19 replies
  1. Tee Mack
    Tee Mack says:

    Hiya Josh,
    Love and appreciate your “everyday-joe” lunch pail approach. Great info. Keep up the good work.
    Not to be “Capt Obvious” but everyone’s situation is different. This video however, has me second guessing my decision to take SS early and let the deferred money grow.
    My situation, with my wife and our unemancipated minor still at home, provides for a significant increase in SS monthly payments for the next 5 years until our child is 18 years, I took the early SS.
    To add, I also just don’t like the idea of using up all of my deferred savings now in lieu of taking SS later for the reason that I’d rather receive and use my Uncle Sam money up front now in case I croak early and can leave the deferred to the Mrs and the kids.
    That said, you have given me pause for thought and possible reconsideration after I speak with a CPA. Guess, I just have to crunch the numbers and if necessary, even payback to SS what has already been distributed to us if in the long run, we be better doing it the way you’ve mentioned.

  2. Steve
    Steve says:

    So if I spent the first 20 years of working and maxing my contributions into traditional 401k and now in my mid 40s I am 100% Roth 401k (seems like I should have done the opposite lol though Roth 401k is kind of new) the idea is when I get to 60-65 to retire I really don’t want to deal with the traditional 401k problems if I can avoid them. I hear people talk about conversion ladders but I still wonder how do you pay the taxes on that without putting that conversion in a high tax bracket. What is the best strategy normal way to convert it before retirement? Do I wait till I am older to to do it like my 60 or 55? If your tax bracket is already pretty high does converting it now now sounds kind of nuts? I get told all the time each person is different then I say how does anyone learn. Someone should do a series of videos talking about the different ideas to convert it.

  3. Jerry D
    Jerry D says:

    Thanks for clarifying. I also thought you were suggesting a one time pull out of three years money needs to put in the bucket. I thought that was going to be costly.

  4. gary kofoid
    gary kofoid says:

    I looked not only in the tax bracket but also Obamacare. I can take out up to 65k and still be able to have maximum withdrawal for my health insurance. ($65000 =0 payment for insurance per month. $66000 =$1980 .00 per month [which is how much the plan is worth where I'm at] (it's also a high deductible plan so I could possibly take out tax free for HSA account). I make 33k a year from a closed pension (Illinois) and that leaves 32k to roll my IRA to Roth. To keep it in the 12% tax bracket.

  5. Big_A
    Big_A says:

    can you do a video on where to take the money from once your retire ? I thought that the 3 year cash reserves are only to use during a market downturn.

  6. Terry Mullins
    Terry Mullins says:

    Can you suggest how to do this for Federal employees with TSP funds? Should we just keep 3 years worth in the G fund and transfer it over on down years. Withdrawals are prorated so it’s not a perfect system. Or, should we just move our emergency funds to IRAs?

  7. Chris Johnson
    Chris Johnson says:

    Can you clarify about taxes on dividend and cap gains? Is it every dollar above the 12% bracket that starts to get taxed or does one dollar over the 12% bracket force you to have to pay taxes on all cap gains and dividends?

    Also, do cap gains and dividends push you into a new bracket or only earned income?


  8. Cheryl
    Cheryl says:

    I was clear on that. I think you have hammered it in to my head. My “bucket 1” with cash is partially in IRA (cd), in regular trading accounts in cds, and cash in a new savings account that pays 2.1%. The rest is invested in IRA, Roth & employers 403B. I’m still getting ready for the big day! Once I retire I will roll the 403B. Thanks for your help Josh!

  9. Mike H
    Mike H says:

    Yep, VMMX for us.  What about having the qualified dividends and LTCG paid to the cash account , especially if they are free due to being in the 12% or less tax bracket.

  10. Alberto Santa Barbara County CA
    Alberto Santa Barbara County CA says:

    We have three years or so of cash in our 401K value stable fund. We use this fund to take yearly 401K distributions once a year based on our expenses. The distribution goes into our expenses account in Ally while our conversions go into the Roth money market to determine at the time the best place to put.

    The overall idea of dynamic distributions is to take from stocks when the market is up and bond when it is down. We bypass this and keep our withdraw money in a value stable fund as Josh suggested.

    We also convert 401K to Roth once a year, specially if the market is below its 200 moving day average. Best time IMHO for Roth conversions.

    We have friends that take distributions either quarterly or semi annually. They try to minimize withdraws and maximize conversions.

  11. Greg Guiltner
    Greg Guiltner says:

    1) If you are over 59 1/2, can't you just roll part of the 401K into a money market in an IRA to avoid taxes until needed (for your cash bucket). Then you could move the whole cash bucket chunk at once. 2) Didn't you advise putting the cash bucket in a bank money market rather than a brokerage money market?


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