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Treasured Social Butterfly
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Re: Taking Money Out Now Rather Than Later

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@Critter21 wrote:
Thanks! I appreciate your comeback. But, even if, as you put it, 'run out' what happens? I mean, it is possible that a person would 'run out' due to needed hospitalization or nursing care and not have had the opportunity to have fun!

I think people create problems by seeing situations as Black & White; where saving for the future means you don't have any opportunity for "fun" along the way! There's no reason why you can't do both, especially if you don't NEED the money now.


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Re: Taking Money Out Now Rather Than Later

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Thank you!
TOM
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Valued Social Butterfly
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Re: Taking Money Out Now Rather Than Later

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Just to note: The rule is you must start taking distributions from a traditional IRA by April 1 in the year following the year you turn 70 & a half. Not when you turn 70& half. This confusion has been appeared in threads before. For someone whose birthday is July 1, it does buy more time than for someone whose birthday will cause the 70 & half clock to turn on Dec. 31st
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Valued Social Butterfly
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Re: Taking Money Out Now Rather Than Later

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Critter21, there are many calculators available online for free that will tell you how long your $$ will "last". If you use the rather conservative annual yield of 5.5 as example, it will tell you that if you have $250K total in investments to draw upon: You can withdraw $1,108 per month and it will last forever. Withdraw $1,686 a month and it will last 20 years; $2,673 a month for 10 years. Use $500K instead and the figures approximately double.
You can find others that use an 8% model (which I find more realistic if you are heavily in equities, not bonds)
Like retiredtraveler I dislike and distrust annuities, too. Altho there are some new products out there now that do come with inflation-adjusted increases each year once you give up the $$$ to an insur. co. you lose control over how it is invested. Also, keep in mind, if you live in a locality of the country that offers a generous property tax abatement program for seniors, the amount of money you receive from an annuity is almost always counted as ordinary income in figuring up your eligibility for the tax credit. (Which I find to be grossly unfair - it should not be treated same as pensions and soc. sec. But it is, at least in Maryland. And elsewhere I am told.
So beware of that trap if you are receiving property tax credits.
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Re: Taking Money Out Now Rather Than Later

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"....What do you think of an immediate annuity? That would guarantee that the income in the future is guaranteed - right?...".

    I am the wrong person to ask about this. DW and I retired, early and wealthy, by doing our own investing since we were in our 20's. I won't turn money over to someone else to get a guaranteed income, especially as it involves fees. I've never paid for investment advice, or used a financial planner because I've spent thousands of hours, over decades, working on investments and personal finance.

   I can't advise other people because their situations will be so different, and, no one can give you overall financial advise without knowing a lot of detail about your personal finances, something you're not going to do online. Retirement planning is complex which (I would guess), so few people tackle it. 

   You're correct about the annuity -- but the guaranteed income works both ways. It gives you a set income, but then, it's set.

   


"...Why is everyone a victim? Take personal responsibility for your life..."
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Re: Taking Money Out Now Rather Than Later

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Thanks! I appreciate your comeback. But, even if, as you put it, 'run out' what happens? I mean, it is possible that a person would 'run out' due to needed hospitalization or nursing care and not have had the opportunity to have fun!

What do you think of an immediate annuity? That would guarantee that the income in the future is guaranteed - right?

Thanks again.
TOM
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Re: Taking Money Out Now Rather Than Later

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Message 7 of 11

Investing and money management are favorite topics of mine.

 

   Your question strikes me (and correct me if I'm wrong), that you don't have projected numbers on what your income is and will be, and what your overall expenses are, or could be if you did things like travel.  It kind of sounds like a Suze Orman show question: "Can I afford this?".

    If you know your expenses, or can project future expenses based on wanting to travel or take up some hobby, then look at your projected income. For instance, if you started taking $5000 a year from your investments, how long could you keep doing that before running out?

    Those of us who have savings/investments want to balance having fun today, but keeping a reserve for tomorrow (as Nyadrn is indirectly saying).  To try to do that, you really have to look at 'hard numbers' along with determining tax liabilities based on withdrawals. There is no other way to get a reasonable idea about if, and how much, money you can start spending. 

  


"...Why is everyone a victim? Take personal responsibility for your life..."
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Re: Taking Money Out Now Rather Than Later

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Message 8 of 11

Thanks for the comment.  I believe I will do just that!

TOM
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Re: Taking Money Out Now Rather Than Later

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Message 9 of 11

If you procractinate for two years, your problem is solved.  You have to start withdrawing at agr 70.5.

 

See IRS FAQ

 

http://www.irs.gov/Retirement-Plans/Retirement-Plans-FAQs-regarding-IRAs-Distributions-(Withdrawals)

 

See section "Required minimum distributions"

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Re: Taking Money Out Now Rather Than Later

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Message 10 of 11

@Critter21 wrote:

I am 68.  Now to me that's not old, however, who knows?  So, that being said, (doncha love that phrase!) should I begin to take money out of IRA now or is there a big reason to wait?  Do not really need since I work part time, but could use, I guess,  for travel, etc.   Any thoughts and feedback would be appreciated!

 

Thanks.

 

Critter


I think everyone has their own ideas and plans  but I don't want to arrive at the retirement home wishing I had done more  so I try to balance savings and spending and you cannot plan for the unexpected health issues  or loss of mobility etc which can alter plans later in life.  I would say think about what you would most like to do and get started!   Just my opinion of course.

Life's a Journey, not a Destination" Aerosmith
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