I received the overnight package from Guardian Life for my single payment income annuity, signed everywhere I needed to and fed'exed it back this afternoon.
If all goes smoothly, my first annuity payment will come in March. I will have them deduct federal and state income taxes so no big tax bill at year-end. I will have to tweak my asset allocation afterwards at Vanguard to make sure I'm at about the same place as I am now, but not a biggie since this is all IRA money and can be moved around with no tax consequences.
Here's a projection of my future income situation:
From ages 63 (now) to 65:
Annual income will come from 4 sources:
Annuity: $ 13,700 (net of taxes this will be more like $1,000/mth)
Investment income (dividends, interest, cap gains) $5,500. I will change my current reinvestment of these and redirect these into my checking account as soon as I get the annuity all squared away.
My new p/t job (still not set in stone but will know in a few weeks): $18,000
This is my hoped-for income from 2 stories a month. If she doesn't like the other writer's work, she will ask me to do 4 stories a month, which I really don't want to do, so I'm hoping she likes us both and will keep us both on, which she explained is a possibility.
Dad's Xmas gift: $5,000
Total income: $ 42,200
From ages 65-69:
Annual income will come from 3 sources only since I plan to retire completely at age 65.
Annuity: $ 13,700
Investment income: $5,500
Dad's Xmas gift: $5,000
Obviously not enough to live on so will start taking withdrawals of about $17,800 annually from a combination of traditional IRA/taxable mutual funds and Roth monies.
Municipal property tax credit: $2,900 (Right now I pay $6,600/yr, so that's a 44% reduction)
State property tax credit: ??
My town offers property tax credits based on a sliding income scale for low-and moderate-income seniors age 65+. You have to reapply every year, but I think it's well worth the effort.
From age 69+2 mths - 73 (69+2 mths is the best age for me to begin SS)
Inv income: Let's say $3,000 due to withdrawals the previous 4 years
Social Security: $ 39,108 ($3,259 a mth) (It will be a bit higher when they factor in 2 more years of work by me that's higher than a string of really low earning years when I was in college and in my 20s), if all goes well, but just using this number for now.)
Total: $ 55,808
Municipal property tax credit: $1,500.
State property tax credit: ???
From age 73 - for the rest of my life
Inv income: $2,500?
Social Security: $39,108
RMDs: Around $34,000??
(Actually, Dido calculated my total income at $100k so need to go back and study her numbers. There are so many moving parts.)
I guess at this point...age 73...I will no longer qualify for a municipal property tax credit, which phases out after an income of $70,000.
Nice income! Of course, I have no debt.
But taxes will rise, too, at age 73 with RMDs. I hope to continue strategically withdrawing each year from traditional IRA or taxable mutual fund money (fully taxable) up to the 2nd lowest tax bracket (well, right now that's just 12% for earners up to $41,775 but that will surely change), and then "topping off" as needed using Roth (tax-free) money.
After what seems like a lifetime of planning (at least 30 years!), everything is beginning to fall in place. It's kind of exciting.