Need retirement guidance

[sisto]

I don't think a full case study is needed here, but I need help figuring out my FIRE plan. I'm not the typical ER case. I'm 46 and my wife just turned 52. I plan to retire in 2021 or 2022 depending on how things look. This should be possible, but I don't have the typical taxable accounts that most here have. I'm trying to figure out how fund the first part of retirement and figure out where my priorities should be investing wise to be setup for the best case when I pull the FIRE trigger. Here is the general situation:

~$360K in 401K accounts. $20K is ROTH and $34K is a rollover IRA from another company.
~$100K in taxable accounts
~$35K cash
~$13K IRA for wife (plan to fund $6500/yr until FIRE)

I own a house that I owe $203K on and it won't be paid off for another 12.5 years. I pay and extra $100/mo to principal, but may stop that. The house is worth $320K, but I don't really like counting it in my NW since I plan to keep it in FIRE. Paying off the house would require $1K/mo less needed in FIRE, but I don't think I'll be able to pay it off before FIRE.

I make too much money to get a tax advantage to fund and IRA for myself and I don't think I can fund a ROTH either. I've been thinking that the SEPP might be the way for me to go, but I'm not sure how that is taxed. Any experts out there on that? What is my best strategy here?

I currently have 30 years of earnings according to SSA and I will be working long enough to have a full 35 so my SS will be substantial when I do take it. Can anyone offer good advice if I should take it early? I had originally been thinking about waiting until 70 for max benefits. My wife has enough credits to qualify for SS, but hasn't worked in over 20 years. Wondering if she should wait to file or go early. She will be much better off claiming half of my benefit, but she is also 5 years older. It's much better when the high earner is older, but it is what it is and I'm just trying to figure it all out.

So I guess my real question is: What strategy is best for my situation when I do FIRE and where do I direct my savings?

Thanks in advance!

[MDM]

I don't think a full case study is needed here, but I need help figuring out my FIRE plan.

You might fill out the spreadsheet linked in the case study sticky as a warmup, then use one or more of the calculators mentioned in https://www.bogleheads.org/forum/viewtopic.php?t=115839#p1686175 for a more detailed look.

I'm not the typical ER case. I'm 46 and my wife just turned 52. I plan to retire in 2021 or 2022 depending on how things look. This should be possible, but I don't have the typical taxable accounts that most here have. I'm trying to figure out how fund the first part of retirement and figure out where my priorities should be investing wise to be setup for the best case when I pull the FIRE trigger. Here is the general situation:

~$360K in 401K accounts. $20K is ROTH and $34K is a rollover IRA from another company.
~$100K in taxable accounts
~$35K cash
~$13K IRA for wife (plan to fund $6500/yr until FIRE)

Note that if you work until the year you turn 55, you may withdraw from your 401k without penalty.  Not without tax, but without penalty.  See last row in the table at https://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/Retirement-Topics---Tax-on-Early-Distributions.

I own a house that I owe $203K on and it won't be paid off for another 12.5 years. The house is worth $320K, but I don't really like counting it in my NW since I plan to keep it in FIRE.

Good choice to not count it in NW.

Paying off the house would require $1K/mo less needed in FIRE, but I don't think I'll be able to pay it off before FIRE.

That's ok, because the $1K/mo doesn't continue forever and thus should not be included as an expense in the "25 * expenses" rules of thumb.  For you, that "rule" is closer to "25 * non-mortgage expenses + remaining mortgage principal" - assuming your mortgage rate is lower than your expected investment return.

I make too much money to get a tax advantage to fund and IRA for myself and I don't think I can fund a ROTH either.

See https://www.bogleheads.org/wiki/Backdoor_Roth_IRA.

I've been thinking that the SEPP might be the way for me to go, but I'm not sure how that is taxed. Any experts out there on that? What is my best strategy here?

See http://forum.mrmoneymustache.com/investor-alley/how-to-withdraw-funds-from-your-ira-and-401k-without-penalty-before-age-59-5/.

I currently have 30 years of earnings according to SSA and I will be working long enough to have a full 35 so my SS will be substantial when I do take it. Can anyone offer good advice if I should take it early? I had originally been thinking about waiting until 70 for max benefits. My wife has enough credits to qualify for SS, but hasn't worked in over 20 years. Wondering if she should wait to file or go early. She will be much better off claiming half of my benefit, but she is also 5 years older. It's much better when the high earner is older, but it is what it is and I'm just trying to figure it all out.

The SocialSecurity tab in the case study spreadsheet can be your warmup, then see the links in http://forum.mrmoneymustache.com/journals/wrestling-with-safety-margins/msg688578/#msg688578 and http://forum.mrmoneymustache.com/journals/wrestling-with-safety-margins/msg687383/#msg687383 (the latter has been updated for the law changes ~a month ago).

So I guess my real question is: What strategy is best for my situation when I do FIRE and where do I direct my savings?
Thanks in advance!

With any luck the items above will have addressed this in pieces.  Of course, any questions after going through those - just ask.  Good luck!

[Exflyboy]

As I have mentioned elsewhere the age 55 is fine in theory, but it plan specific. In my case it came with restrictions.. I could not simply take a monthly withdrawal like I can at 59.5, I had to take the whole thing in one lump sum.

It will be a cold day in Hell before I do that of course.

[sisto]

Thanks MDM for your awesome reply. While waiting for a reply I looked into some of this on my own. I realized that I can actually do a ROTH IRA, but I'm not sure how I can actually fund it and $6500/yr for my wife, which I prefer to fund hers for the partial tax break we get. I only have $700/mo extra each month. I am almost maxing out my 401K and also max out an HSA and ESPP through work. I'll go to work on the spreadsheet.

[sisto]

Exflyboy, thanks for your thoughts. In my case it's true I can withdraw at 55. I just don't think I can stand to stay the extra 2-3 years. I'm already counting down the time now. I can retire through my company with rule of 75 on June 7, 2021. I would work through the end of the year for the profit sharing 401K contribution though and maybe even into April of 2022 to get some stock vesting and bonuses.

[MDM]

As I have mentioned elsewhere the age 55 is fine in theory, but it plan specific.

That is true.  Just because the law allows a 401k plan to allow less-than-lump-sum withdrawals after retirement at age 55 does not mean the 401k plan must do so.  Don't know of a good reason why the plan would not allow this, but the goodness of the reason is not at issue....