Author Topic: Question - Funding the Bridge years, ER to 59.5 - Investment Choices  (Read 2225 times)

h2ogal

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I have a Question for you folks on short term investments for the years between ER and 59.5.

I currently have a small amount in taxable accounts – less than $60K, but plan to add a lot to that over the next 3 years, and will have $150-200K in taxable accounts before ER.  This will be enough to fund the ER years of 55---59.5 if I choose to stop work entirely.   

I have several IRAs also, enough to fund full retirement from 59.5 on, and understand I can do a 72T/SEPP from one or more of the IRAs if needed at 55, but I would prefer to keep maximum flexibility, and just draw down a taxable account instead (I may choose to do part time work, and If I did I would gross $72K/year, and wouldn’t want to draw any income from investments).
What investments do you recommend for this short term bridge period?  I’m not interested in Real Estate or Landlording.  I was thinking of putting my 5 year bridge Taxable account into I Series Treasury Bonds and TIPS or a low fee Vanguard TIPS based fund, and leaving the all the IRAs in total market and global market index funds.  Overall I would have a decent portfolio balance of Bonds/Stocks, and I would be getting a break on state tax at least when drawing from the taxable account.
Who has a better idea?

rpr

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Re: Question - Funding the Bridge years, ER to 59.5 - Investment Choices
« Reply #1 on: February 12, 2015, 06:00:13 PM »
If you retire after age 55 and have a 401k plan with the company, you can withdraw from the 401k accumulation. There are no penalties. You would of course pay taxes. This is only true for 401k plans and NOT for IRAs.

h2ogal

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Re: Question - Funding the Bridge years, ER to 59.5 - Investment Choices
« Reply #2 on: February 12, 2015, 06:03:25 PM »
Can you do that if you leave the company with the 401K and take a part time job elsewhere?  Do you need to lock into regular periodic payments?

seattlecyclone

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Re: Question - Funding the Bridge years, ER to 59.5 - Investment Choices
« Reply #3 on: February 12, 2015, 07:00:04 PM »
Can you do that if you leave the company with the 401K and take a part time job elsewhere?  Do you need to lock into regular periodic payments?

Yes, as long as you leave the company after you turn 55 and don't roll over the balance to an IRA or another 401(k), it doesn't matter whether you're actually working somewhere else or not. No periodic payments needed.

Juslookin

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Re: Question - Funding the Bridge years, ER to 59.5 - Investment Choices
« Reply #4 on: February 13, 2015, 05:25:49 AM »
This is a question I have also been pondering, I'm going to follow the answers. Thanks OP.

h2ogal

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Re: Question - Funding the Bridge years, ER to 59.5 - Investment Choices
« Reply #5 on: February 23, 2015, 07:02:13 PM »
Im thinking that it makes a difference which job you retire from too, especially if like me you change jobs and do part time work or contract work towards the end of your career.   I have a nice balance in my 401K at my current job, certainly enough to live on for several years...BUT, I may leave before 55 and do part time work, so by the time Im 55 I may not have much in my part-time job 401K...Unless the new company lets me roll over funds from the old 401K into into their 401K.

Im telling you guys the withdrawal part is a WHOLE lot more complicated than the saving part...