Rich, You income from pension and social security (at full retirement age) alone will be $95,000 annually. You said that you needed $105,000 annually. The saved nest egg of 1.9M is all in retirement? That is a bit of a problem as for 6-7 years, you will need to withdraw (after age 59.5) 105000 minus 70000 or $35000 annually. You will need to withdraw more because this money will be fully taxed. After social security begins, you will only need 10k from retirement funds and inflation coverage plus, hopefully, some fabulous trips. In my opinion you are more than OK to retire next year. Good going on saving such a large nest egg
@Alec - First, do you children need the gifts? I believe it is important to think about you and your wife first, and make sure you have enough for the future, including how inflation will affect your future cash flow before you begin to think about gifting...except of course if your children are in dire need.
Hi Flaua I can't answer your question based on what you told me. A decision like that really needs a lot more analysis. i suggest you go to www.napfa.org to find a fee only financial planner who can do a full analysis on you and help you decide. This is really too important a decision to be handled over a chat room.
Sorry, Flaura -- slight hiccup!
AR, not sure I have enough information, size of IRA to convert, but it is often a good strategy to convert your IRA to a ROTH in low income years as the tax burden will not be as great. But, you may have to pay some tax as the conversion is taxable income. Also, remember that you will have to come up with the taxes out of your savings, not the IRA. You are on the right path, just research how much you need to pay. Get a 2014 1040 and put figures in..that will help.
Hi Krista, there was a much earlier post on tax 'diversity' and it's an important topic because we like to see a group of accounts with different tax characteristics (thus, diversity) when it comes time to distribute in retirement. So I would encourage you to save in a taxable account for now in addition to your Roth IRA. You can do so in an unlimited amount and any gains are taxed at the lower capital gains rate and you can take any losses annually (up to $3k, carrying more forward).
Jack, Can you clarify your statement? Once you are 70.5 you are not able to contribute to an IRA.
Looks like we got you twice Mike T :)
You still out there Jack W?
Mike, your wife can take spousal social security at age 62 since you will have already been receiving yours.
Jack W. on the other question, yes you can add all your IRA's up for your RMD and take it from one. But do NOT add any funds from your employer retirement plans. They have to be calculated separately.
JJ: Sounds like you are doing a great job!
Nini, I would really hesitate to use your Rollover IRA because of the tax implications.
JJ: In order to payoff the mortgage, you should save discretionary cash flow to a non-retirement account.
JJ: Otherwise the distributions from your retirement accounts are subject to income taxes.
JJ: What are the terms of the mortgage and how long do you plan to hold that property?
Hi Krista, yes, you can add to a taxable account any and all that you'd like (no limits), you are taxed as you go on any realized gains (when you sell and on dividends) and those are taxed at a capital gains rate which is lower than an income rate. If you have realized losses (when you sell) you can take up to $3k of them annually on your return and if you have more than that in a year, you can carry forward the loss over $3k to use on your next return. Does that help?
@marvin A well-diversified portfolio is almost always an excellent option, despite the time horizon. Just be careful on the bond side because of where rates are you want to stay in shorter maturities. Also, if you have not done so, consider some alternatives, like real estate, commodities, and possibly energy to mitigate risk. The latter should be a relatively small part of your portfolio maybe 10% to 15%
Nini, maybe 50% from each might be better. Please understand without looking at your actual tax return you may be approx. doubling your taxes going to the 25- 28% tax bracket using all Rollover. The other option if you wanted to use the Rollover is take half in 2014 and half in 2015. Hope that helps-
@marvin The alternatives I mention should help hedge inflation and diversifies with assets other than gold (Gold is included is a commodities fund.)
JJ: Although saving for retirement is important, it is equally important to have a cash reserve for emergencies. Are you still there? Good Luck
@marvin One last thing. Congrats on paying off mortgage
Thanks for joining us today Mike T!
Jack -- Not seeing them. Would you mind sending again?