Question about withdrawal in retirement

[Calabaza]

Hello everyone.

I posted this on another forum and thought I'd try here. I've been a reader of this site for a while.

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 husband’s 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. I’ve 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 don’t 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:
Husband’s pension: $52,000
Supplemental social security: $12,800 (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. I am wondering what accounts we should withdraw from first, second, and so on in retirement.
2. Are there any accounts we should rollover?
3. Any other thoughts or advice? Anything we should be doing differently?

Thank you!! I really appreciate your thoughts.

[gocurrycracker]

Hi Calabaza,

It looks like you have a solid grasp of your financials. Well done.

Your husband's pension will pay immediately at retirement at age 50?


Assuming so, you almost don't need to withdraw anything as the pension covers 85% of expenses.
I'm not clear on the supplemental SS eligibility - usually that requires having minimal other financial resources.


You can rollover the work accounts if you wish - with the TSP there is no need (access to low fee index funds), but if the other accounts are expensive then moving is a good idea. Since you have access to total stock market funds I assume this isn't the case.

Before age 59.5, pension and brokerage account can pay the bills.
Also before age 59.5, you can do annual Roth conversions (at 12%) if it means paying <12% later.

After 59.5, full access to the retirement accounts - you can split withdrawals between Roth and Traditional to tune your taxes.

>If my husband dies before me, I would continue to get half of his pension.
A term life insurance policy can be a good solution to fund an alternative annuity if you would need to replace this income

[Calabaza]

Hi Jeremy,

Thanks for responding. I realized I wasn't clear on a few points.

My husband's retirement starts at age 50.
Huband is a federal law enforcement officer, so supplemental SS starts at age 50 and lasts until regular social security at age 62.
We're thinking we would like to have an income of about $100,000 in retirement if possible. Not exactly frugal, we know.

Thanks again.

[gocurrycracker]

$100k / year spending

$65k from pension and SS. More at age 62 + spousal benefit

Additional $35k of spending from investments

Withdrawal rate of ~2.5% (35k / 1.4kk - excluding condo)

Withdrawal order is the same

In a year you will have 9-10 years of 35k expenses in taxable / brokerage / cash, which brings you to age 59.5 (full access to traditional accounts)