Getting started- Plan B

as for keeping the 401k, all it did for my parents was cause them to pay a higher insurance premium when they retired than the guy who enjoyed their whole pay check. Scam scam SCAM! from uncle ScAM...

Like you MushCreek we would love to go ahead and move to our "homestead" site. At 57 I really don't want to wait much longer.
Our reasons for staying in town are a little different.We are very lucky that the housing market here is still pretty good. We feel we could get a fair price for our home that would allow us to move with money left over.
Why then have we not done it?
My neighbor has a 60 ac. farm that joins our property here in town. I promised her husband, as he was dying, that I would take care of the farm as long as she was alive and still wanted to stay with it.She is now 81 and her two children that live far away can not pry her away from this place. I feel kinda guilty, like I'm waiting for her to die so I can go to my "homestead", but a promise is a promise. At least my place is only 30 min. away and I can split my time between the two operations
Hope things work out for you soon so we can be neighbors.

PS, You know I will be glad to help at your place any time. Just let me know when.

Hank
http://www.doublemfarmandchuckwagon.webs.com

Salmonslayer:

Your wife can withdraw starting at age 59 1/2 from the 401k without penalty, just has to pay taxes on it like it was income, so maybe she can take it out in increments to use for projects, pay off debt, etc. rather than wait for full retirement.

On The Right
Class Warfare's Next Target: 401(k) Savings
By NEWT GINGRICH AND PETER FERRARA
Posted 02/17/2010 06:52 PM ET


You did the responsible thing. You saved in your IRA or 401(k) to support your retirement, when you could have spent that money on another vacation, or an upscale car, or fancier clothes and jewelry. But now Washington is developing plans for your retirement savings.

BusinessWeek reports that the Treasury and Labor departments are asking for public comment on "the conversion of 401(k) savings and Individual Retirement Accounts into annuities or other steady payment streams."

In plain English, the idea is for the government to take your retirement savings in return for a promise to pay you some monthly benefit in your retirement years.

They will tell you that you are "investing" your money in U.S. Treasury bonds. But they will use your money immediately to pay for their unprecedented trillion-dollar budget deficits, leaving nothing to back up their political promises, just as they have raided the Social Security trust funds.

This "conversion" may start out as an optional choice, though you are already free to buy Treasury bonds whenever you want. But as Karl Denninger of the Market Ticker Web site reports: "'Choices' have a funny way of turning into mandates, and this looks to me like a raw admission that Treasury knows it will not be able to sell its debt in the open market — so they will effectively tax you by forcing your 'retirement' money to buy them."

Moreover, benefits based on Treasury bond interest rates may be woefully inadequate compensation for your years of savings. As Denninger adds, "What's even worse is that the government has intentionally suppressed Treasury yields during this crisis (and will keep doing so by various means, including manipulating the CPI inflation index) so as to guarantee that you lose over time compared to actual purchasing power."

This proposal follows hearings held last fall by House Education and Labor Committee Chairman George Miller, D-Calif., and Rep. Jim McDermott, D-Wash., of the Ways and Means Committee focusing on "redirecting (IRA and 401k) tax breaks to a new system of guaranteed retirement accounts to which all workers would be obliged to contribute," as reported by InvestmentNews.com.

The hearings examined a proposal from professor Teresa Ghilarducci of the New School for Social Research in New York to give all workers "a $600 annual inflation-adjusted subsidy from the U.S. government" in return for requiring workers "to invest 5% of their pay into a guaranteed retirement account administered by the Social Security Administration."

I've already been required to contribute to a 'guaranteed retirement account' all my life. It's called Social Security!

Since I don't approve of their wild spending habits in Washington, I'm not real inclined to support it financially, either.

__________________
"What one generation tolerates, the next generation embraces." -John Wesley

you can legally withdraw from your 401k or IRA (not sure which type, or whether it's both) without penalty at any age if you compute the payout based on your life expectancy at that age, and maintain that payout for a certain number of years. eg, you could start withdrawing at age 40 an amount based on a life expectancy of 30-40 years, so the payment would be rather small. and you'd have to continue those payments for something like 5 years at a minimum. there are lots and lots of rules you have to follow to determine life expectancy, payout rates, etc, but it is possible.

--sgl

The only real issue with that is it is another ploy by the feds. They will tax you every year for that annual distribution- and taxes 15-25 years down the road will be incrementally higher every year I think- especially for wage earners earning more in their mid forties to 60 or so than earlier in their lives- and maybe over time the net present value of your money combined with those increasing tax hits- ends up being far more costly than just taking the 10% penalty hit now. It really boils down to- do you think you are going to play the gambling game with the wall street boys and that America and our politicos are on the way to prosperity, greatness and lower taxes-

or do you believe like I do- that taxes will continue to rise (they must) and that the America we knew decades ago is gone- we are heading in the crapper. If you buy the rhetoric- leave it in and cross your fingers.....

DW turned 59-1/2 last month, so we are good to go on withdrawals. Since I won't be working while I'm building the house, the tax hit will be much less than when we have two incomes coming in. I know they grab 20% up front, but it should balance out at tax time.

After much discussion at home, I think I'll hang onto my job for roughly one more year. I got a bonus this year that was about 10% of my annual pay, so it should be worth waiting for. We have a lot to do in the meantime, and I have the money to start excavation and foundation work during the winter. In SC, the weather starts to warm up about now, so it would be a good time of year to get started. We're going to SC in October, so I'll pull my permits then, and get together with my concrete guy. I have to show some progress every 6 months, so if we break ground in the winter, I'll be good to go in March. I like the idea of letting the concrete cure for a couple months anyhow. The soonest I could start this year would be in the fall, and if next winter is anything like this one, I'd spend most of the winter trying to keep warm!

Meanwhile, if the g'ment shows any signs of funny business with 401K money, we'll cut and run.

__________________
"What one generation tolerates, the next generation embraces." -John Wesley

Some of this 401 (K) info is new to us so we are definitely going to have to look into the incremental drawing out aspects but I think our concern mirrors MushCreeks, will anything be left of it if we wait?

__________________
www.salmonslayer-simplelife.blogspot.com

If you can both still have a job where you are now, save up a decent chunk of money, hire someone to do the concrete work according to your plans and specifications. If you are making average where you are you should about break even. Your pay for their work. Put the house up for sale, there is no bottom. Get rid of it now if you don;t want to live in it forever. The prices got so high they may fall to half or even less. Get out of the morgage,. Do not touch your 401 try rolling it into some gold some federal bonds, diversif it all across the board. At least as much as you can. DO NOT LISTEN TO PEOPLE WEARING TINFOIL HATS think for your self. Right now no one in their right mind would quit a good steady job.
There will even be cuts in the medical fields, possibly heavy cuts her job is probably more secure than most. But remember the only thing you can be sure of is you cannot be sure of anything. I have social security, a private retirment, income from land we financed, a little cash, a little gold, a little silver. Everything is paid for a garden, we raise most of our food and can severl hundred jars a year. We both have several skills we can do but in these times we are still worried.

Tinfoil Hats?? Ha We will see.....I've lived by "the rules" for 25 years -since college and have followed the pack and our "experts and officials". And if you really look at whats going on and really dig in....maybe you will stray away from the blindly led herd too....we are on a homesteading sight right?? Just checking.