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Topics - dvorak

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Early Retirement / How to convert investments to cash
« on: February 04, 2023, 11:50:40 AM »
Hi all,
I am hoping to retire in August of 2024. I will be 53. I think my portfolio and pensions/SS will be in a good place to walk. But I have very little cash and I am worried about having enough if I get the worst sequence of returns issue right when I retire.
I will make 78K this year and then 50k in 2024 before leaving work in June. I spend about 46K a year (with very cheap and good quality health insurance as a teacher that I will lose when I leave). My state tax is 9%. I plan on needing 50K/yr each year in retirement with higher insurance costs.
•   At 55 I will get 520/mo pension with a lump sum payout of 30K.
•   At 65 I will get another pension of 1240/mo with a 54,000 lump sum (rolled to my IRA).
•   At 70 I get SS at 1500/mo.

My portfolio allocations are attached.
I have been investing a lot and probably waited a bit too long to build up cash for my first few years and am probably too heavy in bonds (especially right now!).
Would love feedback on what I plan to do.
Plan for cash this year:
•   Put 17k to my 457 (bond fund) this to keep salary very close to the 22% tax bracket and pair this with selling 17k of my brokerage bond fund (at a 3K loss) to add 17k to treasuries in my brokerage (and harvest the 3K loss to add any salary to 457 or treasuries). I’m also maxing an HSA.
•   Add a 5K RMD from my inheritance IRA to treasuries as well.
•   This year and next: I will continue to loss harvest bond funds to buy treasuries next year (market conditions allowing) to get the 50K cash for the first year and then an additional 14K for when I turn 55 and maybe some more for a third year. (In my 55 year I will start my first pension (6.2K/yr) and get the lump sum 30K… so that is effectively 36K cash). Then, at 56 I will see what I have and hope that bonds are more useful.
So, I find this all kind of confusing and wonder a few things:
•   Is the plan good enough to succeed? Will my available/accessible money last me until 59.5?
•   How much cash/treasuries do I actually need when I walk away? And how much in bonds?
•   Should I put my 457 money in bonds or equities? Bonds are feeling terrible right now.
•   Should I shift away from all bonds throughout my portfolio to treasuries (for example in my inherit IRA) and shift back when the treasuries stop returning 4.5% +?
•   And big picture: How do you decide in retirement when the market is “good enough” to pull funds from equities and bonds to replenish cash? Or do you just make an objective annual rule and follow it no matter what?
Thanks for any thoughts.

Early Retirement / Taking the dive is terrifying!
« on: November 16, 2021, 11:22:46 PM »
Hi Everyone.
I want retire from teaching at a college. It’s been a great career but it’s time for me to leave. I’m 50. I hope to leave in June 2023 at just shy of 52.
I am comfortably living off about 40K/yr now but hope to spend more like 50k-60k/yr in the first decade of retirement. I want to maximize spending (and do more charitable giving) while I still feel good (and do some things I have denied myself to this point) so plan to taper spending as I age. I’d rather scrape by when I am older and I don’t want to move any more. I am very physically active and spend a lot time exercising and doing outdoor activities. I will be paying more for an ACA plan than my excellent school insurance but I’m thinking I can get a decent plan for 600-800/mo. And I may sell my home in Oregon (invest most of the money) and use some of the money to buy a van for travelling the West (and staying with family and friends periodically) for a year or two before settling down somewhere in the west (CO, UT or NV) with lower state taxes and closer to family. I’d likely live in a modest condo or small house that is not in a big city. I did a lot of international travel when I was younger and got that out of my system so local travel to outdoor destinations will be mostly what I do. I also have no kids and hope to spend most of my money by the time I die. The book “Die with Zero” speaks to me. 😊
Assets at 52 (including additions @6% growth):
•   IRA/403b/IAP (rolled upon quitting in one IRA): 615K
(50% VTSAX, 25% VBTLX, 25% REIT & DIV Index funds)
•   Inheritance IRA: 150K
(100% VTSAX)
•   457: 61K
(100% Lg Cap Index)
•   Roth: 32K
(100% VTSAX)
•   Brokerage: 83K
(50% VTSAX, 50% VBTLX)
•   HSA: 15K
(100% VTSAX)
•   Home equity: 300K
Two Pensions (with COLA)
•   #1: 1050/mo starting at 62years old
•   #2: 1050/mo starting at 65
SS (using the “My PIA” calculator):
•   1850/mo starting at 70
My plan upon quitting is to withdraw in the following way:
IRA: 30,000
Inheritance IRA: 10,000
457: 10,000
Roth: 7,000
Brokerage: 6,000
Total: 63,00-->After taxes: 54,094
IRA penalty: -3,000 (Ouch! I know! But the SEPP doesn’t give me enough money (especially if I split it into two IRAs) and doesn’t allow flexibility for extra withdrawals or Roth rollovers…and I still should have plenty of money even with penalties… I think)

I will use the bonds when the market is low and stocks if it is high. And probably move a year (or two?) into cash soon.
•   Is the plan sound? My calculations show plenty of money but I keep doubting I haven’t made a huge error somewhere.
•   Are my allocations ok? Do I need more in bonds and cash?
•   Is the withdrawal strategy reasonable?
•   Can spend more money earlier? (I do want die with no money after all!)

I’m learning that saving is easy, it’s taking the leap and figuring out how to spend it that is truly terrifying!
Thanks in advance for any thoughts!

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