“I believe Social Security will be insolvent in 15 years. I would welcome the extra check, but I’m not counting on it.” (Photo subject is a model.) - Getty Images
Dear Quentin,
I’m 55 and expect to get laid off from my $170,000 job. I have $800,000 split across two 401(k) plans and a $69,000 lump-sum pension. My wife and I each have $150,000 in Roth IRAs, $400,000 in real-estate equity (with a mortgage of less than $50,000) and about $1 million in crypto (up 88% over 12 months and climbing daily).
My wife is the sole heir to her childhood home, inching towards $1 million. I took out a $1 million 20-year term-life policy on myself, but I will likely outlive it with only four years left. We have no college debt, credit cards, kids or car payments. We spend about $60,000 yearly (including leisure travel and $12,000 on the mortgage).
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I expect to use “rule of 55” withdrawals to pay off the mortgage and sell small amounts of crypto to carry us to age 59 1/2. I don’t plan to claim Social Security until age 70, when my wife will likely inherit the house. I believe Social Security will be insolvent in 15 years. I would welcome the extra check, but I’m not counting on it.
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Selling crypto, paying off mortgage
Crypto has been good to me, but it will likely take a year or two to adjust to the new regulatory landscape. In the meantime, paying off the mortgage and selling a little crypto here and there is my plan to tread water for five years to reach 59 1/2. Can I retire early with these numbers? Or am I expecting too much from my crypto?
The elephant in the room is that I haven’t filed taxes in 20 years. I’ve always had taxes withheld and I’m not hiding any undeclared or illicit income; I just haven’t filed in forever. I only bought and held crypto starting 10 years ago with KYC-compliant purchases, so over 97% of my balance is unrealized gains — no unpaid taxes there.
I don’t know what professional help I need to get right with the Internal Revenue Service and several states. A CPA and tax attorney? I feel like we have enough retirement savings. The future rental income will certainly help, and the crypto may grow into the millions. I just don’t want to leave a mess for my wife if I die first.
Stumbling into the FIRE
Don’t miss: I’m a senior who barely survives on $1,300 a month. No way could I live on $1,000.
Between your $869,000 in tax-deferred accounts and your $300,000 Roth, a 4% annual withdrawal rate would give you $48,000 a year. - MarketWatch illustration
Dear Stumbling,
You buried the lede.
You have organized all other aspects of your finances, so it’s unfortunate that you dropped the ball with the IRS, the one creditor that never goes away. With that in mind, hire a CPA and immediately throw yourself at the IRS’s mercy. That sounds dramatic, yes — but it sounds worse than the reality. I suspect anxiety over not filing has kept you from dealing with this issue.
[SRC] https://finance.yahoo.com/news/haven-t-filed-taxes-20-105100250.html
