Newer Newbie Question....

**NyteTracker** · 04-15-2007, 03:03 AM

Originally Posted by EWGuy

The recommended withdrawal strategy for most is first taxable investments/savings, 401k/Traditional IRAs, and Roth IRAs.

I agree with EWGuy.
Additionally, there is another option that many people overlook.
This option would use a non Roth account for the first 15% tax bracket, then IF the Roth account has a healthy balance and the cost of living does not exceed the 15% limit by too much, tap into the Roth for the 25% tax bracket.
For example, if a couple has an annual cost of living of $80,000/year, use non Roth funds for the first $71,600 and the Roth funds for the additional 25% tax of $8,400, for a savings of $2100.

2006 Married Filing Jointly 10% $0-15,100, 15% $15,101-61,300, 25% $61,301-123,700
http://www.enterprisefunds.com/educa...x/brackets.asp

This applies only to amounts above the standard deduction.
For example, a couple filing jointly would actually pay 0% on the first $10,300, 10% between $10,301 and $25,400, 15% between $25,401 and $71,600, 25% between $71,601 and $134,000, and so on.
http://en.wikipedia.org/wiki/Tax_bra...kets_in_the_US

Basic Standard Deductions, Tax Year 2006
Married Filing Jointly, $10,300
http://en.wikipedia.org/wiki/Standar...dard_deduction

**VirginiaBob** · 04-15-2007, 10:46 AM

Cool idea Nytetracker, and good point EWguy. The only thing is will I be able to withdraw from the TSP at 57 penalty free if I retire at 57? If not, I'll have no choice but to withdraw the Roth contributions only or my personal savings. Although I remember a discussion a while aback about possibly not having the penalty as long as you are officially in retired status.

**bob465** · 04-17-2007, 01:35 AM

Thanks for the comments everyone ,,, even tho they don't give me anykind've a warm fuzzy. Guess that doesn't exist ,,, of course it doesn't but alas, i'm still in what-to-do land. Savvy is the only answer I guess even tho *that* apparently looks many different ways as far as I can tell ...

Thanks again,
Bob

**Show-me** · 04-17-2007, 01:52 AM

Originally Posted by bob465

Thanks for the comments everyone ,,, even tho they don't give me anykind've a warm fuzzy. Guess that doesn't exist ,,, of course it doesn't but alas, i'm still in what-to-do land. Savvy is the only answer I guess even tho *that* apparently looks many different ways as far as I can tell ...

Thanks again,
Bob

Frustrating it is. Most of us will refrain from giving you advice about what to do with you investments. We are not professionals. Based on what little personal information you have posted. You should minimize your risk this close to MRA.

Now that I said that you will not like it if the market goes up 30% this year. It is not about how much you make when you are close to retirement it is about how much you want to risk.

In order to protect yourself and you nest egg. You have to give up the potental to make big gains because you do not want to risk big loses this close to retirement.

Keep your retirement in focus. Like a garden, your retirement plans need constant tending, especially in these all-important five years before retirement. Keep an eye on your investments to make sure they remain balanced. Allowing one investment (like a high-flying tech stock) take too large a role in your portfolio can seriously jeopardize your retirement plans. You'll also want to watch your income flow and savings. Are you making and saving as much as you had planned?

http://www.quicken.com/cms/viewers/a...tirement/27604

3. How you allocate your assets.

Typically, for those who start early, stocks are the answer. Over long periods, a diversified basket of common stocks wildly outperforms bonds, cash, and real estate. The differences are breathtaking.

But, as we've seen lately, there's also a lot of volatility in stocks. As you age, you'll want more of your money in bonds and money market accounts. These have lower returns than stocks, but they also have far lower volatility.

Phil DeMuth recommends that, as a basic portfolio, you have half of your savings in the broadest possible common stock index such as the Vanguard Total Stock Market Index (VTSMX) and half in the Vanguard Total Bond Market Index (VBMFX).

To me, that's a bit conservative if you're young. I would have more in stocks and also a good chunk in international markets. (Phil has written a fine book about supercharging your portfolio that will be out in a few months. It's far beyond his basic portfolio in sophistication and returns, so watch for it.)

Ray has a portfolio that he uses in his "Buckets of Money" strategy that uses stocks, bonds, variable annuities bought with a sharp eye on fees, and real estate, and his returns have been excellent.

http://finance.yahoo.com/expert/article/yourlife/27943