UnThreaded | Threaded | Whole Thread (19) | Ignore Thread Prev Thread | Prev | Next | Next Thread
Author: inparadise Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75838  
Subject: Should an Annuity be Part of My Plan? Date: 6/9/2014 1:37 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
We are expecting to retire next year with DH in his mid 50's. We had thought to draw down on our 401K and savings, converting a large amount of TIRAs to Roth at our lower tax rate in retirement, taking SS when DH hits 70 and I am full retirement age, (FRA.) Our reasons for this approach is to minimize RMDs at 70, and to max out the death benefit for me should DH predecease me. If we do not reduce our TIRA exposure, RMDs will cause significant taxation in retirement. We also have a couple of moderate pensions that should come into play, though for the most part we have not factored them into our calculations as we have a hard time understanding what they will amount to.

Or we could simply do SEPP withdrawals and keep our non-retirement funds invested with an eye to tax minimization. This would draw down our TIRAs and further build our non-retirement funds.

Further complicating this is that we will have a senior and a freshman in college at retirement. Because of the amount of cash we have on hand, we do not qualify for financial aid. But retirement funds do not count towards your EFC, or effective family contribution...the amount you are expected to pay before being considered for aid. So perhaps it makes sense to buy a deferred payout annuity with our non-retirement funds, taking funds from the 401K or Sepp TIRA as needed. This might have the benefit of discounting our college costs, providing a "guaranteed" income stream down the road, (assuming the insurer stays solvent,) and allowing us to reduce the impact of TIRA RMDs.

An idea worth considering?

IP
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (19) | Ignore Thread Prev Thread | Prev | Next | Next Thread

Announcements

The Retire Early Home Page
Discussion on accelerating retirement day.
Pencils of Promise - Back to School Drive
"Pencils of Promise works with communities across the globe to build schools and create programs that provide education opportunities for children."
Managing Your Wealth
Our own TMFHockeypop from Rule Your Retirement fame on the TV show Managing Your Wealth.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Post of the Day:
Macro Economics

Should You Be an Index Investor?
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement