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I'm 63. I have a 62-year-old friend who recently decided to retire NOW, because in the long run, he'll collect more money.
Frankly, I don't expect to live too many years past 70. Hell, I could go now.
Maybe I should retire now so I can get as much as I can before I croak at, say 72. My husband, however, will probably last until he's 85 (his parents were in their 90s, but he weighs more than they did). I want to spend the money I paid in rather than his second wife spending it.
A little more front loaded? Unless I misunderstand how it would work, I will stay in and below the 15% bracket, averaging below 10%, each year with the annuity. If i take it all as income in year one and ladder CDs most of it would be taxed at and above 25%.
I wasn't suggesting that one take out a huge amount at the beginning.
If the money is in a deferred account then you would build the ladder in that account and take the money out over time. So whether it's in a annuity or in a ladder makes no difference.
If the money is in a taxable account there may be taxes to pay upon selling appreciated assets at first, but that will be true in either case... annuity or ladder. Once the ladder in place there's a tiny bit of interest income, but really nothing to be bothered about (unfortunately).
our plan has been we initially set a side two years cash which we accumulated over a few years in advance , which is split between the checking account and laddered cd's starting at 3 months and going out to 18 months at this point since we are 6 months in . originally .it was 6 months and 2 year cd's .
in january 2017 we will start living on the 2nd years money . we will take our fidelity insight income and capital preservation portfolio and sell off enough to fund 2018 and ladder that in cd 's in reserve .
the fact we use the income model as well as their growth and income model works nice because first off we can hit the conservative portfolio first but also while spending down that has the effect of increasing the percentage of our assets in the growth and income model giving us the rising glide path we wanted .
I'm planning something similar.
Retiring at 62 and between my pension and using my 403b annuity to bridge until FRA. Once I get to FRA pension and SS take over. My 401k serves as extra during retirement and will take out as needed. Will have two years of cash, so that if there are negative returns in market will not touch 401k
I wasn't suggesting that one take out a huge amount at the beginning.
If the money is in a deferred account then you would build the ladder in that account and take the money out over time. So whether it's in a annuity or in a ladder makes no difference.
If the money is in a taxable account there may be taxes to pay upon selling appreciated assets at first, but that will be true in either case... annuity or ladder. Once the ladder in place there's a tiny bit of interest income, but really nothing to be bothered about (unfortunately).
I didn't realize that I could ladder CDs in a qualified account. I thought you meant withdrawal to buy the CDs.
I didn't know that either! Is that correct? Some info would be great!
Beachsportsfan: if it makes sense to delay until FRA to get that extra 6% a year, why isn't it worth to wait until 70 for the extra 8%/yr...just curious.
RTB was referring to purchasing an annuity with a tax deferred plan so no taxes are paid except on the payments as they occur. If the rates are good enough, that is a safe and predictable plan. CDs within an tax deferred plan would be the same effect...guaranteed ROR/no sequence risk.
I didn't realize that I could ladder CDs in a qualified account. I thought you meant withdrawal to buy the CDs.
Sure. For example, you can set up a ladder of 5 year CDs at Ally Bank and get 1.75% if they're $25K or more. That's a really lousy return that doesn't track inflation but if you wanted the next 5 years locked in with completely safe investments, you could certainly do that and put more risk in the rest of your portfolio.
Sure. For example, you can set up a ladder of 5 year CDs at Ally Bank and get 1.75% if they're $25K or more. That's a really lousy return that doesn't track inflation but if you wanted the next 5 years locked in with completely safe investments, you could certainly do that and put more risk in the rest of your portfolio.
Or create a more balanced portfolio lower on risk and reward.
that is what we did , but cash for spending is still cash . so we will liquidate 1 years worth of assets from the income model and ladder cd's in january .
we always like to be a year a head having the current year ready to go in cash as well as the 2nd years money in cash too in reserve.
i am more comfortable knowing we can ride out 2 years of downturns since even liquidating the conservative income model would likely be at a loss
that is what we did , but cash for spending is still cash . so we will liquidate 1 years worth of assets from the income model and ladder cd's in january .
we always like to be a year a head having the current year ready to go in cash as well as the 2nd years money in cash too in reserve.
i am more comfortable knowing we can ride out 2 years of downturns since even liquidating the conservative income model would likely be at a loss
Buckets, buckets and more buckets. How big is the short term budget? Depends on how many years it needs to support ours was til age 70. After that it is just to cover RMD's over the short term. Weleslley is looking great for bucket #2.
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