Messages

1

Early Retirement / Re: Salary Deferral Distribution

« on: January 19, 2023, 11:35:00 AM »

Thank you for your insights and help!

2

Early Retirement / Re: Salary Deferral Distribution

« on: December 31, 2022, 07:36:50 AM »

Happy New Year!

Thanks for your response. I agree.
Between 5 yrs(22% marginal TB)  and 10 yrs (24% marginal TB) distribution options which one would be better? It's financially stable company, pays out a min of 6% and averaged 7% in the last 20 years.  So which is better, take 5 years distrib. and invest in index funds or 10 years with a min 6% rate of return...in the wake of the current economic and stock market down turn?

3

Early Retirement / Salary Deferral Distribution

« on: December 23, 2022, 03:34:28 PM »

I quit my job back in Apr, 2022 to Coast FIRE in 8 years. 

Now on a Freelance contract till Jun, 2023 and expected to make 80K in 2023.

My salary deferral plan (457) from ex employer begins distribution in Feb, 2023.  I have an option to spread it across 5, 10, 15 years.
Current balance is 400k and interest is accrued during the distribution phase averaging between 6-7% per year.
 
For 2023, if we spread the 457 distribution across 10 or 15 years we remain in 22% Marginal bracket, if 5 years it will be 24%. Not sure after 2023, depends on my gig income. We can meet our expenses with my spouse's reatively stable income + any of 5, 10 year (not 15 yr) distribution.

Question: Not able to decide to go with 5,10 or 15 years distribution? Any thoughts very much appreciated.

Thanks for your help!
Sam

4

Early Retirement / Re: Should I FIRE or Continue

« on: March 10, 2021, 12:11:51 PM »

Thank you very much for your help!

5

Early Retirement / Re: Should I FIRE or Continue

« on: March 08, 2021, 09:24:48 AM »

I made changes accordingly and re-ran it. Success rate is still 100% even after removing part time job for 6 years. That was interesting!  Stocks - 75%, Bond - 20% , Cash - 5% using all historical data available.

Btw, that's agood way to factor in variability in the withdrawals, 3, 6 yrs... Thank you.

 
Questions
1. Based on the results, does it make sense to spend up a little more?

2. Besides roth conversions, any other ways to tax optimize estate for kids?

Thanks

6

Early Retirement / Re: Should I FIRE or Continue

« on: March 07, 2021, 07:08:12 PM »

I put in the numbers in cFiresim. It's reassuring! Hope I did it right . Thanks for the suggestion. Used firecalc in the past but not this one before.

In simulations, I used variable spending option, couldn't figure out of any other way to accommodate variable withdrawal amounts, first 3, then 6 years and thereafter.

Please let me know if there are better ways/inputs running these simulations

Sim 1
  Variable Spending Inputs:
       Portfolio value: 1800k, Spending Ceiling : 145k, Floor: 100k, Inflation Type: CPI Historical, Z-value: 0.5

   Other inputs:
       Social Security @ 62 yrs w/ 50% spousal benefit, part time 20k income for 6 years

        Success Rate: 100%
 

Sim 2
  Variable Spending Inputs:
       Portfolio value: 1800k, Spending Ceiling : 145k, Floor: 120k, Inflation Type: CPI Historical, Z-value: 0.5

   Other inputs:
       Social Security @ 62 yrs w/ 50% spousal benefit, part time 20k income for 6 years

        Success Rate: 94.96%

Thank you again Jeremy, appreciate it!

7

Early Retirement / Re: Should I FIRE or Continue

« on: March 05, 2021, 07:38:14 AM »

Here is the blueprint. Any thoughts, comments are appreciated!

- flexible to go back to work, full or part time if things don't go well. Market Crash etc.

First 3 years
   Income
       - 100k/yr (SP Job)
       -  45/yr   ( 457 distrib. over 10 yrs @ 7% RR, St. Bal=330k)
    ---------------------
   Total: 145

   ~Deductions
       -  ~7k   (FICA)
       - 23k (Fed & State taxes)
       - 10K (Hlth Ins + HSA, 7k)
     ----------------------------
     Total: 40k

    Net Income: 104 k /yr      
 
    Marginal Tax Rate: 22%

  Next 6 years

     Income
        - 45k/yr   ( 457 distrib. over 10 yrs @ 7% RR, Starting Bal=330k)
        - 20k /yr  (Taxable account, expected to be tax free)
        - 20k /yr   (Freelance work)
        - 35k /yr  (IRA St. Bal= ~1700k, 15k collg tution, no penalty | 20k w/  penalty )
     -------------------
     Total: 120k

     Deductions
         - <1k (FICA)
         -  <11k (Fed, State taxes, 10% EW penalty)
         -  ~ 12k (ACA prem. + HSA contrib. (7k) )
     ---------------------------
      Total: 24k

    Marginal tax : 12%

    Net Income : 96k

 59.5 and beyond
     - Kids out of college
     - Scale down. Expenses relatively much lower
     - Pay off Mtg & other loans if possible
     - Re-retire and revise withdrawal rate.

     Income
        -  80k (~ IRA St. Bal = 2000k  @ 4% SWR)
        -  Explore Roth conversions etc.
        -  Begin social security @ 62 (low life expectancy in the family)

8

Early Retirement / Re: Should I FIRE or Continue

« on: March 04, 2021, 08:48:48 PM »

Thank you very much. It makes sense.
I appreciate your time into this!

9

Early Retirement / Should I FIRE or Continue

« on: March 04, 2021, 08:24:47 AM »

I am a huge fan of GCC, been following his blogs for several yrs. Thank you for helping us out of this rat race!

I am 50, my spouse 47, both on full time jobs. kids: 18 & 12. State: VA

Retirement Accounts -  1500k (100% stocks, index funds. Our contribution + ER match = 60k/yr)
Brokerage Account - 300k (VTI, SPY)
My 457, deferred comp - 330K (on separation can begin distribution or can delay it to any future date,
                                          can spread it: 5, 10 or 15 yrs. Historic rate of return: 7%)
529 - 100k (NV 529, SP500 index fund. Need 100k more to support kids thru college over next 10 years)
Home Equity: 300k
Cash: 75K
Total: 2600k

Loans:
 Mortage bal: 320K @ 2% (just refinanced to 30 years)
 Auto Loan: 20K @ 1.5% (5 years left)
 No other debt.

Spouse, brings 100k annually, likes her job, can continue for at least 3 more years. But I would like to call it ASAP:)
Need:
  72 - 84k per year
  100k kids college expense; over 10 years)

Currently on my Health Insurance, can switch to spouse's, it's decent coverage with HSA ( I don't have HSA).

Questions:
1. Unable to decide if I should quit my high paying and very stable job or continue 4 more years, then use age 55 rule? I am not a huge fan of my job, should I quit and do a freelance IT job, Part time/Full Time for a few months in a year?
2. If we both quit within the next 3 years, what is the best way to pull 72 to 84k + 100k for kids college over next 10 years?

Thanks so much for the help.