Where did you get $2.5MM? I came up with just over $2M. Did you include home equity?aristotelian wrote: ↑Tue Jul 31, 2018 8:56 amDoh, I did miss that. So he is really looking at about $2.5M after the mortgage. So yeah, I agree, OP does need to either cut expenses, or work longer to supplement the portfolio. Personally I would be inclined to cut expenses, as I am very comfortable on $60K spending.cherijoh wrote: ↑Tue Jul 31, 2018 8:04 amAristotelian, I think you missed the fact that included in that 3.7M is home equity, $1M in other real estate, the kids college funds, etc.
Liquid assets are $800K in cash, $380K in a brokerage acct, $110K in Roth IRA, and $725K in 401k/trad IRA.
Remember that using your Trad IRA/401k means ordinary income taxes - and a 10% early withdrawal penalty unless you set up a SEPP (substantially equal payment plan) with all or a portion of your retirement assets. These plans are not flexible, result in paying the 10% penalty on all funds withdrawn if you mess up, and must be continued for at least 5 years or until you hit 59.5 - which ever is longer. I have a friend who retired right before the dot com bubble at about your age and who was funding her retirement using an SEPP arrangement. Within 2 years she had torpedoed her 401k and was back at work full-time. She's in her late 60s and still working due to necessity.
Do note that "Roth conversion ladder" is an alternative to SEPP. You can convert Traditional IRA to Roth and withdraw the conversion penalty-free after five years. As long as you have five years of liquidity in other accounts, accessing funds in the 401k should be no problem.
You are right about the Roth ladder, but with the OP having $100K + in ordinary income/yr before any Roth conversions, this strategy wouldn't exactly be cheap for them to put in play.