Author Topic: Thoughts, please  (Read 953 times)

Pinguina

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Thoughts, please
« on: May 07, 2020, 05:57:03 PM »
Hello everybody.

Iíve been a long time reader but never posted.

Life Situation:
My husband and I have been on this FI mission for about 8 years now and are planning on retiring June 2021. Luckily, we can keep my husbandís health insurance when he retires, at the employee rate (unless the law changes), especially considering my health care expenses.

Me: 46 y.o., no kids. I have a syndrome that causes my joints to dislocate frequently and is progressively getting worse. Iíve had numerous surgeries and will need more in the future (2 in the near future), which (in part) prompted our FI journey.

Husband: 49 y.o., no kids.

We currently travel a lot for pleasure (mostly international) using airline miles and would like to travel even more during retirement. Also, since we have no kids, my husband jokingly says his goal is to die with $1 left in the bank.

Income:
Me: $71,000
Husband: $141,000

Taxes:
We live in Florida

Yearly Expenses:
Living expenses: $60,000 (28%)
investments/savings: $127,000 (60%)
Taxes: $25,000 (12%)

We max out retirement accounts and invest $44,400 in a brokerage account each year, and will continue to do so until June 2021.

Assets:
TSP:       $600,000 (100% Total Stock Market)
457:        $78,000 (100% Total Stock Market)
403b:       $98,000 (100% Total Stock Market)
Me: Roth IRA:    $106,000 (55% VTI, 45% VTTHX) I donít buy VTTHX anymore
Husband: Roth IRA: $140,000 (100% VTTHX)
Me: SEP IRA:    $79,000 (no longer contribute, 42% VTI, 58% VTTHX)
Me: Work retirement acct: $27,000 (maybe roll this over once I leave my job?)
Inherited IRA:    $18,000
Cash:        $40,000
Brokerage acct: $$226,000 (100% VFIAX)
Condo:            $200,000 (paid off)
Total:      $1,612,000

Retirement Income:
Husbandís pension: $52,000 (starts at age 50)
Supplemental social security: $12,800 (starts at age 50 and lasts until he can get regular social security at 62).

If my husband dies before me, I would continue to get half of his pension.

Liabilities:
None

Questions:
1. We would like to have an income of about $100,000 in retirement. I am wondering what accounts we should withdraw from first, second, and so on in retirement.
2. Are there any accounts we should roll over or change?
3. Any other thoughts or advice?
 
Thank you!! I really appreciate your opinions.
« Last Edit: May 10, 2020, 08:14:47 AM by Pinguina »

NI

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Re: Thoughts, please
« Reply #1 on: May 07, 2020, 06:09:51 PM »
Markets are down, so withdraw least impacted funds first like fixed income.

Also, if you believe taxes will rise due to the coronovirus stimulation, draw the taxable first.

zolotiyeruki

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Re: Thoughts, please
« Reply #2 on: May 15, 2020, 06:02:18 AM »
FWIW, if your retirement accounts are all in index funds, you might consider consolidating them, just so you have less to keep track of.

There's a great tool for answering your first question (which accounts to withdraw from first) here:  Behold, the Internet Optimal Retirement Planner.

You have plenty saved up to cover your projected $100k/year spending, assuming the pension holds up.  Congratulations!  However, you have a very large percentage of that money locked up in places where you can't access it before you hit 59.5.  You're in the 24% bracket, and in retirement, you'll be paying 22% on the top bits of your income, so there's not much tax savings to be had by deferring those taxes.  The $265k in your brokerage account will only cover your $35k/year (the amount not covered by SSI and pension) withdrawal for 6.5 years, maybe a bit more with market returns, so you need to come up with another $100k-ish to get you to the magical 59.5 year mark, when all those retirement funds become available.  Instead of continuing to contribute to your retirement accounts, you may want to redirect those contributions to your brokerage account, or at least to Roth IRAs, for the next year, so that you can use those funds penalty-free to cover your retirement expenses.