Thanks...have two windows open know searching out 401k rule of 55 and 401k rule 72t. Since there are so many of us near or at retirement maybe we should make a separate thread to discuss this crap. I try not to think about it since I fear I may never be able to retire, but like you I have to pull my head out of the sand (or my ass) and make sure I am prepared. I started early on my 401, but my wife doesn't anymore so it hasn't grown as much as I would like. We also had a kid a little later and purchased a new home which means if I don't pay it off early I will be paying until just about legal retirement age. It would be nice to be in a position where I had FU money, had that earlier when both of us were working and had a smaller mortgage and it made living through a tough job environment better. Maybe if I felt I could just bounce early it would allow me to hang on longer.Not quite right. for traditional IRAs and 401(k)s, money goes in pretax, but when you pull the money out it is taxed at the going income tax rate. So you can control how much you pull out to stay in the 10%, 12%, 20%, 22% etc tax brackets, but it definitely does not come out tax free, Roths come out tax free because you already paid the taxes going in. The 20% for withdrawing early is actually only 10% and that is a penalty on top of the income taxes. So if you are in the 10% tax bracket, the money comes out at 20%, but if you are at the 22% tax bracket, then the penalty makes in 32% (real ouch). Now there are two very nice loopholes that allow you to pull money early. One is to rule of 72(t) to make substantially similar annual withdrawals (google it for the details). The second is using the rule of 55 to reach into your last employer’s 401(k) without penalty if you stop working the year you turn 55 (or later). So if your birthday is on Dec 31st, you can actually start this at 54 years of age on Jan 1st and have almost a year before you actually turn 55. This is what I;m using to retire early. The real loophole was that my employer’s 401(k) happened to allow me to rollover everything from past employers 401(k) or from external Roth or traditional IRAs, so I essentially have access to all of it. Also some employer plans would require you to withdraw all of it to use the rule of 55, and that doesn’t work because then you could be taxed at an insane rate if you had 7+ figures in your 401(k). Luckily, my employers 401(k) allows me to pull as much or as little as I want. The only part I cannot access right now is anything I put into a recent Roth because there is a 5 year rule on Roths and this a Roth was started because the company I used to work for got acquired, so the Roth started in 2020.
Alas, 7 years ago, I knew nothing about retirement, I had been contributing for decades, but had my head in the
sand just hoping it would work out. It wasn’t until a couple job scares the kicked me into overdrive to pay off the house and get out of debt to ward off any future job scares. Then I saw the light, rather than wait for a job scare, I just planned to leave on my own terms. So I retired last August and am not looking back.
State taxes, on the other hand is another mess. Luckily the state of IL does not tax retirement income.
Finally, you ask about federal social security and yes, it is taxed at the going rate depending on your marginal tax rate. So if all you are making is SS, the taxes aren’t very much. I;m not depending at all on SS, but I do plan to start collecting SS as soon as I legally can. Maybe I’ll use my SS checks to lease a Huracon or something insane like that.
So after that long winded diversion… I love my new Pirelli tires. I;ve never owned Michelins though.
So now my tire content: I am still enjoying my BFGoodrich Comps but I am more convinced that they are the source of my noise. During normal driving they are not loud at all, probably similar to stock on most surfaces, but during certain braking they almost growl. Early on I thought it could have been the slotted and drilled rotors on my car but I didn't notice this over the winter. But I was running studded snows so maybe that covered up some of the noise. I was thinking about switching the tires from side to side to see if the sound went away under braking, but that seems like a lot of effort for something that doesn't really bother me.