Investing 102

[AU Doc]

Originally Posted by GregWeld

..........
If you figure (as I do) to average 5% dividend - and factor a 20% tax rate - then you're net cash is about $40,000 PER MILLION. Scary when you think about it really..... that if you're earning $150K a year now - you'll need 3 million invested to replace that spending.........

Here's a question I've been chewing on for a while, if I put all of my retirement savings in an IRA, if I decide I can retire before 59-1/2 am I going to have to pay an additional 10% penalty every year until that 59-1/2 mark? If so, that's going to HURT!

EDIT: It looks like there is a way to make early withdrawals, but it carries some risk. There is the 72(t) Substantially Equal Periodic Payments (SEPP) option. It would require some planning to get it right, though.

[GregWeld]

Originally Posted by AU Doc

Here's a question I've been chewing on for a while, if I put all of my retirement savings in an IRA, if I decide I can retire before 59-1/2 am I going to have to pay an additional 10% penalty every year until that 59-1/2 mark? If so, that's going to HURT!

EDIT: It looks like there is a way to make early withdrawals, but it carries some risk. There is the 72(t) Substantially Equal Periodic Payments (SEPP) option. It would require some planning to get it right, though.

I have no idea and would only discuss questions like that with a tax professional.

I'm 64 now and don't withdraw from our IRA... nor do I add to it either - but I do have it entirely invested in high risk growth stuff. We don't need it - so why not try to have it grow until they force me to take it (70). My wife is only 60 and is also retired.... I want her to hurry up and get her Social Security. LOL ---- Seriously not really but I rib her all the time about it.

[SSLance]

Originally Posted by AU Doc

Here's a question I've been chewing on for a while, if I put all of my retirement savings in an IRA, if I decide I can retire before 59-1/2 am I going to have to pay an additional 10% penalty every year until that 59-1/2 mark? If so, that's going to HURT!

EDIT: It looks like there is a way to make early withdrawals, but it carries some risk. There is the 72(t) Substantially Equal Periodic Payments (SEPP) option. It would require some planning to get it right, though.

I'm living this quandary for real...we have always been very aggressive with our IRA and 401k contributions (to take tax and matching advantages) and currently sit with about half of our Net Worth in Pre-tax accounts. I'm 50 and the wife is 55 years old.

We are rearranging the post tax assets to try to make them cover living expenses until we can access the pre-tax money without penalty.

But hey, at least we have the pre-tax money there...just in case we do need it.