dhrivnak
Active Member
Move to TN and be comfortable on $1MThis article came out today and it made me depressed
The new savings target for a modest retirement: $8 million?
4% withdrawal or 25X expenses is the most accepted rule.
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How much $ to retire and how to fund your lifestyle in retirement
- Thread starter dl003
- Start date
One other minor issue is that your federal tax rate will drop. Depending on your state you will be paying 15% for a short term trade on a taxed account.
MikeQ
Member
I retired at 53 this past Friday by doing a 72t. Here's a calculator so you can see what the plan will allow you to withdrawal.
72t Distribution Calculator
Another way you never hear about is the rule of 55.
If you leave your employer in the year you turn 55, you can access ONLY that employers 401k without penalty.
I read up on this a little. I don't seem to understand. It basically allows you to skip the penalties of withdrawing early, full stop. Like, any age? It doesn't seem to have many restrictions, am I missing something? Seems like it sorta negates the penalty entirely, letting you do what you want?
The only bad part that I see for the 72t rule is that the payments will always be equal so you cannot adjust the amount that you will receive if the stock market goes down or up or if inflation is low or high etc.
adiggs
Well-Known Member
You're about right - any age. The restriction is that the size of the annual withdrawal is pretty restricted, is calculated when you start the distributions, and doesn't change. There is a method that makes the annual distribution dynamic to that year's balance, but tends to be the lower % option of those available. I figure the farther away you are from 60, the more attractive that choice becomes, but I haven't researched that.
I'm close enough that I'll take the choice that yields the largest annual distribution.
So it doesn't let you do what you want, but it does provide a choice that enables a retirement account to provide an income prior to age 60.
MikeQ
Member
Basically what people are saying is correct.
Let's say you want to retire today. The calculation on today's balance tells you how much you can withdrawal. You must withdrawal that amount for the GREATER of 5 years or the number of years until you reach 59 1/2.
Any deviation from when and how much you withdrawal will be a violation of the plan and you must pay the 10% penalty on all distributions you've taken to that point.
The 72t calculation is based off your lifespan, account balance and the 120% of the midterm bond rate.
In February this rate was something like 2.26%. It's now 0.42%. So timing is everything. Now might not be the time for some.
I'm fortunate enough that my balance outweighs the negatives of the current bond rates.
You can track the bond rates here:
Index of Applicable Federal Rates (AFR) Rulings
Look under "120% AFR" in the annual column.
MikeQ
Member
If you only have a single IRA or 401k, a good strategy is to split your IRA/401k into two. Do the 72t on just one of them. That way if you need to access some emergency funds, you do it out of the IRA that doesn't have the 72t associated with it.
This way you only incur the 10% penalty on the one withdrawal instead of all your 72t withdrawals. Also some IRA withdrawals are penalty free such as medical expenses, education or home purchase. If you took one of these on the 72t account, you would incur all the penalties. This is another reason it's a good idea to keep some money out of the 72t in another IRA.
This way you only incur the 10% penalty on the one withdrawal instead of all your 72t withdrawals. Also some IRA withdrawals are penalty free such as medical expenses, education or home purchase. If you took one of these on the 72t account, you would incur all the penalties. This is another reason it's a good idea to keep some money out of the 72t in another IRA.
gavine
Petrol Head turned EV Enthusiast
Interesting. How do you split your 401k into two accounts? Do I need to withdraw and put-into an IRA or would the 401k manager be able to do it?
MikeQ
Member
Since you would be retiring, you would roll your 401k into two IRAs.
The rule 72t strategy is for people retiring early. If you're retiring, then you would be eligible to rollover part or all of your 401k into a traditional IRA (or even better, convert into a roth!). This would be called a "rollover distribution" with my previous 401k's.
You can also do Roth Conversions to access money early. 2 IRA's with 72t strategy set up for one and do Roth Conversions on the other could be an option depending on your situation. Read this to see an in depth analysis of the various ways to access your "retirement" money early without penalty and the pros/cons.
How to Access Retirement Funds Early
How to Access Retirement Funds Early
Nice link! Interestingly enough, it seems taking the early-withdrawal tax penalty is preferrable to putting the money into a Roth IRA early on!
I live in South Carolina so is really cheap. How about retiring in Portugal for $20k a year.
I am scrambling here. Because years ago when planning when to stop adding to my investments and start using them I put down a date and a number for my investment account. Whichever came first - I'd start spending.
But then when we shot past $500 recently that number got awfully close. I don't think the date I set is relevant any more.
So much to think about and plan. Sooner than expected. Feels unreal. I love it!
But then when we shot past $500 recently that number got awfully close. I don't think the date I set is relevant any more.
So much to think about and plan. Sooner than expected. Feels unreal. I love it!
MikeQ
Member
This is what happened to us. We surpassed our number in February of this year. We've planned from the beginning to retire at 55 but were able to pull it into 53 for me and 52 for my wife. My wife is a teacher so she decided to finish out the remainder of the year. She teaches elementary school and losing a teacher mid year can be tough on the younger kids. Since she wasn't going to retire until May, I decided to keep going to August to cash in a final stock option grant from work.
Been retired for 12 days now and even with the pandemic making it hard to go do things, it's better than work. Such a feeling of freedom knowing that you have no responsibility (Youngest left for college a couple days before I retired) and everyday is yours to enjoy however you want.
Been retired for 12 days now and even with the pandemic making it hard to go do things, it's better than work. Such a feeling of freedom knowing that you have no responsibility (Youngest left for college a couple days before I retired) and everyday is yours to enjoy however you want.
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lafrisbee
Active Member
What is a guy with $80,000,000 doing on a chatboard?
EDIT: so you changed it to "60." Still, if I get to 2 million I am going to be on eternal vacation...and say good bye to all you fine folks.
original post still on my page.... 2000 cybertrcks! lol
gene, 8 minutes ago
New
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You are missing out on the ability to lock it autopilot price, which might or is even likely to make that model y actually appreciate in value. Also resale value is quite good on them. I'm taking delivery of one soon mostly because of those two reasons. Well, and it'd be nice to drive it until the truck shows up.
I bought the Model Y because my Model 3 trunk just could not fit equipment that I have to carry. As soon as Cybertruck comes I'll sell the Y. Ok, so I loose a bit of money, who cares, I've made enough on TSLA to buy what, almost 2000 Cybertrucks for free.
https://www.noidlingproject.com/
Can you teach us how to retire on $2 million in the bank in US? Say expecting to live another 40-50 years. Family of 4. Need health insurance, pay for college, cars, etc.. Want to travel. It sounds nice until you start thinking about how to *actually* do it. I think you can start being serious at about 5M and definitely do it at 10M, but at 2M? I just don't see how realistically...
mekberg
Member
Definitely not.
DINK here with a target of 3.5-5M. I intend to own my house outright and live in a country with socialized medicine.
Pezpunk
Active Member
I'm in the exact same position (family of four), have recently gotten serious about running the numbers, and although it matters a whole lot where you live, here in Northern VA, I'd say your assessment is absolutely spot on. $2 million -- not gonna work. $5 million -- probably (depending on a bunch of factors). $10 million -- definitely.
of course there are lots of variables, such as your debt situation and what kind of life you want to lead. you can retire on a lot less if you want to, say, move to Mississippi and live on baked beans.
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