Always learning from this forum--2 questions!

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Topic Author
emmie1
Posts: 21
Joined: Thu Mar 27, 2008 8:57 am
Location: Virginia

Always learning from this forum--2 questions!

Post by emmie1 » Sat Aug 01, 2020 10:32 am

Hello! I retired from teaching July 1st after 40 years! I will receive my final payroll deposit this month and I want to move some additional funds into my Vanguard Money Market account which serves as my emergency fund. My pension will take care of most of my monthly expenses but I plan to draw from my emergency fund for healthcare until I reach Medicare age. I will turn 63 in November. In my IP, I allocated 15% of my equity holding to Vanguard International and it is now approaching 19%. I also have a $20K Ibond that I have held for about ten years. I’m thinking of drawing money from either of these two sources which will pay for monthly medical insurance expenses for the next two years. So my first question: which funding source would be best to build up my emergency fund?

Question two: I will apply for Social Security after I turn 63 in November. Unfortunately, my people are not that long lived…we rarely reach our 8th decade. Hopefully, I’ll be the exception! Should I apply for SS in late 2020 or early 2021?

Just a bit more information: Monetarily, I feel ready for retirement. In addition to my SS and pension, I have both a 403b account and Vanguard taxable account with all Vanguard funds…primarily: Total Stock Market, International, Tax Managed Small Cap, Total Bond, and Prime Money Market…60/40…$750K. I’m single. My house is paid for. I’m a saver…I need to wrap my head around the fact that I’m no longer in the accrual phase….scares me a bit. Mentally, I’m working on the idea of being retired. Our school system shut down March 13th because of COVID and I didn’t have a sense of closure with my people... but finding my way!

Thank you! I learn something new every time I logon to this forum! Emmie

L82GAME
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Joined: Sat Dec 07, 2019 9:29 am

Re: Always learning from this forum--2 questions!

Post by L82GAME » Sat Aug 01, 2020 10:39 am

Thank you for your years of public service! It would be helpful for you to depict your financial picture in this way before others can help you in the most effective way possible:

viewtopic.php?f=1&t=6212

[edited to fix grammar]
Last edited by L82GAME on Sat Aug 01, 2020 10:47 am, edited 2 times in total.

megabad
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Re: Always learning from this forum--2 questions!

Post by megabad » Sat Aug 01, 2020 10:39 am

Hello. Will your marginal tax bracket be abnormally low this year or next in comparison to future years? I assume with the forthcoming SS it might be. If so, I would consider evacuating funds from the 403b first to decrease your eventual RMDs but I would not do so much that would take you into a tax bracket higher than your predicted bracket at 72. I would delay SS as long as you feel comfortable. Consider the tax bracket implications if you start taking halfway through a tax year as well as this may affect your 403b withdrawals that I mention above.

random_walker_77
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Re: Always learning from this forum--2 questions!

Post by random_walker_77 » Sat Aug 01, 2020 7:55 pm

Also, since you're planning on receiving both a pension and social security, be aware of the windfall elimination provision and make sure you have accounted for any potential impacts from this in estimating your SS income.

see https://www.ssa.gov/benefits/retirement ... r/wep.html

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arcticpineapplecorp.
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Re: Always learning from this forum--2 questions!

Post by arcticpineapplecorp. » Sat Aug 01, 2020 8:06 pm

emmie1 wrote:
Sat Aug 01, 2020 10:32 am
Question two: I will apply for Social Security after I turn 63 in November. Unfortunately, my people are not that long lived…we rarely reach our 8th decade. Hopefully, I’ll be the exception! Should I apply for SS in late 2020 or early 2021?
if I did the math right, I'm assuming you were born in Nov 1957. If that's the case, you'll see your full retirement age is 66 and 6 months:
https://www.ssa.gov/benefits/retirement ... ction.html

taking SS before that, leads to a reduction in your FRA. To see how that's impacted (the amount changes each month):

https://www.ssa.gov/benefits/retirement ... /1957.html
"May you live as long as you want and never want as long as you live" -- Irish Blessing | "Invest we must" -- Jack Bogle

Topic Author
emmie1
Posts: 21
Joined: Thu Mar 27, 2008 8:57 am
Location: Virginia

Re: Always learning from this forum--2 questions!

Post by emmie1 » Sun Aug 02, 2020 12:17 pm

Thanks, Random _Walker_77 . According to the SS website, "If you paid Social Security taxes on 30 years of substantial earnings, WEP does not apply to you." I have paid Social Security taxes on 40 years of substantial earnings. Emmie

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