in the market.