Retire at 66 , SS at 70 , Funding the Gap

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oembogle
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Retire at 66 , SS at 70 , Funding the Gap

Post by oembogle »

Greeting Esteemed Bogleheads
I plan to Retire 1Q 2021 at age 66 but dont plan to take SS until 70 . No Pension but about 1.3M IRA and 1.4M non qualified . House paid. i bought Gold Coins when i was younger and i have about 60 Gold Coins. I would self fund my gap years to delay Social Security . I will also be doing Roth Conversions from 66 until 72 .
I have set aside about 100k unqualifed cash to fund roth coversions ( 100K / per year x 5 years) . Since i will not have SS from 66 until 70 i am considering the following for income : Dividends from non Qualified , Selling 1 gold coin a month ($1900/mo) , any additional i could take from IRA to lower eventual RMDs . Any thoughts on using the Gold coins to supplement this period ? Anythoughs on overal funding of this gap period - 66-70.
Thanks for your consideration


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22twain
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Re: Retire at 66 , SS at 70 , Funding the Gap

Post by 22twain »

How much are you figuring on spending per month or year during the gap?
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Watty
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Re: Retire at 66 , SS at 70 , Funding the Gap

Post by Watty »

oembogle wrote: Tue Sep 22, 2020 2:09 pm I will also be doing Roth Conversions from 66 until 72 .

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Selling 1 gold coin a month ($1900/mo) ,
A big question is how much you will need to pay in taxes when you sell the gold coins.

Depending on how the taxes work out it might make sense to sell a bunch of the gold coins every few years so that you could then do the Roth conversions in a low tax bracket in the years when you do not sell any gold coin.
oembogle wrote: Tue Sep 22, 2020 2:09 pm Any thoughts on using the Gold coins to supplement this period ?
One advantage of selling them is that they will be a lot easier to deal with now than when you are older. For example what would happen to them if you still own them when you need to move into assisted living?
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Kenkat
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Re: Retire at 66 , SS at 70 , Funding the Gap

Post by Kenkat »

You will owe capital gains taxes on the sale of the gold coins to the extent that the sale price exceeds your original purchase price.
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willthrill81
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Re: Retire at 66 , SS at 70 , Funding the Gap

Post by willthrill81 »

The most robust means of doing this is to use the time value of money formula in a spreadsheet to determine how much you should withdraw from your portfolio each year until you begin taking SS, when your portfolio withdrawals will presumably shrink. This method was discussed in this thread: viewtopic.php?t=274243.
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vineviz
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Re: Retire at 66 , SS at 70 , Funding the Gap

Post by vineviz »

oembogle wrote: Tue Sep 22, 2020 2:09 pm Since i will not have SS from 66 until 70 i am considering the following for income : Dividends from non Qualified , Selling 1 gold coin a month ($1900/mo) , any additional i could take from IRA to lower eventual RMDs . Any thoughts on using the Gold coins to supplement this period ? Anythoughs on overal funding of this gap period - 66-70.
The price of gold is more volatile than most assets that I’d consider appropriate for an investment with a time horizon of 4-5 years.

Can you get a better price on the coins if you sell 24 or 36 of them now to fund a more conventional gap strategy (eg a bond or CD ladder)? Personally I’d prefer to match the asset (ie some form of fixed income) to the liability rather than relying on an illiquid and speculative asset
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FrankLUSMC
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Re: Retire at 66 , SS at 70 , Funding the Gap

Post by FrankLUSMC »

The gains tax for gold coins is 28%, do not pass GO there. Not the same as LTCG taxes on stock funds.

I would tend to keep them and leave to heirs where they can cash them immediately for no gain with stepped up basis and thus no taxes.
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Watty
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Re: Retire at 66 , SS at 70 , Funding the Gap

Post by Watty »

FrankLUSMC wrote: Tue Sep 22, 2020 4:57 pm The gains tax for gold coins is 28%, do not pass GO there. Not the same as LTCG taxes on stock funds.
That is often misunderstood, my understanding is that the gains are taxed at your ordinary income tax rate up to a maximum of 28%.
fyre4ce
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Re: Retire at 66 , SS at 70 , Funding the Gap

Post by fyre4ce »

Watty wrote: Tue Sep 22, 2020 5:08 pm
FrankLUSMC wrote: Tue Sep 22, 2020 4:57 pm The gains tax for gold coins is 28%, do not pass GO there. Not the same as LTCG taxes on stock funds.
That is often misunderstood, my understanding is that the gains are taxed at your ordinary income tax rate up to a maximum of 28%.
This is correct - ordinary income with a 28% rate cap.
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