Hey everyone! I hope you’re enjoying the beautiful spring weather. It’s been a while since I posted an update. To be completely honest, blogging became much more difficult once I stopped posting every single week. There are always so many things to do around the house, and writing is much harder when I don’t stick to a strict schedule.
Anyway, I promised to update my withdrawal plan, so here it is.
This plan isn’t set in stone. We’ll constantly modify it to minimize taxes and respond to unforeseen circumstances. We will likely withdraw more in some years to cover “lumpy” expenses, like buying a new car. Life is full of surprises, and we’ll have to adapt as needed.
Our early retirement withdrawal plan is flexible. Right now, we have almost $1 million combined in our taxable brokerage account and Treasury bonds. However, we also have changing family circumstances to navigate. Our parents are getting older and need more assistance. Because of this, we plan to move to California to be closer to Mrs. RB40’s family when our son finishes high school in 2029. As you’ll see below, this move is a massive factor in our financial timeline.
(For context, I am 52.5 years old right now.)
The Timeline: 2026 to 2049+
2026 to 2028: The Early Years & Simplifying Real Estate
2026 is our first year of full retirement. Our active income will be minimal—probably around $5,000 from blogging and minor side gigs.
Fortunately, Mrs. RB40 has a small pension of about $10,000 annually. More importantly, her retirement plan includes group health insurance coverage. We pay the same premium amount as we did when she was working, and it’s deducted directly from her pension. This is huge. Not having to worry about the ACA marketplace or healthcare costs gives us a lot of breathing room.
- Estimated Annual Expenses: ~$75,000
- Active Income + Pension: ~$15,000
- Passive Income (Dividends/Interest): ~$20,000
- The Gap: We need to cover a shortfall of about $40,000.
The Solution: Since we are moving to California in a few years, I am winding down our Portland rental real estate. We recently put our rental condo on the market. Once sold, it should generate roughly $150,000 after fees and taxes. This cash pool, combined with our other income streams, will fund the next 2 to 3 years of living expenses.
Our Housing Adjustments: Currently, we live in a duplex and rent out the upstairs unit. However, I’ve asked our tenant to move out in 2027. RB40Jr is a teenager now and needs more space. One bathroom doesn’t cut it anymore. Mrs. RB40 also wants more room since she is home full-time. We will use the next few years to live comfortably in the whole property while fixing it up to get it ready for sale. It’s a big win that we resisted upsizing for 15 years. Most families expand their housing when they have kids.
Note on a lumpy expense: I may purchase a new car in 2027. My budget is around $30,000. Our 2010 Mazda5 minivan is still going strong, but an upgrade would be nice. I want to take advantage of Oregon’s 0% sales tax before we move.
2029 to 2032: The California Move
When RB40Jr graduates from high school in 2029, we will sell the duplex. This should generate around $500,000.
From there, we will relocate to California. Recently, Mrs. RB40 transitioned her dad into an assisted living facility. It’s a big life change, but he can’t live alone in his house anymore. Currently, she spends about half her time in California managing the property and helping both of her parents (who are divorced but live in the same town) with random logistics.
Her dad’s house is completely paid off, and he wants us to move in there. It’s Mrs. RB40’s inheritance. Because we won’t have a mortgage or rent, the $500,000 cash from the sale of our Portland duplex can act as a bridge fund to cover our living expenses until we can withdraw from our retirement accounts.
What about college? RB40Jr will head to college right around this time. Our 529 College Savings Plan should be enough to cover his tuition… unless he gets into Stanford. Haha!
2033 to 2034: The Traditional Retirement Age Gate (59.5)
I will hit the magic age of 59.5 in 2033. Then, I can finally withdraw from my traditional IRA without the 10% early withdrawal penalty.
My preliminary plan is to withdraw roughly $100,000 per year from my IRA. This is highly flexible because I suspect we will still have plenty of capital left over in our taxable accounts. Mrs. RB40 is a year younger than I am; once she turns 59.5, we will split the distributions evenly (e.g., $50,000 from each of our IRAs) to manage our tax brackets.
Required Minimum Distributions (RMDs) could become a tax problem for us down the road if we don’t start aggressively drawing down these tax-deferred accounts early. We’ll ask the AIs to help us run the math on the optimal drawdown numbers when the time comes! They should be way smarter in 10 years.
*Everything is highly speculative after this point.
2035 to 2040: Early Social Security
I’ll turn 62 in 2035 and plan to file for early Social Security benefits. Based on our projections, we won’t actually need this money for baseline living expenses. Instead, we’ll use my Social Security checks to supplement our travel budget and charitable donations.
2041 to 2048: Maximizing Benefits
Mrs. RB40 hits her Full Retirement Age (FRA) of 67 in 2041. She can choose to file then or delay until 70 to maximize her monthly benefit. Since women tend to live longer, it’s likely a smart move for her to delay filing to lock in those 8% annual delayed retirement credits.
2049 and Beyond: RMDs
I will turn 75 in 2048, which means my Required Minimum Distributions (RMDs) will officially kick in by April 1, 2049. The RMD could become a problem if we don’t manage the IRA withdrawal well.
Why Our Withdrawal Strategy Shifted
If you’ve followed this blog for a long time, you know this is a significant departure from my original retirement withdrawal plan. Initially, I thought we would live off our taxable brokerage account and passive income until I turn 59.5. Then, we could draw down our IRAs.
However, our pending relocation to California changed the math entirely. By converting our illiquid real estate equity (the rental condo and our primary duplex) into liquid cash, we can fully fund our 50s without touching our core taxable brokerage account unless more surprises pop up.
Looking back, a handful of major wildcards worked out tremendously in our favor:
- The Health Insurance Jackpot: Mrs. RB40 worked just long enough to secure a lifetime pension and retiree health insurance benefits.
- The Housing Windfall: Moving into her dad’s paid-off house eliminates what would otherwise be a massive California housing expense.
- Market Growth: Our investments have grown significantly since I retired back in 2012. We have a fantastic cushion in both our taxable and retirement accounts.
- Moderate Lifestyle Maintenance: We continue to live a relatively frugal, moderate lifestyle. We share one car and cook at home almost every day. When we travel, we still fly economy and stay in mid-range hotels.
That last point is actually why I’m pushing myself to spend money on things like a vehicle upgrade and taking over the whole duplex. We probably should live it up a little more while we are healthy and active in our 50s and 60s!
The Wildcard
If it all goes according to plan, we are looking at a smooth, comfortable retirement. The primary variable left is our parents’ long-term health.
Mrs. RB40’s dad has enough personal savings to fund many years of assisted living care. Her mom has fewer financial assets, but she is currently in excellent health. Meanwhile, my dad is also doing well and has enough to fund a comfortable retirement in Thailand. If any of them need financial assistance, we’ll probably step in. (Unfortunately, my mom passed away in 2023. I still miss her.)
Everything is stable for now, but health can change in an instant when you’re over 80. I plan to spend a lot more time in Thailand when my dad needs more help. Actually, I’m thinking about moving to Thailand before Mrs. RB40 and I need long-term care. You get a lot more value for your dollars there. I plan to visit a few luxury assisted living facilities in Thailand this summer.
What do you think about our updated withdrawal plan? Has your retirement withdrawal plan changed as aging parents or family obligations popped up? Let me know in the comments!
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