[USER]

Hi everyone! I have a question about best sequence of withdrawals. I guess you could say that I’m Barista FIRE’d. I am 52, recent empty nester. 3 kids are in different cities.

I work 3 days a week at a cute shop but my feet are killing me.

My house is paid off and my FIRE’d bf (56) pays me rent. My gross income is about 32k which allows me to get a very good ACA subsidy.

I am ready to not be a homeowner for a while and take a 6-12 month sabbatical.

During that time we would be nomadic, taking an extended road trip, staying in parks and BLM land in a camper van or small RV.

We love road trips, hiking, and want to explore as much as possible while we have our health.

At the end we would either relocate to a mid size college town or return to Houston (I have a love/hate relationship with it, but so, so tired of hurricanes and power outages) I feel like the time away will help give some clarity on choosing where we land.

Once we are off the road, I would like to rent for at least 2-4 years.

I’m budgeting for $60k expenses per year, plus initial purchase of camper or van. I realize this might have impact on my ACA subsidy.

My question is what is the smartest way to withdraw from my various accounts once I’m no longer earning income?

Do I pull from brokerage accounts and keep my cash buckets intact or use the interest earned from home sale proceeds plus some brokerage $?

Currently I just take periodic withdrawals when needed from my Vanguard settlement fund which I treat like a HYSA. Also would like opinion on where to park proceeds from home sale.

Thinking CD or HYSA since I’d like to have option of buying in 5 years depending on the market, but please share any other ideas.

Not interested in buying rental property.
I appreciate your collective wisdom!

[Frank]

You manage it every year based on your tax situation. There is no rule of thumb or baby steps to follow, but it is generally not a significant issue.

You really need to have more of a plan that just “sell the house and hit the road for 6-12 months”.

I would plan what happens after that or you are going to spend all your sabbatical time planning it then.

Figure out where you plan on renting and how much that will cost.
I would get out of Wells Fargo ASAP.

The fees must be ridiculous. Use Fidelity, Schwab or Vanguard to hold your investments. No banks, no insurance companies, no retail outlets.

[Sunny]

I’m in similar situation as you. I’m currently spending down IRA inheritance.

If I didn’t have that, I’d spend down my brokerage accounts.

Get a side job.

Wouldn’t touch any retirement accounts.
I’ve been upselling stuff.

[Jack]

Generally you want to take from taxable accounts first because there are no penalties and you’ll hopefully be paying capital gains tax at the long term rate.

Do you have an overall asset allocation? Something like 75% stocks 20% bonds and 5% cash?

That’s just an example but you want to sell whichever asset class is above its target allocation to nudge your portfolio back into balance.

[Author]

Posts