Retirement Q&A

[walkenvol]

56.
I’m contracting but working about 35-40 hour weeks.

I’m approaching 64 and I’m also contracting part time. While I wouldn’t do it if I weren’t compensated fairly, I don’t do it for the money if that makes sense. I seem to do better when I involve myself in business outside my home. I keep thinking it’s time to give it up and will then have second thoughts. When I don’t get up and go work I end up wasting too much time to suit me. Finding that retirement balance is still a work in progress for me.

 

[YankeeVol]

nvm

 

[Orangeslice13]

I’m approaching 64 and I’m also contracting part time. While I wouldn’t do it if I weren’t compensated fairly, I don’t do it for the money if that makes sense. I seem to do better when I involve myself in business outside my home. I keep thinking it’s time to give it up and will then have second thoughts. When I don’t get up and go work I end up wasting too much time to suit me. Finding that retirement balance is still a work in progress for me.

I only work for people I like. I enjoy the work time when the clients are not shitheads. Plus people who know me will pay me what I’m worth.

 

[Go aeiou]

Military. School systems (primary and secondary education).

govt

 

[imw8n4u]

Does anyone have any outside the box ideas for retirement savings? Outside of 401k, rental property or anything else that has already been mentioned in this thread? Even if its something risky. I am honestly curious. Trying to explore all other options

Have you considered Crypto? FYI - don't take this as a recommendation, I truly don't know anything about it, but it seems to be an option that fits your inquiry.

 

[Orangesmokey]

Have you considered Crypto? FYI - don't take this as a recommendation, I truly don't know anything about it, but it seems to be an option that fits your inquiry.

That is definitely an option but I know absolutely nothing about it so it would definitely take some extensive research to make sure it’s right for me. I’m not opposed to doing the research. Maybe someone in here knows more about it and can advise on that option

 

[imw8n4u]

That is definitely an option but I know absolutely nothing about it so it would definitely take some extensive research to make sure it’s right for me. I’m not opposed to doing the research. Maybe someone in here knows more about it and can advise on that option

Here's an old thread that discusses crypto

I just bought over 12,000,000 crypto

 

[Go aeiou]

Here's an old thread that discusses crypto

I just bought over 12,000,000 crypt

oops

 

[orangebloodgmc]

Grow taters ...

 

[WallyBalls]

I'm 43. Single (happily divorced, but no kids and came out fine financially).

Mortgage under 150k, but locked in at 2.5%. Did treat myself to a boat and a vehicle in the last couple years but those will not go to the full term of their loans.

401k and IRAs (as of close on monday) all together were about $380k. I check in on them at least weekly, and set a time once a quarter to make minor adjustments. To be conservative, annual deposits are $25k (not counting about $2500 in annual dividends in a self managed part of one IRA that are in DRIPs). Did start an HSA a couple years ago, gets about $2500 a year put in it.

Short term goal (<18 months) is paying off vehicles. After that, trying to decide if I just should maintain current course...or if I should just start throwing money at the mortgage, or build up a non-retirement investment account. Don't have a firm retirement age in mind. Would love to start kicking it around at 60, maybe shift to a lower paying retirement gig around 55 if I've had enough of my line of work...

I haven't shifted to an advisor yet, but its something I've considered. Have a guy trusted by numerous people in my profession who has done well for all of them, but don't necessarily see a need in going that way until I'm at $500k (or if certain mostly non-cash things come up after settling my parent's estate hopefully several years down the line).

 

[walkenvol]

I'm 43. Single (happily divorced, but no kids and came out fine financially).

Mortgage under 150k, but locked in at 2.5%. Did treat myself to a boat and a vehicle in the last couple years but those will not go to the full term of their loans.

401k and IRAs (as of close on monday) all together were about $380k. I check in on them at least weekly, and set a time once a quarter to make minor adjustments. To be conservative, annual deposits are $25k (not counting about $2500 in annual dividends in a self managed part of one IRA that are in DRIPs). Did start an HSA a couple years ago, gets about $2500 a year put in it.

Short term goal (<18 months) is paying off vehicles. After that, trying to decide if I just should maintain current course...or if I should just start throwing money at the mortgage, or build up a non-retirement investment account. Don't have a firm retirement age in mind. Would love to start kicking it around at 60, maybe shift to a lower paying retirement gig around 55 if I've had enough of my line of work...

I haven't shifted to an advisor yet, but its something I've considered. Have a guy trusted by numerous people in my profession who has done well for all of them, but don't necessarily see a need in going that way until I'm at $500k (or if certain mostly non-cash things come up after settling my parent's estate hopefully several years down the line).

IMHO, I think there’s little value provided by financial advisors in return for 1% of your money. Picking individual stocks can be more profitable verses holding low cost ETF’s, but on average one can do as well or better with ETF’s. Market timing is rarely done well consistently. Read 10 minutes of investing / retirement news each day and you will get a good general education. I keep reading about fee based financial advisors but all I’ve encountered are the 1% types. There’s enough knowledgeable guys on here to answer most your questions for free. Again, this is JMO

 

[WallyBalls]

IMHO, I think there’s little value provided by financial advisors in return for 1% of your money. Picking individual stocks can be more profitable verses holding low cost ETF’s, but on average one can do as well or better with ETF’s. Market timing is rarely done well consistently. Read 10 minutes of investing / retirement news each day and you will get a good general education. I keep reading about fee based financial advisors but all I’ve encountered are the 1% types. There’s enough knowledgeable guys on here to answer most your questions for free. Again, this is JMO

Appreciate that. That's pretty much what I've been doing and the returns have been absolutely acceptable for what I'd like to see.

I lean towards continuing that unless something happens to make things more complicated. Feels like I could just consult some one on an as needed basis for the normal tax questions, etc.

 

[walkenvol]

Appreciate that. That's pretty much what I've been doing and the returns have been absolutely acceptable for what I'd like to see.

I lean towards continuing that unless something happens to make things more complicated. Feels like I could just consult some one on an as needed basis for the normal tax questions, etc.

As has been repeated in the thread by several, the most important thing is to start saving early and save a certain percentage every month. Invest those savings to allow years of compounding to grow your wealth.

I’m almost 64 and what I’m grappling with the most now is a completely different bunch of issues versus just 5-10 years ago when I was in the “I think I’ve got enough saved, but I need to be careful cause what if something goes bad”. When to start SS for me and the Mrs. How to figure out this whole Medicare business. What percentage of our savings to spend each year 4%, 5% which now appears will be more than we’ve ever spent in the past. How to minimize my tax burden. Why is it only OK to do a ROTH conversion if you have another way to pay the taxes besides using a portion of the withdrawal - I’m losing the tax dollars now along with their compounding growth regardless of whether the dollars are in my brokerage account or in the IRA? Should I go ahead and shut down my business or am I really working for reasons other than generating income.

 

[BigOrangeMojo]

I'm 43. Single (happily divorced, but no kids and came out fine financially).

Mortgage under 150k, but locked in at 2.5%. Did treat myself to a boat and a vehicle in the last couple years but those will not go to the full term of their loans.

401k and IRAs (as of close on monday) all together were about $380k. I check in on them at least weekly, and set a time once a quarter to make minor adjustments. To be conservative, annual deposits are $25k (not counting about $2500 in annual dividends in a self managed part of one IRA that are in DRIPs). Did start an HSA a couple years ago, gets about $2500 a year put in it.

Short term goal (<18 months) is paying off vehicles. After that, trying to decide if I just should maintain current course...or if I should just start throwing money at the mortgage, or build up a non-retirement investment account. Don't have a firm retirement age in mind. Would love to start kicking it around at 60, maybe shift to a lower paying retirement gig around 55 if I've had enough of my line of work...

I haven't shifted to an advisor yet, but its something I've considered. Have a guy trusted by numerous people in my profession who has done well for all of them, but don't necessarily see a need in going that way until I'm at $500k (or if certain mostly non-cash things come up after settling my parent's estate hopefully several years down the line).

I wouldnt hire an advisor if I were you. You are doing fine by yourself.

1. Get the boat and car paid off.
2. Fully fund the HSA. You should have more than enough to do that without boat/car note
3. Get decent emergency fund
4. Max out 401k and IRA.

401Ks sometimes have crappy funds in there. Typically Schwab, Fidelity, T Rowe Price and Vanguard all have good low cost funds.

 

[WallyBalls]

I wouldnt hire an advisor if I were you. You are doing fine by yourself.

1. Get the boat and car paid off.
2. Fully fund the HSA. You should have more than enough to do that without boat/car note
3. Get decent emergency fund
4. Max out 401k and IRA.

401Ks sometimes have crappy funds in there. Typically Schwab, Fidelity, T Rowe Price and Vanguard all have good low cost funds.

Thank you, that's definitely the way I'm leaning. The fees are steep.

1) There's a 60%-ish chance I take a promotion within the next quarter. If I do, those two items will be paid off by the end of summer. (And they're the only things vehicles I've ever bought that way, but I don't regret them at all.)

2) We just got an HSA eligible plan a couple years ago so I'm still a little new with them. I'm lucky I have a buddy that has preached about them for awhile now so I got on board. Our investment options are janky, but I still enjoy the tax savings.

3) Already have that taken care of, thankfully. A couple grand for immediate emergencies, 3 months can be covered with no changes. Its really more than 6 or 7 months, I would just revert back to cheap bachelor status to stretch it that long (which, honestly I live like that most of the time anyway, I live pretty low key).

4) That's the goal!

One good thing is I have my 401k, old 401ks, and IRAs under Fidelity. My current 401k has the run of the mill funds (not bad per se, but nothing fancy). I do have an old 401k that has funds that have done great for going on 10 years now that I don't mess with, plus a self directed IRA where all my previous rollover 401ks went. That one gives me a lot of flexibility as far as funds, buying individual stocks, etc. Plus its helped me learn what I like/don't like as far as investing.

 

[CPA]

The one thing to remember is when you start withdrawing from your 401k and IRA after retirement, it is taxable income unless Roth. It may be cost effective in the long run to start converting now if the additional taxes are not prohibitve.

 

[Thunder Good-Oil]

The one thing to remember is when you start withdrawing from your 401k and IRA after retirement, it is taxable income unless Roth. It may be cost effective in the long run to start converting now if the additional taxes are not prohibitve.

Also, if the taxes owed are paid with funds already in the IRA then early withdrawal penalties can come into play.

 

[walkenvol]

Also, if the taxes owed are paid with funds already in the IRA then early withdrawal penalties can come into play.

The one thing to remember is when you start withdrawing from your 401k and IRA after retirement, it is taxable income unless Roth. It may be cost effective in the long run to start converting now if the additional taxes are not prohibitve.

Both are sound advice. Without adding in additional caveats like these, why do the ROTH conversion advocates all seem to dismiss the future value of $ spent on taxes for a conversion if the money comes from a source other than the pretax account being converted? I’ve read claims of the conversion paying off in 7-9 years if taxes are not paid with the conversion monies yet upwards of 20 years to pay off if paying taxes with the pretax $’s. What am I missing here? All my $’s not budgeted to be spent soon are invested and growing so why the huge difference in payback?

 

[Thunder Good-Oil]

Both are sound advice. Without adding in additional caveats like these, why do the ROTH conversion advocates all seem to dismiss the future value of $ spent on taxes for a conversion if the money comes from a source other than the pretax account being converted? I’ve read claims of the conversion paying off in 7-9 years if taxes are not paid with the conversion monies yet upwards of 20 years to pay off if paying taxes with the pretax $’s. What am I missing here? All my $’s not budgeted to be spent soon are invested and growing so why the huge difference in payback?

Something like reducing the pot of money that will never be taxed again and/or having a smaller base of that tax free money. And compound growth of the tax exempt Roth.

The AI answer:
You should pay the taxes on a Roth conversion from a taxable account to maximize the growth of your new tax-free Roth account. Paying the conversion tax with money from within the retirement account itself reduces the amount that can grow tax-free and may trigger a 10% early withdrawal penalty if you are under 59½.

 

[walkenvol]

Something like reducing the pot of money that will never be taxed again and/or having a smaller base of that tax free money. And compound growth of the tax exempt Roth.

The AI answer:
You should pay the taxes on a Roth conversion from a taxable account to maximize the growth of your new tax-free Roth account. Paying the conversion tax with money from within the retirement account itself reduces the amount that can grow tax-free and may trigger a 10% early withdrawal penalty if you are under 59½.

I’m not saying I don’t want as much money in the ROTH as possible, only that the tax payment will reduce my net worth regardless of which pot of money it leaves. Logically, the conversion payback timeline should be close to the same yet the conversion proponents predict it to be more than twice as long to break even if you use pretax dollars to pay the tax bill? What am I missing?

 

[Thunder Good-Oil]

I’m not saying I don’t want as much money in the ROTH as possible, only that the tax payment will reduce my net worth regardless of which pot of money it leaves. Logically, the conversion payback timeline should be close to the same yet the conversion proponents predict it to be more than twice as long to break even if you use pretax dollars to pay the tax bill? What am I missing?

There’s no difference on day 1. But say for example $1,000 is paid in taxes. If invested and that $1,000 becomes $10,000 then inside of the Roth the $9,000 gain is tax free. If the $9,000 is outside of the Roth then taxes must be paid on the $9,000 at some point (unless the appreciated asset is donated to charity). It’s more like an opportunity cost.

 

[Tin Man]

If you’re able maximize contributions to both traditional and Roth 401ks as well as HSA. If you’re not, look at where you are in the tax brackets to decide how much to allocate to traditional vs Roth. If your employer only matches in your traditional 401k, at least put in the amount to qualify for the full match.