When to retire?

[Buckminster]

Don't have kids in your 40's like we did, you'll end up working to nearly 60 like I will be. Have your kids earlier so you can enjoy grandchildren earlier.

Nice to see this written down by someone. We did it the right way round - another benefit being that you can travel once they fly the nest. We would have been better parents if we had waited though...

Millennials in the UK are struggling to afford a wedding and a mortgage, let alone kids...

 

[MikeQ]

Why are you using the (72t) SEPP vs Roth IRA Ladder to pull your money from retirement accounts?

I'd have to do a Roth conversion and the money needs to stay in the Roth for 5 years before you can withdraw.

I'm about to turn 54 so the 72t works for me.

 

[dmvevguy]

Reading up on the 72T...are you allowed to start at the age of 40 (or early 40s)? I'm 36 and thinking of taking a break and spend time with my kids more and may need supplemental income. I don't know the rules of 72t, so just learning on here. Thank you in advance for this knowledge!

 

[mongo]

Reading up on the 72T...are you allowed to start at the age of 40 (or early 40s)? I'm 36 and thinking of taking a break and spend time with my kids more and may need supplemental income. I don't know the rules of 72t, so just learning on here. Thank you in advance for this knowledge!

Yeah, you can start anytime, but you can't stop once you do.

 

[dgpcolorado]

Reading up on the 72T...are you allowed to start at the age of 40 (or early 40s)? I'm 36 and thinking of taking a break and spend time with my kids more and may need supplemental income. I don't know the rules of 72t, so just learning on here. Thank you in advance for this knowledge!

Yes, you can start withdrawals at any age BUT you have to continue the plan for five years or until age 59½, whichever is longer, or you will get hit with penalties all the way back to when you started. Don't start unless you are sure you can carry on with the plan through age 59½!

 

[MikeQ]

Yes, you can start withdrawals at any age BUT you have to continue the plan for five years or until age 59½, whichever is longer, or you will get hit with penalties all the way back to when you started. Don't start unless you are sure you can carry on with the plan through age 59½!

One thing to note is that a 72t doesn't preclude you from making other income. If you decided the 72t wasn't working and wanted to go back to work, you could always bank the 72t income and invest it or use it to augment your work income.

 

[MikeQ]

To all those contemplating early retirement, you should also investigate the rule of 55.

If you don't like the idea of the 72t or it won't generate the income you want, the 401k rule of 55 is also a little know provision.

In the year that you turn 55, if you leave work (voluntary or not), you can access your CURRENT employers 401k without penalty. Note, this is only your current employer. However, you're not restricted like the 72t in the amount you can withdraw.

Also note with the 72t, you are free to combine accounts prior to the 72t to create a balance you want.

I had two 401k accounts that I combined into a single IRA. The IRA is what I started my 72t with. I kept another IRA out of the 72t account for an emergency fund. This emergency fund isn't to replace a regular savings account. We have ample emergency savings as well.

The IRA emergency fund is for really unforeseen issues. So much so that I'm not sure what we would use it for. However, it's there so we wouldn't need to violate the rules of the 72t and then potentially be on the hook for years of early withdraw penalties.

 

[pete8314]

Love this thread. That's all. I don't understand much of the financial stuff, but the wisdom and experience illustrated here is insightful.

 

[dmvevguy]

Yes, you can start withdrawals at any age BUT you have to continue the plan for five years or until age 59½, whichever is longer, or you will get hit with penalties all the way back to when you started. Don't start unless you are sure you can carry on with the plan through age 59½!

Yes, you can start withdrawals at any age BUT you have to continue the plan for five years or until age 59½, whichever is longer, or you will get hit with penalties all the way back to when you started. Don't start unless you are sure you can carry on with the plan through age 59½!

Thank you all for this information! I will look into it. I have my own tech consulting business, and am thinking of early retirement and just planning for the worst case scenario in case I need a little bit of income. I own rental properties that would cover my cost of living, but just thinking about doing this in the next few years and wanting a fall back plan in case!

 

[OldPro]

Ha, yes, kids are an insane amount of work! Can't immagine how I could have managed them while still at work, though.

In regards to having children, If I had it to do all over again and it were possible....I'd hold "interviews" so I wouldn't have ended up with two
that are a pain in the butt!

 

[ZeApelido]

The timing of when to have children is an interesting discussion, and I don't think there is one answer. We had our children in mid to late 30's.

But I spent lots of time in my 20's doing lot's of "bucket list" items that others may get around to doing later. I lived in 3 other countries. Learn some languages. Traveled all over the place. Learned a lot about different cultures and uh, persons of the opposing gender. And managed to get my phd too.

Most of those things didn't cost that much money, but I certainly wouldn't have been able to do them while I was working and making more money.

And, you may not know 'when' you will be able to retire until you are older anyway! If I had to keep working until I was 70, wouldn't have many regrets since I had many life experiences when I was younger (and could take advantage of it with health).

Just one way to skin a cat.

Now, I have just recently gotten all our investments well documented, and the TLSA gains have put us near 4m. I am still trying to digest what it means. I don't think we are anywhere near 'retirement', but it feels pretty good to see there is going to be at least a lot of flexibility in how we choose to live coming up. We are 40, and with young kids, there's a lot of expenses. In a few years those will decline a good amount, and hopefully I can manage our investments to get at least decent returns. At that point, I think we will be in great shape.

Getting back out in our mid 50's with full freedom is gonna be pretty cool considering I did take advantage of freedom in my 20's.

 

[Grassy Knoel]

Not a retirement question pers e, but looking to generate some liquidity from TSLA shares in conjunction with a a bank in Canada.
Looking for some cash to diversify investment, new vehicle and home repairs.
Their recommendation was an equity collar 85% - 145% for 3 years. They'd then provide me a loan on the shares at 1.6%
I'd quite sure that I'd be "loaning" them the shares to enable the equity collar.

Any red flags? Would a straight forward Margin loan be better?

Thanks in advance for the support

 

[EVNow]

Not a retirement question pers e, but looking to generate some liquidity from TSLA shares in conjunction with a a bank in Canada.
Looking for some cash to diversify investment, new vehicle and home repairs.
Their recommendation was an equity collar 85% - 145% for 3 years. They'd then provide me a loan on the shares at 1.6%
I'd quite sure that I'd be "loaning" them the shares to enable the equity collar.

Any red flags? Would a straight forward Margin loan be better?

Thanks in advance for the support

Sell calls. If you are new - spend (quite) sometime learning first.

 

[Grassy Knoel]

Sell calls. If you are new - spend (quite) sometime learning first.

Thanks for the response. Total newb on the matter of calls so likely a bad idea. Also, looking to free up a larger chunk of liquidity rather than have the funds trickle in. Margin or Equity Collar... thoughts? Just inherenetly suspicoius of the banks so worried that they are trying to fleece em.

 

[Featsbeyond50]

The timing of when to have children is an interesting discussion, and I don't think there is one answer. We had our children in mid to late 30's.

But I spent lots of time in my 20's doing lot's of "bucket list" items that others may get around to doing later. I lived in 3 other countries. Learn some languages. Traveled all over the place. Learned a lot about different cultures and uh, persons of the opposing gender. And managed to get my phd too.

Most of those things didn't cost that much money, but I certainly wouldn't have been able to do them while I was working and making more money.

And, you may not know 'when' you will be able to retire until you are older anyway! If I had to keep working until I was 70, wouldn't have many regrets since I had many life experiences when I was younger (and could take advantage of it with health).

Just one way to skin a cat.

Now, I have just recently gotten all our investments well documented, and the TLSA gains have put us near 4m. I am still trying to digest what it means. I don't think we are anywhere near 'retirement', but it feels pretty good to see there is going to be at least a lot of flexibility in how we choose to live coming up. We are 40, and with young kids, there's a lot of expenses. In a few years those will decline a good amount, and hopefully I can manage our investments to get at least decent returns. At that point, I think we will be in great shape.

Getting back out in our mid 50's with full freedom is gonna be pretty cool considering I did take advantage of freedom in my 20's.

40 years old and 4M in the bank, I say you've already managed a nice return. Good job (though maybe below average in this neck of the woods lol). If I was you, I'd ditch CA and retire now.

I'm 56 and I want to retire bad. I love what my cousin said, he said I'm "on a retirement jihad". I was thinking I'd need about 2.2M but as I've gotten close to that number I've taken the time to figure out my expenses and look into health insurance, and now I'm thinking I need closer to 3M.

To address the OP question 'when to retire', for me 3M really does seem to be the magic number. With 3M, a market average return of 9 percent provides growth substantially above expenses and it's also enough to comfortably absorb a 2-3 year market downturn without dipping below a level that would lead to a crash & burn scenario. It also helps that, by happenstance, I have it lined up so I can go two years without touching investments. First year will be a combination of savings and Rule 55 money. The rule 55 money is in mutual funds, not precious TSLA shares, so I don't mind spending that. Second year will be proceeds for selling our east coast house. We'll move back to our house in income tax free washington state.

 

[WattsHappening]

I'm struggling with wanting to retire asap versus getting to a more comfortable financial position before pulling the trigger. And the biggest unknown is what kind of returns we can expect going forward.

If we assume a 7-9%, 'safe' annual return, we probably wait several years, build up our finances, and figure out what our daughter's higher education costs are going to be before we retire.

BUT, if we assume any kind of outsized returns from TSLA for the next 5-10 years (say 30%+ annually), I am sure we can retire tomorrow and our assets would outgrow our spending.

Guess there are multiple layers of 'going all in' on TSLA. Putting the vast amount of investable funds into TSLA is one. Retiring assuming continued big returns on TSLA is another.

 

[EVNow]

Thanks for the response. Total newb on the matter of calls so likely a bad idea. Also, looking to free up a larger chunk of liquidity rather than have the funds trickle in. Margin or Equity Collar... thoughts? Just inherenetly suspicoius of the banks so worried that they are trying to fleece em.

How much would you really make with the collar ? Collar is basically selling calls and buying puts - obviously if you just sell calls you get more money.

What are the actual numbers you are getting (per 100 shares) ?

 

[TSLA Pilot]

I'm quite surprised that no one has posted this video from SMR here; dividends from TSLA changes EVERYTHING on this thread.

While dividends can increase and decrease over time, I suspect with the cash flow being generated by Tesla circa-2030 or thereabouts, one will NEVER need to sell shares or play the risks of covered calls either.

Watch, think, and enjoy the possibilities of continuing to accumulate TSLA shares while they're still "On Sale" from their $900+ highs of months ago (as we are):

 

[2daMoon]

I remember that one.

It made a lot of sense, and I look forward to the day Tesla decides they have way too much money coming in and can't think of anything better to do with it than give it to their shareholders.

 

[Buckminster]

I am of the opinion that TSLA will not sell cars and run their own robotaxis. This would mean no cash for dividends.