L1: early retirementI have worked for Unilever for 30yrs. Facing the sale of company to Huish by end of June,according to internet reports. Question is should I start a 72t program and retire very soon. Between lump sum payout of pension and 401k would be around 900,000. Problem is I am 48 and not sure if I should start this so soon,but don”t see old age in my future either. Also very leary about going with new company if that is even a option. Maybe someone smarter than me can shed some light on this…2008-06-17 00:21, By: amp0808, IP: [188.8.131.52]
L2: early retirementIn this situation, a 72t plan is the solution of last resort. Still, some preparation and number crunching is advisable now so you can estimate your living expenses should you need to make a quick decision. Also, if you expect the new company to be downsizing, you should check into the severance plan offered for someone with 30 years tenure. You might well get a year”s salary if you wait until a severance is offered. On the other hand, you might have to make a quick decision to waive any severance if you opt to stay on. With a 30 year investment with a major corporation at age 48, I would tend to hang in there for awhile unless the situation is totally untenable. However, if you get a good severance package, you can take your time to assess new employment prospects before having to start a 72t. $900,000 is much nicer at 62 than at 48 when you have to start tapping into it and waiting 17 years before Medicare eligibility. I think it is too early to hang it up, but you may want to switch occupations if something else interest you more than what you have been doing recently.
You may also want to check out your cost basis in any highly appreciated company shares you own in the 401k. If you end up with shares of the successor company, then those shares will be eligible. Taking shares in a lump sum distribution would enable you use the lower LT cap gain rates when you sell, and if you are not working and stay in the 15% bracket, the tax rate is -0- through the end of 2010. However, you would owe the 10% early withdrawal penalty on the cost basis portion since you are not yet 59.5 or 55 under the separation rule.
2008-06-17 15:09, By: Alan S., IP: [184.108.40.206]
L2: early retirementI retired at age 54 and things are OK for me although I need to watch my budget carefully . But you are thinking about retiring in a down market, which is not helpful.
Consider the following major expenses you will need until age 62 (Social Security) and age 65 (Medicare)
*** living expenses
*** discretionary spending (travels, etc)
*** mortgage payments (if you still have a mortgage, I would advise against retirement)
*** car payments ( maintenance insurance)
*** family commitments (education, etc)
*** health insurance (major expense when unemployed)
Calculate your expectedexpenses & multiply by 33% for emergencies. Can you retire now ???2008-06-17 15:27, By: session52, IP: [220.127.116.11]
L2: early retirementI retired at age 55 and had less than you now have for retirement. Of course, my wife also had a 30 year career and had saved about the same as I had, including her state pension and her IRA. Still, retirement can be expensive and is getting more so all the time. I”ve never been a “spender”, so not being able to spend during an economic slow-down is not any kind of hardship for me. It could be for others, though.
My thought is that the primary financial concern during retirement is CASH FLOW. If you havesufficient cash flow to support car and house payments as well as medical costs, travel, and the usual daily living expenses then you are in a good enough financial condition to retire. If your cash flow does not support these things, then the answer would be to eithercontinue working fora while or pay off your biggest debts so that you do not need to make those monthly payments.
I agree with Alan about taking some time to consider your options. In your position, there seems to be no reason to make any quick decisions. Most hastily made decisions are sources for reget later on. If you are not interested in a lot of financial planning home work, then perhaps hiring a fee-only financial advisor would be beneficial. A good one will explain all of your options and the ramifications for choosing them so you can figure out what actions on your part will be most beneficial / least harmful and what choices give you the most options.Ed2008-06-18 14:17, By: Ed_B, IP: [18.104.22.168]
L2: early retirementI want to thank the people for the insightful information. But I am now in retirement as of Sept.1,08. To retire under the unilever “umbrella” I had to go. I now find out that with 820,000 to invest and live on, I am swimming with “sharks.” My age is 49 and plan on pulling out money as of Jan.09, turning 50 later that year. I read on the motley fool website…doing everything myself….but just the choices have my head spinning. Trying to do this 72t thing without making mistakes seems beyond me. The financial people that are descending on me say they can do it and taking out 5 percent a year seems to be no problem. Everyone says hope you are enjoying your retirement but find more majordecisions have to be made than when I was working. Who do you trust?2008-09-08 14:19, By: snidley, IP: [22.214.171.124]
L2: early retirementFirst, get a recommendation from a “satisfied user” for a tax practitioner and/or a financial advisor (which is different from an investment advisor/broker).
Second, take your time.
Third, consider TIMING because you probably already have significant taxable income in 2008, so you might be best served by waiting until 2009.
Fourth, consider settingaside part of your retirement in an IRA for emergencies, or in order to set up a 2nd SEPP 72-T later on if the first one does not provide enough cash flow.Fifth, remember that you will have to pay taxes (federal and state)on the SEPP 72-T, so you need to distribute more than you will need for cash flow.2008-09-08 14:43, By: dlzallestaxes, IP: [126.96.36.199]
L2: early retirementCongratulations on your birthday since your original post, but I”m sorry you lost your job. Now you need to find a new job because at your age and the small amount of funds you have, my guess is that you will not make it trying to stay retired.
No, I do not have enough information about your particular situation … and we don”t need to try making a financial plan for you here … but my experience is that most folks in your situation need to work longer and accumulate more retirement funds. So while you are looking for a newjob, look for an independent, investment advisor who is or works for a Registered Investment Advisor (RIA) firm. You mayneed a full financial plan or you mayjust need a modular plan for an investment strategy,but you do needsome form of plan to get you to age 62 – 65 before thinking about retirement. When you cross into the “retirement age threshold” of over age 60, the costs of living, especially for medical, really starts to increase.In your search for your RIA, don”t be locked into a”fee only” concept. You may or may not pay a fee for the planning … dictated by your individual situation. Your investments may be on a “fee-basis” or on a “commission-basis,” depending on what your plan requires and how a particular investment is sold. Don”t be afraid of having a commission-based product in your portfolio if that investment will do the best job for you. Anyway, find the right investment advisor and he / she can help you build the right plan, just for your situation.If you are going to start a SEPP Plan, then look for a distribution rate in theless than5% per year range of your account balance for longevity reasons. Keep in mind that the plan MUST comply with the calculations for a good SEPP Plan which may or may not fit this distribution rate. Plan well … your funds have to last a long time.If your plan has highly appreciated company stock and you plan to elect the NUA distribution option, then you probably want to wait until after January, 2009, to start the withdrawal process. You will probably have a rather large taxable event to deal with along with your current income for 2008, so waiting a few more months will help your tax situation a lot. This is definitely NOT a DIY process so seek help. Also, it”s getting late in the year to start the process and you must complete it during one calendar year.Good luck.
Jim2008-09-09 07:05, By: Jim, IP: [188.8.131.52]