Retirement

[McDad]

Making some assumptions here @kiddiedoc but given your age, your occupation and its earning power, Id strongly lean towards getting as much into Roths as possible. Great tools for generational wealth building....

Strongly suggest looking at ability for your 401K plan to allow Mega Backdoor Roth planning if not already there....

You never miss a chance to insert into the backdoor option.

 

[BigOrangeMojo]

You never miss a chance to insert into the backdoor option.

Sometimes if its too big (your income) to squueze in the front door, your only alternative may be the backdoor....

 

[BillyHoyleVol]

You may be over the income limits to do a Roth IRA although there are ways to do a backdoor Roth IRA to get around it....

Does your 401k give you the ability to do a Mega Roth backdoor? If so, this is probably where Id lean if I were you.

In short, with a Mega backdoor, you make after-tax contributions in your 401K (up to 80K at your age I think) and convert those after-tax earnings to a Roth IRA

Just googled Mega Roth backdoor and now my CPU is in infected...thanks man...

 

[McDad]

Sometimes if its too big (your income) to squueze in the front door, sometimes you have to try the backdoor....

Ok. I'm not going to derail this thread with more comments.

In all seriousness, you give good financial direction. We're lucky to have you posting.

 

[DarkVolder]

my 401k is long gone i will be working till im 80 or drop dead.

 

[Thunder Good-Oil]

Not my area of knowledge, but if your income is considerably lower at retirement, then a Roth IRA might not be the best strategy. If leaving a lot to children then the stepped up basis rule might be a very good strategy with money lefy inside of a regular, taxable investment account. Use capital losses against current taxable income. Let your highly appreciated investments grow in a regular anccount and have the kids take advantage of the stepped up cost basis (and hope that the democrats don’t eliminate that tax avoidance rule).
A good finsncial advisor should be able to figure out what’s best. Inculling managing taxes.,Hire them BY THE HOUR instead of giving them a percentage. A 1% fee on a million is $10k EVERY year. If the million grows to $5,000,000, then they’re getting $50,000 EVERY year.

Don’t buy life insurance from them.

Do a google search on them.

 

[BigOrangeMojo]

Not my area of knowledge, but if your income is considerably lower at retirement, then a Roth IRA might not be the best strategy. If leaving a lot to children then the stepped up basis rule might be a very good strategy with money lefy inside of a regular, taxable investment account. Use capital losses against current taxable income. Let your highly appreciated investments grow in a regular anccount and have the kids take advantage of the stepped up cost basis (and hope that the democrats don’t eliminate that tax avoidance rule).
A good finsncial advisor should be able to figure out what’s best. Inculling managing taxes.,Hire them BY THE HOUR instead of giving them a percentage. A 1% fee on a million is $10k EVERY year. If the million grows to $5,000,000, then they’re getting $50,000 EVERY year.

Don’t buy life insurance from them.

Do a google search on them.

I'd suspect, given @kiddiedoc occupation/income, he may not get a tax deduction for a traditional IRA contribution. In that case, you might as well do backdoor Roth IRA strategy.

I think he'd be better off using Backdoor Mega Roth 401K planning than a taxable account if that's a viable option for him.

Agree with everything else. Avoid the whole life insurance products.

 

[Thunder Good-Oil]

But if your income is likely to decrease in retirement it might be best to not put money in a Roth (or regular) IRA.

If your know how much you want to leave to heirs, it’s better to keep that money in a non-retirement account. A non-retirement account gets to take advantage of the stepped up basis. But an heir will pay taxes on traditional IRA money.

Again, it’s not my area of expertise. Does the tax advantage of a Roth pass on to a beneficiary?

There are rules for surviving spouses as well. And required minimum distributions. It would be worth hiring a wealth planner - even if it costs $1,000 or $2,000. A non-revocable trust can be useful for shielding some assets from a long term care facility/nursing home.

Patriot Investment Management and PYA Waltman are 2 worth checking out. Morgan-Stanley as well, but they collect a whole lot of fees from their clients.

 

[BigOrangeMojo]

But if your income is likely to decrease in retirement it might be best to not put money in a Roth (or regular) IRA.

If your know how much you want to leave to heirs, it’s better to keep that money in a non-retirement account. A non-retirement account gets to take advantage of the stepped up basis. But an heir will pay taxes on traditional IRA money.

Again, it’s not my area of expertise. Does the tax advantage of a Roth pass on to a beneficiary?

There are rules for surviving spouses as well. And required minimum distributions. It would be worth hiring a wealth planner - even if it costs $1,000 or $2,000. A non-revocable trust can be useful for shielding some assets from a long term care facility/nursing home.

Patriot Investment Management and PYA Waltman are 2 worth checking out. Morgan-Stanley as well, but they collect a whole lot of fees from their clients.

Roths keep same tax free treatment for beneficiaries.

There's exceptions to the rule but in TN (no state tax), Im going to lean Roth over Traditional IRA 95 times out of 100 for a professional who is 50 who is subject to a work retirement plan.....

There's more variability when choosing Roth 401k vs Traditional 401k. In most cases, Im still leaning Roth but its probably not 95% of the time. I'd absolutely consider the Roth 401K mega backdoor planning if plan/personal finances allow for it....

 

[Thunder Good-Oil]

Roths keep same tax free treatment for beneficiaries.

There's exceptions to the rule but in TN (no state tax), Im going to lean Roth over Traditional IRA 95 times out of 100 for a professional who is 50 who is subject to a work retirement plan.....

There's more variability when choosing Roth 401k vs Traditional 401k. In most cases, Im still leaning Roth but its probably not 95% of the time. I'd absolutely consider the Roth 401K mega backdoor planning if plan/personal finances allow for it....

No RMD with a Roth either.

But if your tax bracket is significantly lower upon retirement then NOT putting cash in a retirement account has some advantages. Especially the closer you are to retirement.

 

[95 Vol Alum]

Roths keep same tax free treatment for beneficiaries.

There's exceptions to the rule but in TN (no state tax), Im going to lean Roth over Traditional IRA 95 times out of 100 for a professional who is 50 who is subject to a work retirement plan.....

There's more variability when choosing Roth 401k vs Traditional 401k. In most cases, Im still leaning Roth but its probably not 95% of the time. I'd absolutely consider the Roth 401K mega backdoor planning if plan/personal finances allow for it....

“High earners” doing catch up in a 401k have to do the catch up as Roth now.

 

[walkenvol]

Have never heard of that, but I will definitely inquire. Thank you! I didn't realize a Roth has income limits. I would assume that if we file jointly, my wife wouldn't qualify either?

It's really a shame that docs get basically no education in financial planning/ investing. So many make terrible decisions and end up with little to show after working hard for decades.

What occupation besides working in the financial services industry includes financial planning / investing - probably not an issue unique to your profession.

For long term disciplined savors, it’s more about managing your wealth to minimize lifetime tax and health care costs. Having multiple $millions in tax deferred accounts once RMD’s start (currently 75 for you) forces a large AGI on your tax return potentially pushing you into higher tax rates than you paid while working and triggering IRMA charges. If you’re currently paying in the 35% or 37% bracket then I don’t see how it can be managed within this discussion.

 

[Go aeiou]

I'm there,
the rates are much lower than when I was working. 12-22%.

Google Search

 

[walkenvol]

I'm there,
the rates are much lower than when I was working. 12-22%.

Google Search

I recall in my younger adult years paying an effective tax rate of single digits and putting pretax money into a 401K. Once Turbo Tax started I didn’t look at brackets.

We’re doing all these financial plans on today’s tax rates and future changes could change the decisions?

 

[1SmokinVol]

Will be 70 in May 2027/ semi retired at 62 running a website out of my home. It was my own website and was maybe 20 hours a week of work. Went back to work as a salesman at 64, was going to stay 5 years, and now it's been 6. I was going to retire at 69 and Company asked me to stay 2 more years. I do love the job (sales) but the Company has grown so much it's getting to be more corporate instead of family owned (12 employees 1 office to 5 offices and 50 employees) . Going to take SS at 70- Sitting with Tax guy in 2 weeks to figure things out with 401 K's and whatnot. I am probably going to work until August/Sept. 27. I do have some retired friends- what I worry about-
Loss of sense purpose -right now I have customers/co workers that depend on me. What's it like when that stops?
Filling time every day- Lack of daily structure?
I like to ride my bicycle and play golf but I cant do both every day- got to recover. Not to mention Golf has gotten expensive and S L O W and I don't enjoy it as much as I used to-
Loss of work friends?
How do you structure a week and replace 40-50 hours of working?
Everybody is different- I'm not very laid back.
Anyways-some of you already retired may have figured this out-

 

[OldandStillaVol]

Will be 70 in May 2027/ semi retired at 62 running a website out of my home. It was my own website and was maybe 20 hours a week of work. Went back to work as a salesman at 64, was going to stay 5 years, and now it's been 6. I was going to retire at 69 and Company asked me to stay 2 more years. I do love the job (sales) but the Company has grown so much it's getting to be more corporate instead of family owned (12 employees 1 office to 5 offices and 50 employees) . Going to take SS at 70- Sitting with Tax guy in 2 weeks to figure things out with 401 K's and whatnot. I am probably going to work until August/Sept. 27. I do have some retired friends- what I worry about-
Loss of sense purpose -right now I have customers/co workers that depend on me. What's it like when that stops?
Filling time every day- Lack of daily structure?
I like to ride my bicycle and play golf but I cant do both every day- got to recover. Not to mention Golf has gotten expensive and S L O W and I don't enjoy it as much as I used to-
Loss of work friends?
How do you structure a week and replace 40-50 hours of working?
Everybody is different- I'm not very laid back.
Anyways-some of you already retired may have figured this out-

I'm where you are as I retired last year. Quick list of things in my week:

1. Work out at gym 4 days a week.
2. Care for my daughter's dog while she works.
3. Take classes at local university or at church on literature / Bible study.
4. Manage our finances more closely. Reading more in this area.
5. Still looking for volunteer activities.

I had a satisfying career but don't think my purpose in life was my work. Looking for ways to help my extended family and those in need.

 

[walkenvol]

Will be 70 in May 2027/ semi retired at 62 running a website out of my home. It was my own website and was maybe 20 hours a week of work. Went back to work as a salesman at 64, was going to stay 5 years, and now it's been 6. I was going to retire at 69 and Company asked me to stay 2 more years. I do love the job (sales) but the Company has grown so much it's getting to be more corporate instead of family owned (12 employees 1 office to 5 offices and 50 employees) . Going to take SS at 70- Sitting with Tax guy in 2 weeks to figure things out with 401 K's and whatnot. I am probably going to work until August/Sept. 27. I do have some retired friends- what I worry about-
Loss of sense purpose -right now I have customers/co workers that depend on me. What's it like when that stops?
Filling time every day- Lack of daily structure?
I like to ride my bicycle and play golf but I cant do both every day- got to recover. Not to mention Golf has gotten expensive and S L O W and I don't enjoy it as much as I used to-
Loss of work friends?
How do you structure a week and replace 40-50 hours of working?
Everybody is different- I'm not very laid back.
Anyways-some of you already retired may have figured this out-

It’s a really challenging issue, likely more than the financial part for a lot of folks. I retired the second time earlier this summer. Have 2 living parents and a Mother in law, wife, and 5 grandchildren and I’m still trying to figure it all out. It’s very easy to let days get away without much happening, especially if you didn’t sleep well or have some ailment. Recreation activities don’t necessarily create “purpose”.

 

[Thunder Good-Oil]

There was a guy that would volunteer to hold babies born addicted to drugs because the mothers were addicts. I think he did it at UT hospital.

If owning a dog is appealing, but expensive and/or a burden the shelters need foster homes. They cover medical and other expenses.

STAR and Horse Haven need help taking care of their animals.

Knox County CAC needs volunteers in its Office on Aging as drivers taking patients to appointments and providing other rides (groceries, hair care, social functions).

CAC also runs Meals on Wheels.

 

[tennrich1]

I'm where you are as I retired last year. Quick list of things in my week:

1. Work out at gym 4 days a week.
2. Care for my daughter's dog while she works.
3. Take classes at local university or at church on literature / Bible study.
4. Manage our finances more closely. Reading more in this area.
5. Still looking for volunteer activities.

I had a satisfying career but don't think my purpose in life was my work. Looking for ways to help my extended family and those in need.

Between church activities and ministries, helping with all the grandchildren (they are unbelievably busy), doctors' visits (ugh), helping with a 97 year old mama, taking care of ALL our financial issues, insurance etc ....I've found the statement "when did i have time to work" not to be hyperbole.

 

[walkenvol]

I’ve been calculating a bunch of different scenarios on ROTH conversions and discovered something I was doing wrong - maybe this will help someone else or maybe it just shows how ignorant I can be since I’ve read this a bunch but it never sank in till today?

Concerning IRMA limits, I was viewing them on the same plane as tax brackets. For example, the 22% tax bracket goes up to $211,400 and the IRMA limit is $218,000. The IRMA doesn’t include your deductions. Assuming you’re using the standard deduction for MFJ, then that $33,200 doesn’t count (plus a couple other things to arrive at your MAGI). To view those numbers on the same plane, the IRMA limit is $185,800. If you’re thinking of using up all the $22% tax bracket for ROTH conversion then you can’t go to $211,400 without additional Medicare charges if you’re 63 or older.

Hope that helps someone.

 

[CPA]

Approaching a balanced life style has worked best for me. Go to a local y week days for a variety of classes and get to be with a wide variety of people, all races, ages, very friendly. Take my adult disabled son in the afternoon which he loves. Attend weekly Bible class which is very supportive and uplifting. Fold and box clothes for a city mission group which focuses on rehabilitation for homeless. Shop at a local thrift store which supports local needy residents. Go to Vols games with sibling and take son one game. Attend Titans games with spouse and great nephew who loves being independent there and getting food choices he wants. Since my 401k annual amount is under 10,000 arrange to go directly to charities so not taxable. Was very involved in parents and in laws care until they died. Got so much help from them and spouse so I could work for over 40 years and get a good state retirement and discount Medicare supplement. I was not prepared for the Medicare penalty at first.

 

[cardvolfan]

Making some assumptions here @kiddiedoc but given your age, your occupation and its earning power, Id strongly lean towards getting as much into Roths as possible. Great tools for generational wealth building....

Strongly suggest looking at ability for your 401K plan to allow Mega Backdoor Roth planning if not already there....

Start sooner rather than later. Depending on age and money accumulated, it can make a huge difference for financial upside.

 

[GoDucks349]

I retired from 35 years at Delta Air Lines last year, and I have learned a few things that I think should be passed on to younger workers to think about.7

If you have a 401(k), at least put in what your company offers to match, and as soon as you can, convert all of it to a ROTH 401(k) and/or ROTH IRA. But remember, those conversions are taxable events, so make sure it doesn't jack you into a higher tax bracket. Tax free is VASTLY superior to tax deferred.

When to take SSA? Have you thought about it?

I'm not pretending to give retirement advice, but I noticed we didn't have a thread on this topic that I could find. I thought this would be a good place to share thoughts and ideas to those that are getting close to retiring, and for ways to help those that have a ways to go to maximum their money in retirement

l haven't read all the replys, but I'll share two thoughts on retirement (I retired 15 years ago). First, when you retire the first thing that happens is that people see you as "FREE LABOR", you need to learn to say "NO". Second, assuming you have a spouse, you will find that you are with each other 24/7 and that amount of time together can get on each of your nerves. Plus, if both of you were use to making decisions at work, telling people what needs to be done and expecting it to be done the way you want it........ LOL lets face it you and your spouse will have some very heated explosions. So the first year of retirement just might be one of the most difficult challenging years of your relationship together.

Good luck

FYI: I speak from experience on ALL counts!!!

 

[Smokey X]

l haven't read all the replys, but I'll share two thoughts on retirement (I retired 15 years ago). First, when you retire the first thing that happens is that people see you as "FREE LABOR", you need to learn to say "NO". Second, assuming you have a spouse, you will find that you are with each other 24/7 and that amount of time together can get on each of your nerves. Plus, if both of you were use to making decisions at work, telling people what needs to be done and expecting it to be done the way you want it........ LOL lets face it you and your spouse will have some very heated explosions. So the first year of retirement just might be one of the most difficult challenging years of your relationship together.

Good luck

FYI: I speak from experience on ALL counts!!!

facts

 

[walkenvol]

l haven't read all the replys, but I'll share two thoughts on retirement (I retired 15 years ago). First, when you retire the first thing that happens is that people see you as "FREE LABOR", you need to learn to say "NO". Second, assuming you have a spouse, you will find that you are with each other 24/7 and that amount of time together can get on each of your nerves. Plus, if both of you were use to making decisions at work, telling people what needs to be done and expecting it to be done the way you want it........ LOL lets face it you and your spouse will have some very heated explosions. So the first year of retirement just might be one of the most difficult challenging years of your relationship together.

Good luck

FYI: I speak from experience on ALL counts!!!

Hope you and your Mrs came through it for the better!