Author Topic: Clarification on the amount to save for early retirement  (Read 5481 times)

pay-no-interest

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Clarification on the amount to save for early retirement
« on: September 14, 2016, 05:05:00 PM »
Hello fellow Mustachian's!

I've been following the MMM blog for a couple of years now and I have read the early posts several times.  I'm inspired! 

I know MMM has said to save 20-25x annual spending as a metric for having enough to retire early.  What I don't have a clear answer on is the following:  is the 20-25x annual spending amount net assets?  Only the amount in a retirement and investment account?  Only the amount in the retirement account and then more money should be saved in an investment account for easy access?  If the 20-25 annual spending goes into the retirement account, how much should be in the investment account?

thanks for your help! 

ender

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Re: Clarification on the amount to save for early retirement
« Reply #1 on: September 14, 2016, 05:06:40 PM »
The amount of money you have saved that is spendable should be counted. Taxable investment accounts, bank accounts, IRAs, 401ks, etc. Not your possessions, including house, unless you are planning on downsizing.

Everyone will have slightly different breakdowns on this.

rugorak

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Re: Clarification on the amount to save for early retirement
« Reply #2 on: September 14, 2016, 05:23:22 PM »
Keep in mind if you are FIRE you'll need some money in places you can access it before 59 1/2. This could be taxable accounts or if you did a Roth IRA ladder.

But if you are in the building phase just worry about enough in easily access places. So basically stocks, bonds, and cash. Whether they are in normal taxable or tax advantaged accounts. When you get close you can worry about the how to access it most efficiently. In general while building tax deferred is the best place to let it sit.

pay-no-interest

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Re: Clarification on the amount to save for early retirement
« Reply #3 on: September 14, 2016, 05:50:18 PM »
Hmmm, I'm still a little fuzzy.

Here is my situation, perhaps your analysis will help me better understand where I am on the "saving scale" to have early retirement:

Savings in a retirement account (401K):  $153K
Savings in a Roth:  $58K
Savings in investment accounts:  $367K (most is in index funds in Vanguard and future contributions are going into those index funds, some are in individual stocks that are performing horribly right now)

This year, I've begun to max out my retirement contribution of $18K per year in a supplemental retirement (split between a 457b and 403b)

Additional retirement contributions are 5% of my salary for my portion and my employer contributes 9%.  I make $91K gross.

I add $500 to $1500 to my investment funds each month (this is after I pay all my bills and make my contributions to my retirement accounts)

I have $53K left on my mortgage and expect to have it paid off in 3-4 years.

Should I try to make my retirement amount reach $800K before seriously considering retirement?  This is what I'm trying to figure out to determine how much longer I plan to work full-time.

Thanks for your help.


ender

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Re: Clarification on the amount to save for early retirement
« Reply #4 on: September 14, 2016, 05:55:29 PM »
It depends, a lot, on a few things.

First, your spending per year.

Second, your age. If you are 59 vs 29 -- big differences.

Third, future income(s). This could be SS, pensions, working part time, spouse income, etc.

boarder42

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Re: Clarification on the amount to save for early retirement
« Reply #5 on: September 14, 2016, 06:12:44 PM »
Keep in mind if you are FIRE you'll need some money in places you can access it before 59 1/2. This could be taxable accounts or if you did a Roth IRA ladder.

But if you are in the building phase just worry about enough in easily access places. So basically stocks, bonds, and cash. Whether they are in normal taxable or tax advantaged accounts. When you get close you can worry about the how to access it most efficiently. In general while building tax deferred is the best place to let it sit.

Even paying the 10% early withdrawal penalty is often better than saving taxable

human

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Re: Clarification on the amount to save for early retirement
« Reply #6 on: September 14, 2016, 06:13:39 PM »
It's supposed to be 25 times your expenses. If you plan on selling that house when you retire to downsize then go ahead and count the difference between your old house and the new house if you buy (assuming you also know what you could sell it for in today's dollar). If you aren't selling and are mortgage free, then you obviously will have less expenses than someone like me who plans on probably renting.

You ask if your "retirement amount" should reach 800k.

Does this include just investments or the house too? If it includes the house will you stay there? If so deduct the house from the 800k and you have a number with which to divide by 25.

You don't mention what your anticipated expenses will be.

If that 800k is invested you will have 32k a year to use during retirement (according to the 4% rule). If you think you can live off of 32k per year when you retire you are set.
« Last Edit: September 14, 2016, 06:15:45 PM by human »

pay-no-interest

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Re: Clarification on the amount to save for early retirement
« Reply #7 on: September 14, 2016, 06:17:37 PM »
I estimate our spending per year is around $30-$35K without the mortgage costs.  I could cut back if I did more cooking and we ate out less.  Our cars are paid off, my husband does all the maintenance on the vehicles, maintenance on our house, and we both ride our bikes to our jobs and other places in town.  We expect to do this in retirement.

DH makes about $58K per year in addition to my $91K income.

I'm 43 y/o.  If SS is still around by the time I turn 65, I expect I'll get at least 2-3K per month in SS benefits.  I have earning potential for part-time work and think I could easily bring in $15-$20K per year.

We aren't eligible for pensions by our employer as we optioned for the 401K retirement account option. 

My original goal was to have the option to retire by age 55.  Now I'm thinking I may want to move it to age 50.  I'm trying to figure out if the amount in my non-taxable retirement account should be 25x my annual spending?  If so, then I need $750K in that account and at the rate I'm going, I have about 21 years left of working.   
« Last Edit: September 14, 2016, 06:35:46 PM by pay-no-interest »

terran

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Re: Clarification on the amount to save for early retirement
« Reply #8 on: September 14, 2016, 07:15:29 PM »
Include all invested assets, but don't include the value of your house. Of course, a paid off house will reduce your expenses, so you'll need less. Remember to include the taxes you'll pay as you withdraw that $30-35k in your expense estimations (so any withdrawals from traditional IRA/401k, since capital gains taxes will be minimal or non-existent at least at current tax rates at that income level).

BlueHouse

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Re: Clarification on the amount to save for early retirement
« Reply #9 on: September 14, 2016, 07:26:58 PM »
Keep in mind if you are FIRE you'll need some money in places you can access it before 59 1/2. This could be taxable accounts or if you did a Roth IRA ladder.

But if you are in the building phase just worry about enough in easily access places. So basically stocks, bonds, and cash. Whether they are in normal taxable or tax advantaged accounts. When you get close you can worry about the how to access it most efficiently. In general while building tax deferred is the best place to let it sit.

Even paying the 10% early withdrawal penalty is often better than saving taxable
Is it?  Under what circumstances?  Long investment time frame?  the penalty is in addition to regular income tax rate, isn't it?  I suppose if your income tax rate dropped from the highest bracket to the lowest it is possible, but I'm not sure how large the difference would have to be.
Can you provide an example or even just a more detailed explanation? 

boarder42

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Re: Clarification on the amount to save for early retirement
« Reply #10 on: September 14, 2016, 07:41:41 PM »
Just going from 25-15% gets you there.

http://www.madfientist.com/how-to-access-retirement-funds-early/#ck_modal2

I was of your same mindset before reading this and applying it to my own personal numbers

BlueHouse

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Re: Clarification on the amount to save for early retirement
« Reply #11 on: September 14, 2016, 08:06:10 PM »
Just going from 25-15% gets you there.

http://www.madfientist.com/how-to-access-retirement-funds-early/#ck_modal2

I was of your same mindset before reading this and applying it to my own personal numbers
Isi don't think I'll ever get to the 15% tax bracket, and the spreads aren't as broad in the higher ranges, but I'll run some numbers anyway and see how it works for my situation. Thanks for e link.

human

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Re: Clarification on the amount to save for early retirement
« Reply #12 on: September 14, 2016, 09:15:05 PM »
I agree with Terran, include all invested money not just taxable. You just have to figure out when and how to access the retirement accounts. I'm Canadian so can't help there.

If you are trying for 800k invested and a paid off house with 30k expenses when you are retired you should be quite all right.

MDM

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Re: Clarification on the amount to save for early retirement
« Reply #13 on: September 14, 2016, 09:50:07 PM »
Savings in a retirement account (401K):  $153K
Savings in a Roth:  $58K
Savings in investment accounts:  $367K (most is in index funds in Vanguard and future contributions are going into those index funds, some are in individual stocks that are performing horribly right now)
This year, I've begun to max out my retirement contribution of $18K per year in a supplemental retirement (split between a 457b and 403b)
Additional retirement contributions are 5% of my salary for my portion and my employer contributes 9%.  I make $91K gross.
I have $53K left on my mortgage and expect to have it paid off in 3-4 years.
I estimate our spending per year is around $30-$35K without the mortgage costs.
DH makes about $58K per year in addition to my $91K income.
I'm 43 y/o.

Took the numbers from the posts above, added some guesses, and entered them - correctly, I hope ;) - in the case study spreadsheet.  Results shown below.  Given those results, let's look at some comments/questions:

Quote
1. I add $500 to $1500 to my investment funds each month (this is after I pay all my bills and make my contributions to my retirement accounts)
2. Should I try to make my retirement amount reach $800K before seriously considering retirement?  This is what I'm trying to figure out to determine how much longer I plan to work full-time.
3. My original goal was to have the option to retire by age 55.  Now I'm thinking I may want to move it to age 50.  I'm trying to figure out if the amount in my non-taxable retirement account should be 25x my annual spending?  If so, then I need $750K in that account and at the rate I'm going, I have about 21 years left of working.   

1. Spreadsheet indicates you have closer to $4000/mo available for taxable investing, or more per month if you increase your pre-tax investments.  Why only $1000/mo going into investment funds now?
2. That is reasonable if by "retirement account" you mean "all invested assets".  The 25X guideline assumes 30 years of retirement.  You could have more than that even with normal life expectancy, but you could get SS in less than 30, so....  In general, "annual retirement expenses" needs to include taxes but with current tax law yours would be ~$0 anyway if you need only $35K/yr.
3. See http://forum.mrmoneymustache.com/investor-alley/how-to-withdraw-funds-from-your-ira-and-401k-without-penalty-before-age-59-5/.  If you (plural) really spend only $35K/yr outside of your mortgage then you could be FI in 3 years if the spreadsheet calculations are correct.  If you are interested, it's probably best for you to download and enter your own numbers.  Good luck!



CategoryMonthly
Comments
Annual
Salary/Wages for earner #1$7,583$91,000
Salary/Wages for earner #2$4,833$58,000
401(k) / 403(b) / TSP / etc.$1,500Room to increase?$18,000
457 plans   $379Room to increase?$4,550
Employer Match$683$8,190
Income subject to IRS tax$10,538$126,450
Federal Total Income$10,538$126,450
Federal tax$1,4982016 rates, MFJ, stand. ded., 2 exempt.$17,980
State/City tax$0Guess, using 0.00% * (AGI - Exempt'n)$0
Soc. Sec.$770Assumes 2 earners paying$9,238
Medicare$180$2,161
Total income taxes$2,448$29,379
Income before other expenses  $8,089$97,072
Monthly Average Expenses:
Mortgage$1,197$14,360
Miscellaneous$2,917$35,000
Non-mortgage total$2,917$35,000
Total Expense$4,113$49,360
Total to invest$3,976$47,711
Summary:
"Gross" income$12,417$149,000
Income taxes$2,448$29,379
After-tax income$9,968$119,622
IRA+401k/403b/TSP/457 (Savers' credit)$1,879$22,550
Living expenses$4,113$49,360
After-tax investable$3,976$47,711
Time to FIRE?:
Time to FIRE3years
Safe Withdrawal Rate4.00%percent
Real return on tax-deferred investments5.00%percent
Real, after tax, return on taxable investments4.25%percent
Current Savings
Taxable$367,000
Tax-deferred (e.g. trad. IRA/401k)$153,000
Roth + HSA$58,000
Projected Savings at Retirement
Taxable$565,112
Tax-deferred (e.g. trad. IRA/401k)$274,024
Roth + HSA$67,142
Total projected stash$906,279
Projected Expenses in Retirement
Non-loan, non-work expenses$35,000
Annual non-tax retirement expense$35,000
Total$35,000
Total loan principal due at FI$14,054
Stash needed for retirement @4.0% SWR$889,054
Have $17,225 extra.


Filing Status21=S, 2=MFJ, 3=HOH
# Exemptions2
Adult #1Adult #2
Age4343
# of earners2
Total Income$126,450
Std. Deduct.$12,600
Act. Deduct.$12,600
Exemption$8,100
AGI$126,450
MAGI$126,450
Taxable$105,750
1040 Tax$17,980
AMT adder$0
Saver's credit$0
Tax after n-r credit$17,980
NIIT$0
EIC$0
Child Tax Cred.$0
Net Tax$17,980
Monthly$1,498
Mtg. Int. (approx.)$2,099
Item. Deduct.$2,099
VersionV8.09

Loans:Orig. Prin.Orig. LengthCurr. Prin.Yrs leftRate
Mortgage$53,0004$53,00044.000%

ender

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Re: Clarification on the amount to save for early retirement
« Reply #14 on: September 15, 2016, 07:02:22 AM »
Just going from 25-15% gets you there.

http://www.madfientist.com/how-to-access-retirement-funds-early/#ck_modal2

I was of your same mindset before reading this and applying it to my own personal numbers
Isi don't think I'll ever get to the 15% tax bracket, and the spreads aren't as broad in the higher ranges, but I'll run some numbers anyway and see how it works for my situation. Thanks for e link.

If you retire early, how will you not be in or below the 15% federal tax bracket?

boarder42

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Re: Clarification on the amount to save for early retirement
« Reply #15 on: September 15, 2016, 07:46:47 AM »
Just going from 25-15% gets you there.

http://www.madfientist.com/how-to-access-retirement-funds-early/#ck_modal2

I was of your same mindset before reading this and applying it to my own personal numbers
Isi don't think I'll ever get to the 15% tax bracket, and the spreads aren't as broad in the higher ranges, but I'll run some numbers anyway and see how it works for my situation. Thanks for e link.

If you retire early, how will you not be in or below the 15% federal tax bracket?

blue house makes a metric shit ton of money. and works in DC.  go look at the race to 500 thread or the save 100k thread or one of those and you'll see

BlueHouse

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Re: Clarification on the amount to save for early retirement
« Reply #16 on: September 15, 2016, 09:26:28 AM »
Just going from 25-15% gets you there.

http://www.madfientist.com/how-to-access-retirement-funds-early/#ck_modal2

I was of your same mindset before reading this and applying it to my own personal numbers
Isi don't think I'll ever get to the 15% tax bracket, and the spreads aren't as broad in the higher ranges, but I'll run some numbers anyway and see how it works for my situation. Thanks for e link.

If you retire early, how will you not be in or below the 15% federal tax bracket?

blue house makes a metric shit ton of money. and works in DC.  go look at the race to 500 thread or the save 100k thread or one of those and you'll see
Ah, Boarder, I'm so happy to see you care enough about me to know this stuff.  <3

So I'm going to take this opportunity to point out why it can be a good idea to pay off a mortgage loan early.

No mortgage prepayment:
In my situation (HCOLA), if I DON'T pay mortgage early, then I'll be paying 42K/year just in PITI until I am aged 74.  That money has to come from somewhere, and the bulk of my stash is in a 401k, which I'll pay income tax on whenever it moves out of that account.  So 42K + whatever else I need to live on (which is admittedly kinda spendy), will land me in the 25%-28% tax bracket.  After 70, RMD and SS combined may increase that amount.  I'm also expecting tax brackets to change and to move more towards Euro-level taxes.  Just because I'm kind of conservative.

Mortgage pay off pre-retirement:
If I DO pay my mortgage early (at least before retirement), then I get to reduce the amount of withdrawal from a tax-deferred account (decreasing income) and I can maybe sneak into that 15% bracket if I can get my expenses down low enough.

The third option, of course, would probably be most appealing to most here: 
I could sell the house, move away, and probably stop working today.  But as Cathy would say, "I am a Coward".  And yes I am in this sense.  It's just too far away from what I've been aiming for for so long, that I haven't really thought it out long enough or put enough mental energy toward it.  So I'm just chugging along, working my numbers, and starting to see the possibilities that are out there for me. 

tl;dr:  I'm still too spendy to be in 15% bracket. 


mammothunder

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Re: Clarification on the amount to save for early retirement
« Reply #17 on: September 15, 2016, 11:14:05 AM »
I'd recommend that you max out both your 457b and 403b before contributing to taxable investment accounts.  You can put $18k in your 457b and another $18k in your 403b (i.e. $36k total).  You can make withdrawals from your 457b early without penalty as soon as you retire.  Just confirm that your 457b is "governmental."

pay-no-interest

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Re: Clarification on the amount to save for early retirement
« Reply #18 on: September 15, 2016, 07:28:23 PM »
MDM Thanks for working the numbers out for me.  The amount I contribute to a non-taxable retirement account is higher than what was listed on the spreadsheet. 

The total year contributions to my 401k (my contributions (5%) and employer (9%) are ~$12K.  I'm now adding an additional $18K on top of those contributions into the 457b/403b.

mammothunder I didn't realize that I could contribute $18K in both the 457b and 403b.  I thought the total contribution for the year was $18K which is why I was dividing the allocation between the two.  I'm not sure what you mean by the 457b being "governmental".  That is another question, right now I'm contributing $2000K per month to the 403b and $500 per month to the 457b.  Is it better for me to contribute more to the 457b?  I was thinking that it would be better to put more in to the 457b since I planned to retire early but wasn't sure.

I'm not making enough to contribute $18K to both accounts at this time.

Thanks for your help!
« Last Edit: September 15, 2016, 07:33:39 PM by pay-no-interest »

terran

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Re: Clarification on the amount to save for early retirement
« Reply #19 on: September 15, 2016, 08:30:24 PM »
Does the 401k belong to one spouse and the 403b to another? The 18k limit is shared between those two accounts if you have both (work for two different employers for example). The 457 has a separate limit.

The comment about the 457 being governmental was because the assets in a non-governmental 457 are subject to your employer's creditors, so its an added risk you need to consider. These are usually available at private universities and hospitals. Governmental 457s on the other hand are not subject to the institutions creditors and are usually great plans for early retirement because, unlike 401k/403bs, they allow penalty free withdrawal at any age, so as long as yours allows partial withdrawals you can withdraw as you need income without worrying about the workarounds linked above. Governmental 457s are usually available at public universities and other other government jobs and should make it pretty obvious that the plan is run by the state where your employer is located.

pay-no-interest

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Re: Clarification on the amount to save for early retirement
« Reply #20 on: September 15, 2016, 09:19:49 PM »
terran  Now that you mention it, my "401k" contributions are probably 403b contributions since I work at a public university.  All of the retirement accounts and the amounts listed in this thread are mine.  My husband has separate retirement accounts at the same university.

It sounds like my 457b is "governmental" based on your description.

letired

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Re: Clarification on the amount to save for early retirement
« Reply #21 on: September 15, 2016, 09:36:25 PM »
+1 to the 457! Those accounts are great for the reasons discussed.

401k and 403b share a contribution limit. So if you switched jobs mid-way through a year or something, your max between the 2 would still be 18k. If you have a 403b AND a 457, they have separate contribution limits and 18k can be contributed to each account. Employer contributions don't count toward the 18k limit.

If you and your husband work for the same university, you might both be eligible for both account types, giving you Epic Sh*t-tons of tax-deferred savings space!

MDM

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Re: Clarification on the amount to save for early retirement
« Reply #22 on: September 15, 2016, 09:41:20 PM »
MDM Thanks for working the numbers out for me.  The amount I contribute to a non-taxable retirement account is higher than what was listed on the spreadsheet. 
The total year contributions to my 401k (my contributions (5%) and employer (9%) are ~$12K.  I'm now adding an additional $18K on top of those contributions into the 457b/403b.

The numbers might have gone into different categories: I put the 5% 401k into "457 plans" and the 9% employer into "Employer Match", with the additional $18K put into "401(k) / 403(b) / TSP / etc." 

See snippet below, but this seems to match your totals...?  If so, that still leaves a huge discrepancy between $1000/mo vs. $4000/mo available....

CategoryMonthly
Comments
Annual
Salary/Wages for earner #1$7,583$91,000
Salary/Wages for earner #2$4,833$58,000
401(k) / 403(b) / TSP / etc.$1,500Room to increase?$18,000
457 plans   $379Room to increase?$4,550
Employer Match$683$8,190
Income subject to IRS tax$10,538$126,450

mammothunder

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Re: Clarification on the amount to save for early retirement
« Reply #23 on: September 16, 2016, 06:30:36 AM »
If you and your husband work for the same university, you might both be eligible for both account types, giving you Epic Sh*t-tons of tax-deferred savings space!

Yes!  My husband and I both work for a public university, so we have a total of $86,350 of tax-advantaged space from two 403(b)s, two 457(b)s, one HSA, and two IRAs.  We can't contribute that much though, so here's how we prioritize:

Mandatory 5% into both 403(b)s to get 9.29% contribution from the university
$18k into my 457(b) and $18k into his 457(b)
$3,350 into his HSA  (I don't have an HSA because I chose the low-deductible plan due to a serious medical condition.)
At this point, we're always in the 15% tax bracket, so I throw any extra money into our Roth IRAs for some tax diversification.  I also like that I can withdraw our Roth contributions at any age without penalty.
If I was ever able to max out the Roth IRAs, then I'd work on maxing out the 403(b)s next.

We prioritize the 457(b)s because we want to retire early.  You can make withdrawals from a 457(b) at any age without penalty, so you don't have to worry about having money in taxable accounts or doing a Roth ladder.

Terran - Thanks for explaining my "governmental" 457(b) comment!

erutio

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Re: Clarification on the amount to save for early retirement
« Reply #24 on: September 16, 2016, 09:49:23 AM »
First, Max out 457 at 18k per year.   This account is tax-deferred but unlike 403b or 401k, you can access it without penalty upon leaving your position at the university.

Next, max out the 403b.  Another 18k there.  If you have a 403b, you cannot have a 401k through the same employer, so unless you have 2 jobs (or changed jobs mid-year), they should be one entity.  Maxing out both brings you to 36k saved per year pre tax.

Pay off your mortgage on track in your stated 3-4 years.  by then, you will have ~800k spread across your retirement accounts, and if you have not had spending inflation, you'd be ready to retire before 50!  I haven't even mentioned the roth iras or HSA accounts, but with your numbers above, I wouldn't put anything into the taxable accounts anymore, unless you just have that much money left to save. 

On spend down, draw from taxable account first, then 457, then 403b once you're older than 59.5, then roth last.
« Last Edit: September 16, 2016, 09:55:23 AM by erutio »

erutio

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Re: Clarification on the amount to save for early retirement
« Reply #25 on: September 16, 2016, 09:53:36 AM »
terran  Now that you mention it, my "401k" contributions are probably 403b contributions since I work at a public university.  All of the retirement accounts and the amounts listed in this thread are mine.  My husband has separate retirement accounts at the same university.

It sounds like my 457b is "governmental" based on your description.

Please take this as no offense, but you need to get your information right together first. 

403b or 401k?  Figure it out.   You can't have both unless you have 2 jobs.  Since you work at a public univ, you probably have a 403b and 457 available, and if so, the contribution limit of 18k for each is separate.  So in other worss, you have a 18k limit for the 403b and another 18k for 457, for a total of 36k of tax-deferred space available.   


pay-no-interest

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Re: Clarification on the amount to save for early retirement
« Reply #26 on: September 17, 2016, 03:09:54 PM »
erutio "figure it out"...well, I looked on my employer website and they don't make it easy.  They have 3 categories:  alternative retirement, Supplement 403b and 457b.  The Alternative retirement is the mandatory contributions from my salary and my employer.  Given the fact that I work at a University, the Alternative retirement is likely a 403b.

With that said, I did more reading about the supplemental 403b and 457b and found that I became more confused than when I started.  So, I plan to make an appointment with the "free financial advising" service I get with TIAA/Cref.

I have one question I was hoping that someone might know about, for the supplemental 403b, it is a TIAA/Cref tax-deferred Annuity.  This is what is written for the distribution:  Distributions must meet a qualifying event:

    Separation from service
    Age 59
    Permanent and total disability
    Financial hardship as defined by IRS regulations - for example, a tuition payment, or to purchase primary residence
    Death of participant

For the 457b it is a deferred compensation and this is what is written for the distribution:  Distribution must meet a qualifying event:

    Separation from service
    Age 70
    Retirement
    Unforeseeable emergency as defined by IRS regulations - for example, an unexpected illness or loss of property
    Death of participant

More details:  Age-based distribution: Your employer will typically allow you to withdraw funds once you've reached 70.5 years of age.  Small-sum distribution: When you leave your employer, you may be eligible to withdraw your retirement savings. Your plan may distribute your entire balance if the value does not exceed $2,000. Even if your plan doesn't allow cash distributions, you can withdraw your entire retirement savings if your TIAA Traditional Account value does not exceed $2,000 and your overall account balance is below a limit set by your employer's plan (either $1,000 or $5,000).

It seems to me they won't let me take out any money prior to age 70.5 like some plans do.  Also, what is the difference between a 403b Annuity vs another type of plan?  I would like to have some understanding of this before I meet with an adviser so I know what questions to ask.  AT this point, it seems like I should put most of my money into the 403b rather than 457b so I can access the money earlier.  Thoughts?
« Last Edit: September 17, 2016, 03:16:41 PM by pay-no-interest »

terran

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Re: Clarification on the amount to save for early retirement
« Reply #27 on: September 17, 2016, 03:48:55 PM »
I could be wrong, but my interpretation would be that you have to meet one of those conditions. So if you separate from service (quit, fired, whatever) you can withdraw. If you're still working at 59.5 70.5 you will be able to withdraw from the 403b or 457 respectively. As long as your employer allows distributions you won't pay a penalty when withdrawing from the 457, but while your employer may allow you to withdraw from the 403b, if you're not yet 59.5 you'll pay a penalty since that's a federal law.