Longtime lurker, but first time poster. Federal Employee that seems to be on track to retire in 4 years at age 57, but suddenly might have buyout opportunity to retire this year, so just wanting some some impartial eyes on the plan to make sure I haven't missed a giant roadblock.
Emergency funds: $35K
Debt: Mortgage $425K @ 2.75% 27 years remaining [$2.3K/month PITI]
Tax Filing Status: Single
Tax Rate: 22% Federal, 4.5% State
State of Residence: NC
Age: 53
Desired Asset allocation: Unclear
Desired International allocation: 0% of stocks
TOTAL PORTFOLIO: $1.125MM (75% stocks, 25% bonds)
t401k (TSP): $800K (70% stocks [C Fund/0.05% ER], 30% bonds [G Fund/0.05% ER])
Roth IRA : $150K (100% stocks [VFTAX Vanguard FTSE Social Index/0.14% ER])
Taxable : $175K (85% stocks, 15% tax-exempt bonds [Wealthfront Risk 8/0.25% Admin + varying ER])
Annual Expenses: $75K (estimate in retirement)
Current Salary : $90K
My original Retirement Plan was to glide to 67/33 AA in anticipation of a retirement in 4 years at age 57, utilizing Rule of 55 to access most of the funds without EWP. Income of $20K/yr Pension, plus SS and access to affordable health insurance.
I now have a possibility of Buyout/Early Retirement this year. One time $45K payout plus $25K/yr Pension for 4 years, then $35K/yr for 5 more years, then back to $25K/yr, plus SS and access to affordable health insurance. Would lose Rule of 55 penalty-free access to t401k (TSP).
Questions:
Three major points to get input on:
1) WR to cover the $50K gap would be 4.4% to begin; pension increase after 4 years and then SS at 62 (if needed) should lower the long term WR below 4%.
2) I presume the optimal source of funding the gap would start with draining Taxable account, but I likely can’t get to 59.5 without tapping Roth contributions or using 72(t) to avoid EWP. Would transferring part of the t401k to tIRA and executing 72(t) be the next preferred step, or should I use Roth contributions to try to get to 59.5 when everything becomes easier to access?
3) There’s a strong temptation to quickly migrate to a more conservative AA, maybe as safe as 50/50 to try to avoid crashing out since I’m really close to the magic number for 4% WR but I’m guessing most would advise a higher target equity position?
I appreciate any advice, comments or thoughts. The potential of being retired by the end of the year is making me second guess all my planning.
Emergency funds: $35K
Debt: Mortgage $425K @ 2.75% 27 years remaining [$2.3K/month PITI]
Tax Filing Status: Single
Tax Rate: 22% Federal, 4.5% State
State of Residence: NC
Age: 53
Desired Asset allocation: Unclear
Desired International allocation: 0% of stocks
TOTAL PORTFOLIO: $1.125MM (75% stocks, 25% bonds)
t401k (TSP): $800K (70% stocks [C Fund/0.05% ER], 30% bonds [G Fund/0.05% ER])
Roth IRA : $150K (100% stocks [VFTAX Vanguard FTSE Social Index/0.14% ER])
Taxable : $175K (85% stocks, 15% tax-exempt bonds [Wealthfront Risk 8/0.25% Admin + varying ER])
Annual Expenses: $75K (estimate in retirement)
Current Salary : $90K
My original Retirement Plan was to glide to 67/33 AA in anticipation of a retirement in 4 years at age 57, utilizing Rule of 55 to access most of the funds without EWP. Income of $20K/yr Pension, plus SS and access to affordable health insurance.
I now have a possibility of Buyout/Early Retirement this year. One time $45K payout plus $25K/yr Pension for 4 years, then $35K/yr for 5 more years, then back to $25K/yr, plus SS and access to affordable health insurance. Would lose Rule of 55 penalty-free access to t401k (TSP).
Questions:
Three major points to get input on:
1) WR to cover the $50K gap would be 4.4% to begin; pension increase after 4 years and then SS at 62 (if needed) should lower the long term WR below 4%.
2) I presume the optimal source of funding the gap would start with draining Taxable account, but I likely can’t get to 59.5 without tapping Roth contributions or using 72(t) to avoid EWP. Would transferring part of the t401k to tIRA and executing 72(t) be the next preferred step, or should I use Roth contributions to try to get to 59.5 when everything becomes easier to access?
3) There’s a strong temptation to quickly migrate to a more conservative AA, maybe as safe as 50/50 to try to avoid crashing out since I’m really close to the magic number for 4% WR but I’m guessing most would advise a higher target equity position?
I appreciate any advice, comments or thoughts. The potential of being retired by the end of the year is making me second guess all my planning.
Statistics: Posted by K2Retire — Mon Feb 12, 2024 8:18 pm — Replies 6 — Views 416