My husband and I are both teachers with pensions that max out at age 62, but we'd like to FIRE when I am 52 and he is 55. (ish) The plan that makes the most sense for us is that we stop working at those ages, but we leave our pensions alone as long as possible because, similar to SS, the older we are when we start collecting, the larger the payment will be. Should something go wrong, we can start collecting our pensions at any time and it will be enough to meet our expenses, but I think we should be able to defer at least until we are each 60, probably more like 62-65. To bridge the gap, we'll live off our savings, which are currently about 2/3 in 403b accounts, and 1/3 in Roth IRAs. Based on my calculations, we'll have twice as much as the total amount we'll need between when we stop working and when we start our pensions, and once we're both receiving pension payments, we won't need our own savings for anything but big, irregular expenses.
My question is this: As I do the calculations, I can see that we will need to draw varying amounts from our savings several years. For the first year, we'll work until June and then need a modest amount for the rest of the calendar year. For a few years after that, we'll need to support ourselves entirely independently. Then, since my husband will be 60 3 years before I am, there will also be a few years where we'll collect his pension, but still make up the difference (between his pension and our monthly expenses) with our own savings before I start collecting mine. So, in order to met our needs, we won't exactly be taking substantially EQUAL periodic payments. So, my first questions is whether that is allowed.
Second, I have no idea how SEPP are calculated, but we'll need quite a bit more than 4% some years. It'll be more like 5% in the years we need to withdraw half our annual expenses, and 10% in the years we need to support ourselves completely independently. Is that allowed/possible?
Even when we're living entirely off our pensions, we should still end up with about 40%-50% of our initial portfolio intact, but we basically plan on using about half our savings to support that 7-10 year stretch between working and collecting pensions.
If the SEPP rules don't allow what we need, I suppose we have enough of a buffer that we could just pay the 10% early withdrawal penalty, but I'm trying to figure out what our options are.