OT: Early Retirement by Tapping IRA

[CA renter]

[quote=disimilar1]I retired at 50. You do not have enough, nor did I as it turned out. Life can throw you curve balls – things you cannot even imagine happening.
I hope you do not think you will spend less when you retire because that is not likely. Eventually you or a family member will need medical services that may not be covered or fully covered. It adds up – the slow drip.
Life in this world is too uncertain now – even if your home is fully paid for.
I retired early after an illness woke me up. Life is precious. So is the ability to sustain yourself.
Here are some things I did not count on happening:
September 2008
The resulting BK of one of my credit tenants (100 year old company) and 2 other tenants.
A family member gets a devastating long term illness.
Parents need help and father with Alzheimers comes to live with us for a while.
uninsured loss due to exclusions in policy.
The travel was great during the first few years. You could accomplish that with an extended vacation. I wish you the best.[/quote]

Thank you for providing us with your real-life experiences here. It sounds like you’ve been hit with multiple “worst case” scenarios. I’m especially sorry to hear about your family’s illnesses — this is the big “what if” that too many young people don’t factor in.

Best wishes to you and your family. I hope that everyone gets better soon.

[cvmom]

What a great thread. All of the experience here is amazing.

I also have kids/spouse with dual citizenship, no debt (including house paid off), and a healthy net worth (>OP). But as much as we would like to, we have concluded that we need to work as long as possible, for the reasons already stated. As we are nearing 50, our “re-employability” is definitely dropping, and we’d better save as much as we can while our health etc. is still good. Soon enough, we may no longer have that option.

[cvmom]

What a great thread. All of the experience here is amazing.

I also have kids/spouse with dual citizenship, no debt (including house paid off), and a healthy net worth (>OP). But as much as we would like to, we have concluded that we need to work as long as possible, for the reasons already stated. As we are nearing 50, our “re-employability” is definitely dropping, and we’d better save as much as we can while our health etc. is still good. Soon enough, we may no longer have that option.

[cvmom]

What a great thread. All of the experience here is amazing.

I also have kids/spouse with dual citizenship, no debt (including house paid off), and a healthy net worth (>OP). But as much as we would like to, we have concluded that we need to work as long as possible, for the reasons already stated. As we are nearing 50, our “re-employability” is definitely dropping, and we’d better save as much as we can while our health etc. is still good. Soon enough, we may no longer have that option.

[cvmom]

What a great thread. All of the experience here is amazing.

I also have kids/spouse with dual citizenship, no debt (including house paid off), and a healthy net worth (>OP). But as much as we would like to, we have concluded that we need to work as long as possible, for the reasons already stated. As we are nearing 50, our “re-employability” is definitely dropping, and we’d better save as much as we can while our health etc. is still good. Soon enough, we may no longer have that option.

[cvmom]

What a great thread. All of the experience here is amazing.

I also have kids/spouse with dual citizenship, no debt (including house paid off), and a healthy net worth (>OP). But as much as we would like to, we have concluded that we need to work as long as possible, for the reasons already stated. As we are nearing 50, our “re-employability” is definitely dropping, and we’d better save as much as we can while our health etc. is still good. Soon enough, we may no longer have that option.

[scaredyclassic]

Ok then whatever crazyy shit you read in the freedom manifesto either ignore it or balance it out against this thread.

[scaredyclassic]

Ok then whatever crazyy shit you read in the freedom manifesto either ignore it or balance it out against this thread.

[scaredyclassic]

Ok then whatever crazyy shit you read in the freedom manifesto either ignore it or balance it out against this thread.

[scaredyclassic]

Ok then whatever crazyy shit you read in the freedom manifesto either ignore it or balance it out against this thread.

[scaredyclassic]

Ok then whatever crazyy shit you read in the freedom manifesto either ignore it or balance it out against this thread.

[aldante]

At 40 the rule is not just a 10% penalty it is actually ordinary income plus 10% penalty. The penalty is based on the income not the after tax income. So 60k withdrawal (5% of $1,200,000)from an ira x 15% = $9,000 paid in ordinary taxes. Then one must take $60,000 x 10% = $6,000. $9,000 plus $6,000 = $15,000 tax on a $60,000 distribution leaving you with

Walaa : $45,000. (It is only that much if you are in the %15% bracket) So what that means is a your 5% distribution only gets you purchasing power of 3.75%.

Of course that deplets your ira by 60k so by age 41 your IRA is only worth $1,140,000 (assuming you do not make or lose any in the market)
The only way to avoid the 10% penalty on an ongoing basis is if you take a 72t distribution which figures your life expectency and gives you a yearly payment. If you try and stop that payment before age 59.5 you are subject to a 50% tax.

Based on those numbers my plan would be to stop working and have your wife work.

[aldante]

At 40 the rule is not just a 10% penalty it is actually ordinary income plus 10% penalty. The penalty is based on the income not the after tax income. So 60k withdrawal (5% of $1,200,000)from an ira x 15% = $9,000 paid in ordinary taxes. Then one must take $60,000 x 10% = $6,000. $9,000 plus $6,000 = $15,000 tax on a $60,000 distribution leaving you with

Walaa : $45,000. (It is only that much if you are in the %15% bracket) So what that means is a your 5% distribution only gets you purchasing power of 3.75%.

Of course that deplets your ira by 60k so by age 41 your IRA is only worth $1,140,000 (assuming you do not make or lose any in the market)
The only way to avoid the 10% penalty on an ongoing basis is if you take a 72t distribution which figures your life expectency and gives you a yearly payment. If you try and stop that payment before age 59.5 you are subject to a 50% tax.

Based on those numbers my plan would be to stop working and have your wife work.

[aldante]

At 40 the rule is not just a 10% penalty it is actually ordinary income plus 10% penalty. The penalty is based on the income not the after tax income. So 60k withdrawal (5% of $1,200,000)from an ira x 15% = $9,000 paid in ordinary taxes. Then one must take $60,000 x 10% = $6,000. $9,000 plus $6,000 = $15,000 tax on a $60,000 distribution leaving you with

Walaa : $45,000. (It is only that much if you are in the %15% bracket) So what that means is a your 5% distribution only gets you purchasing power of 3.75%.

Of course that deplets your ira by 60k so by age 41 your IRA is only worth $1,140,000 (assuming you do not make or lose any in the market)
The only way to avoid the 10% penalty on an ongoing basis is if you take a 72t distribution which figures your life expectency and gives you a yearly payment. If you try and stop that payment before age 59.5 you are subject to a 50% tax.

Based on those numbers my plan would be to stop working and have your wife work.

[aldante]

At 40 the rule is not just a 10% penalty it is actually ordinary income plus 10% penalty. The penalty is based on the income not the after tax income. So 60k withdrawal (5% of $1,200,000)from an ira x 15% = $9,000 paid in ordinary taxes. Then one must take $60,000 x 10% = $6,000. $9,000 plus $6,000 = $15,000 tax on a $60,000 distribution leaving you with

Walaa : $45,000. (It is only that much if you are in the %15% bracket) So what that means is a your 5% distribution only gets you purchasing power of 3.75%.

Of course that deplets your ira by 60k so by age 41 your IRA is only worth $1,140,000 (assuming you do not make or lose any in the market)
The only way to avoid the 10% penalty on an ongoing basis is if you take a 72t distribution which figures your life expectency and gives you a yearly payment. If you try and stop that payment before age 59.5 you are subject to a 50% tax.

Based on those numbers my plan would be to stop working and have your wife work.

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