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Archive for January, 2024

Another unexpected fork in the road

January 22nd, 2024 at 09:57 pm

Well, it's official. I'm without a job, it seems. I suspected my job could be in jeopardy when the person I report to asked me to stop writing, "for the time being." 

That was back in mid-December, and I figured I'd give it til after the holidays to resolve, but when I still hadn't heard back from her, I sent her a note. I had already informed the agency that pays me but they seemed pretty lax in getting back to me and I'd been in limbo long enough. So yes, she was very nice about it, but I'm out of a job now.

Now I'm faced with a few choices: 1) Call it a day and retire now. 2) Look for another p/t job 3) Look for f/t work and file for unemployment benefits, which wouldn't be available to me if I only wanted to work p/t.

I think I'm going to call it a day. But it still feels SCARY!

I went ahead and changed my reinvested dividends and cap gains  on 2 remaining big funds to be diverted directly to my checking account. I called the brokerage and was told that since these are individual taxable accounts, they don't withdraw taxes when they do the transfer so I would have to pay taxes at tax time, but as Dido told me, I would only pay taxes on the gain.  Wondering if I would need to make quarterly tax payments to ensure I don't get a tax penalty for late payment.

So I now have several traditional IRA funds from 1 brokerage and 2 taxable funds from the other diverting dividends and cap gains to my checking account, which, based on a look at my 2023 cap gains/dividends, should yield me about $17,000. I vaguely remembered that when I set up the traditional IRA funds, I only had 10% withheld in taxes, when I really should have 12% withheld. I was on hold for over 40 minutes waiting to talk to a rep as i don't see the place where you can change the tax withholding amount. And, I probably also withheld only 10% from my annuity, which will be too low, so looking to increase that also.

My net annuity proceeds for the year should come to $11,184 and there's a family $5,000 Xmas gift in December, so my 2024 annual (mostly) net income should be about $33,000, so I'll plan on taking traditional IRA distributions amounting to about $15,000 to bring my annual income up to about $48,000 (taxable income, which is minus the $5,000 gift, will be about $43,000), still comfortably within the 12% tax bracket.

Some of those funds will be used to pay for various home improvements, like the recent replacement of my 10-year-old electric hot water heater with an uber-energy efficient heat pump hot water heater ($3,000+). Next up will be some masonry work on my basement walls, including repairing a large crack where a snake came through when we had massive rain here ($3,850).

When I take that $15K in traditional IRA distributions, I think I will try to time 1 or 2 large transfers on a good market day and put in either a brokerage money market account OR my  online money market savings account that's  currently earning 4.35%. From there, I could do perhaps monthly or quarterly transfers to my checking account (which earns 0% interest) as needed. Wondering if they can automate that for me.

In 2025, I'll allow myself higher income, maybe around $50 or $55k.

Until I get a certain routine set up with withdrawal income streams, this is going to feel very wonky. My taxes this winter could be difficult for me to handle with all the changes, and next year, too. Just different line items to complete for annuity and ira distributions etc etc. but head is still swimming with newfound tax obssession. I really want to simplify things as much as possible.

I've pretty much decided to defer a new vehicle purchase to 2025.



A Look at My 2023 Income

January 2nd, 2024 at 09:37 pm

As I transition into retirement, my income sources are shifting away from reliance on work. While my p/t job still accounts for 31% of total income, so, too, do dividends (from just 3 funds) and a small, one-time IRA distribution. My annuity contributes another 23%; it will be a bit more next year as I did not start getting annuity payments until February 2023.

Credit card rewards are still nice to pursue as they earned me $532.

That's it in a nutshell; 2024 will bring even bigger changes as I'll retire fully in August and begin the Great Spend-down of traditional IRAs.


A Breakdown of My 2023 Expenses

January 2nd, 2024 at 08:46 pm

My total expenses for the year were $42,851, about $800 less than last year, so I count that as a win.

A closer look at my top expenses reveals, however, that in only one category, my cat, my expenses stayed roughly the same as last year;  7 other top expenses rose by as much as 94% (maintenance). Surprisingly, there was also one category, electricity, that dropped by 1% compared to last year. That must be attributable to my turning the lights off all the time since I'm still on the same 3-year contract I locked in 2 years ago at a very good rate. My spending on lawn and garden increased by 54% (mower raised his prices) and car upkeep (10-yr-old car) by 41%.

Top 11 expenses:

Property taxes: $6942
Kitchen upgrade: $5582 (cabinet paint job, new sink/faucet)
Food: $5203
Oil tank replacement: $4300
Lawn and garden: $2658
Maintenance: $2,644
Cat: $1897
Heating oil/cleaning: $1476
Household: $1401
Car upkeep: $1015
Electricity: $1008

I also have 8 "mid-tier" expenses, and the story there is prices rose in most categories, the most marked being the 62% increase in dining out. That's probably a result of both rising restaurant prices as well as the fact that I treated family a few times to some very nice meals out. Notably, the $690 I spent on gas for the car this year was a 15% drop from last year. My prices for car insurance ($645) and homeowners insurnce ($615) saw only modest increases from last year, which is again a surprise.

I have another 8 "low-tier" expenses that aren't really mentioning.