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Retirement Thread

I just read 400 posts under the CV topic and there was a shout-out for a retirement thread back on May 5th.  I’m glad my wife declined to retire until our youngest is out of college.  So we have 4 more years.  It would have been pointless to retire this year anyway since we want to travel across the US first.  We both started work in the early 90’s and maxed out our 401ks basically in the SPY.  Not one dime in fixed income.  I know that will creat a fire storm.  We pretty much blitzkriged all our number goals which is why we never slowed down in equities.  It’s not a greed thing.  It’s just the fact we can adjust our spending to remain well below our means.  I was just curious about other people’s path to retirement.  We never took on rental properties but know others that have done well in that arena.
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Comments

  • TheAliasTrollTheAliasTroll Posts: 2,676PFN Referee
    edited May 20
    You read 400 posts?  In one day?  Damn, son!  That thread is going to be in PFN HOF.

    I find it interesting a lot of folks around this board seem to be rather financially savvy.  Posted a Mr. Money Mustache article a while back and there were people here who actually knew of him.  Birds of a feather...

    Fastback, I'm sure you'll get some good advice here, but also would refer folks to bogleheads.org forums.  Whenever I need solid financial advice the collective group there is amazing. Depending on your interests you may end up reading 400 threads there lol
  • TexpackTexpack Posts: 2,525
    Wife has two years of teaching left. I’m two years younger so I may work another 12-18 months past that but not much more. I went 50% bonds in 3Q last year. First bonds I’d ever owned either. I would recommend The Retirement Answer Man podcast. It’s as much about life as it is about money. 
  • AdventurooAdventuroo Posts: 2,727
    Fast....I sent you an offline message.  Troll, if you want it....I'll copy and do so....

    The Reader's Digest short version.  Graduated in 1968. Had a FIL that was a mentor.....self trained dairy farmer that was fascinated by the market.  We never financed a car, save $600 in 1968....until 2014 when I bought my wife's ATS and the rates were so low.....

    We camped from 1965 until 1981.  Never stayed at a motel or rarely ate on on vacation.  Saw a lot.  Kids have wonderful memories.  

    We were lucky.  Sold a house in 1978 for twice what we paid for it (had a lot of DYI sweat equity) and then assumed a cheap loan with a low payment.  Invested the equity.  Sold it all in 1981 when Carter's prime his 21%.  

    Kids worked part time jobs and saved and I matched.  They bought their own cars.  

    We set up MF accounts for each kid when very young.  Did well.  Thanks to Wall $treet Week and Louis Rukeyser.  Watched it faithfully and made notes.  Kids MF's exceeded their education expenses.  The gains were not taxable as it was in THEIR names.  Wife did taxes....she knew.

    We traveled after they were out of school.  I flew a lot all over the US and she would tag along on FF miles and we traveled a lot in the 90's.  Camped again out west....twice.  Took some great tours, not cheap....but memorable.

    We saved like Scrooge, but also spent wisely.  Kept cars for 8 - 10 years.  Bought nice ones and drove them.  Bought a lot of good used cars also.  I bought ONE PC in 1983 and the next NEW one was a retirement gift in 2006.  Same for kids....they never had a NEW computer in college.  

    We saved and saved and saved.  Finally were saving all of DW's salary.  Used every trick in the book for IRA's, 401K's and matching, SEDC programs that we were privy to from our company's little "exec perks" programs.  

    We had a nice nest egg several years before retirement.  Was like Fast....all market driven....no CD's or Bonds or Fixed income.....stayed the course.  Made few adjustments.  Also had a good broker for my mom.  She had a small nest egg that I had invested for her.  My broker and I massaged that and we provided 10 years of wonderful AZD care without fear of me kicking in.  

    I actually DID, around age 55 or so or maybe later....diversify a bit and put a smidge in bonds....but very little.  Could have retired then, but we were saving so much and I was manipulating my small stock options and we were fine....  In 2006, I quit to raise my GK's...

    We had bought a used MH when we retired....we wanted to travel and I wanted to DRIVE the country.  Then, in 2008, we took my mom's inheritance and traded and got a really nice one.  I got a deal (Deals are always GOOD).  I bought it for HALF the MSRP.  It was NEW.  That was NOT cheap....but I figured that what she had left was "gravy" and we wanted to drive in a little nicer rig and go places.

    Warren Buffet's advice....be piggish when others are wailing....don't follow the crowd.  Against all odds, I stayed fully invested in 2007/08.  BUT, I needed income....as we were still not getting any pension or SS or such and I did not want to pull a cent out our retirement.  I had planned on 3 - 5% per year...but it became a game NOT TO.  Dabbled in selling options....just about everything.  
     
    Then, I started buying MLP's for the dividends (technically distributions or usually return of capital).  BUT, it was INCOME.  They flourished...and I paid taxes when we sold.  Still have one that we will never sell...

    My advice....start to invest like you are retiring.  My mix works for me.  It has almost matched the market.   Never tried to outwit or outsmart the market....

    We have traveled the US and the lower portion of Canada and have more memories than you can imagine.  We drove 60K and spent 2 months out each year....and our GK's were with up 1/3 of the time.  I have driven in every state in the MH and camped in 47 of them.  That sneaked up on me.

    I write this from Emerald Isle and we are still in the MH...

    IF you want my magic formula....after years of experimentation....I'll post...but keep on doing what you are doing, Fast....  Not a bad record....

    Troll....Pots of Gold are hard to come by....so I am Mr. Vanguard MF Man....  YES.... I dabble in some high risk high reward....but less than maybe 0.5%.    You DO know who John Bogle was and what his claim to fame is?  I am living proof that he was right.

    I was out west in 2018.  My kids were laughing about how faithfully we watched Rukeyser.  I bought a frame and downloaded and printed his picture.  I put it in the MH before my daughter came in to join us and the GK's.  She finally, the next morning said.  OK....what is going on?  Why is that man that RUINED every Friday night for me on the wall.  My GK's broke out laughing as we had told them.  My son ignored it a bit later and finally asked....  OK....you WANT me to ask...I will.

    My answer....had it NOT been for Rukeyser and my mentor FIL, we would NOT be doing what we are doing today and my Kids and GK's future would not be as prosperous...


  • Fastback68Fastback68 Posts: 795
    TAT, I had to take a break from the CV thread and the new post count was like a pinball score so yesterday was the day of reckoning.  Thanks for the link and thank you Tex for the podcast.  

    Roo, you have an amazing background story.  I enjoyed the Hardee's saga.  Nice home run.  Unfortunately, I have a trail of what if's.  There's a long list of Food Town millionaires because they got in at $1.00 a share.  I got in much later around $10 bucks but it was well beyond the boom.  I spent some of my childhood updating my dad's DRIP schedules for AT&T which went to 8 schedules, RJR, Freeport, Duke, CP&L, NCNB, GE, Sears and a dozen others.  I have to thank him and his father for getting me interested at a young age.  I had a fraternity brother talking nonstop about a company called microsoft going public. My grandfather had given all 10 of his grandkids a small sum of stocks in 1980.  I'm proud to say I still have some today.  Anyway, Reynolds got bought out while I was at State and IF I had just called home and asked to buy a $2,000 position in microsoft well I would probably still be waiting for the wife's green light to retire.  She's a tough sell.

    I'm almost 54, wife 52.  We have talked to some friends who have semi retired and I have researched medical insurance.  We will need a self paid insurance bridge to Medicare.  So a family of 4 will cost between 1,700 - 2,500 a month.  That's the range I keep coming across.  I keep telling the wife that isn't some huge number but she's hung up on it.  I think it's just an excuse "concern".  Is that the largest fixed cost in retirement assuming everything else is paid for?

    I have an endless amount of kick it around financial topics.  I always enjoy someone else's take on things.
  • Pack78Pack78 Posts: 409
    Been retired for ~5 years...between decent incomes, moderate lifestyle choices, and a nice bump from smart-investor parents (now passed), we can do all that we want. We are currently holding off of SS income, wife hit Medicare last year and I will later this year. Currently very conservatively invested with $$$ in three buckets: 0-2 years, 3-10 years, and 10+ years out. Barring MAJOR calamities, we have more than we need and should be able to leave a tidy sum for our only child at that time.
  • AdventurooAdventuroo Posts: 2,727
    edited May 20
    Fast....as the lawyers say....that depends.

    I never intended to retire @ 60.  Daughter announced second planned child.  Opps....that is interesting.  Talked about retiring and said...NAH...  we are saving a bundle (KMS King Midas Syndrome).  But an accident of stupidity which I had to fix convinced me to hang it up.  I did.  MH was a pursuit for a small pop up that got out of hand.  But we enjoyed it so much, we upgraded.  Would not change a thing.

    We did not have the MediGap issue as wife was still working, PT but with full benefits.  Have friends that went with a huge deductible.  They busted it open at least twice.  So they have a $50 per month payment to two different hospitals for life and it will never be paid off.  Not a bad deal, all in all.  Another couple both retired so he could play the market.  She is on the NC Teachers plan, so she can buy insurance for him.  Has either one of you looked at PT that has benefits (you buy coverage).  Had a friend who was a high level IBM exec.  He worked for the USPS PT for MediGap and also ended up with a Federal pension.  Did that for 5 years to qualify.  PT teaching at a community college?  

    The guy playing the market spends about 3 hours per day.  But when he does, he averages 40% gains....  he does not day trade. He is using his IRA/401K funds...so if he loses, no write off.  But he does not pay tax on the profit....only when he takes $$ out.

    For all my planning, I never took out any annual amount.  Did one home update project, but that was less than what I planned to take out annually.  Do the spreadsheet on your situation.  I had a complex one.  It showed me we could retire early and still leave a small nest egg.  Since I never took it out...we splurged on the second MH and now, thankfully, my kids and GK’s will be fine.

    I ended up taking my SS @ 62.  Delayed DW until 66.  I paid the max in.  She was about half that.  We both get the same.  It all depends on your lifestyle and such.

    i never, probably should’ve, used a CFP.  The stock guru did.  He balked at paying for anything other than the first round.  I got a freebie due to my VG holdings from VG. Usual....need more fixed, less stocks, whatever.  My spreadsheet was used by some VP’s and others and they said it worked.  One of the “investment” guru’s that handles the NCSU or maybe the WPC endowments USED to teach a course at Wake Tech.  A friend, who is a die hard UNC person with a good financial background took the course and he is guiding her and she seems to be well fixed considering her single status and her former salary (guessed at).  

    My friend, who is playing the market for cyclical stocks where you can book a 25-50% gain in say 6 months also attended some NAII courses. One CFP reluctantly said, it is HARD to beat Mr. Market.  Your SPY or the Market Index Funds, held and not jerked around, will be hard to beat.  The guy uses 3 - 5 newsletters.  Some are very high dollar.  He shares one with me.  I limit my investment to 4% and I made 25%  in six months.  That little “reward” is my gun and shooting and vacation money.  DW has made me switch to a Roth Brokerage account as she is worried about hitting the Medicare Surcharge AGI.

    That is also a little known ZAPPER.  We hit it one year.  We actually went about 2X the limit.  That added about $10K total to our Medicare Part B as well as surcharging us for Part D.  RACKET.

    We ended up with a bunch in the IRA/40K column.  We converted a goodly amount to Roth.  That drove us over the edge.  So be wary if you go that route. Get it done before you go on Medicare.   

    There is no one magic formula.  My DW panicked when we bought our present house.  We paid twice what we sold the previous one for in 1991.  She was sure we would go bankrupt.  Then, when we paid a similar sum for our MH, it was like...OH WELL...

    My friend’s wife did not want them to retire.  He showed her his gains for 3 years.  They retired.  He decided to get a really pricey newsletter.   He showed her his first years retirement gain....he bought it.

    i quit tweaking a few years back.  Now I DO help my son and daughter manage theirs.  Occasionally, I do a little rearranging,  I am now 10% in a 6% “hard money” fund in California.  Last year it was over 8%.  The fund manager is banking 2% for COVID issues and will give that back as supplemental distributions after things settle down.  I only have 25% of our portfolio held long.  The rest is tax sheltered....wish more was in the Roth side.

    Good luck....
  • Fastback68Fastback68 Posts: 795
    Roo, the 2 main fixed cost expenses on my spreadsheet for planning purposes would be #1 medical insurance (1,700 - 2,500 a month, kids to 26 worst case, should get their own with first job) #2 personal Property Tax 1,500 a month.  I read a lot of financial blogs and it is hard to fathom when someone says their annual expenses are 15,000.  What risks are they not managing?  Then I see people get skewered for saying they want $10,000 after tax income per month.  Why do you need so much?  People up north or out west pay way more in property tax.  There’s just no way around it.  

    I will say that my take on retirement is different and I have a large measure of pure negligent overkill in my thinking.  I hate the idea of getting to a number, then earning 1-4% and then reducing principal by 3-4% annually and then hopefully dying within a certain number of years before the money is gone.  I totally understand the perspective behind fixed income as you get older because you want the financial math to be rock solid.  I just can’t stand the idea of getting torpedoed by some unexpected cost while in retirement.  I want to live off after tax income without ever touching principal.  I want to keep slinging the rock instead of playing not to lose.  Of course, I realize most folks would consider my approach dumb—-ery.  I would have a hard time debating them.  

    I don’t want to give the impression that I’m in love with money.  It’s just like my wife and I stood side by side each other shoveling coal into the train engine while enjoying our lives with one another and the kids and we just finally took an empty nester moment to look out the window and we are like “where the h—- are we?”  Even though we are in a good spot, the wife refuses to retire for 4 more years.  I have to deal with that reality.  Plus, she never, ever wants to go back to work.  So I can’t ever be wrong.  

    Secondly, my parents paid for their kid’s college.  My wife had an absolute miserable time paying for herself.  A long story.  It was a certainty early on that we would do the same for our children.  So it was a 3 front war.  Retirement, Education and Mortgage.  We haven’t had the same level of fun as most people but it was never drudgery under the almighty dollar either.

    We won’t have access to some insurance deal through work.  We have to fund that for a number of years.
  • Fastback68Fastback68 Posts: 795
    Pack78, congrats on retirement.  Do you think my medical cost estimates are in the ballpark?  Secondly, has anyone delved into Long-term Disability insurance?  Worth it or overkill?
  • Pack78Pack78 Posts: 409
    FB-I chat with folks whose medical expenses run upwards of $800-$1000/mo. for a one individual-your group plan #'s sound quite reasonable to me. Back in the day, I had LTD  insurance for several years-got good advice that our net worth had improved to the point that it was no longer needed-more of a hedge against a calamity in the younger years.
  • TheAliasTrollTheAliasTroll Posts: 2,676PFN Referee
    edited May 20
    You DO know who John Bogle was and what his claim to fame is?  I am living proof that he was right.
    Oh yes, very much know of "Jack" and am an ardent follower of his advice.  Pioneer of indexing investing.
  • Fastback68Fastback68 Posts: 795
    I think Bogle survived and thrived after a heart transplant.  He was one tough old bird.
  • TexpackTexpack Posts: 2,525
    Our calculations are all about when to pull the plug on the JOB. Once I hit 67 our SS plus pensions will equal about 70% and the retirement accounts about 50% of our projected spending. Health insurance isn’t a killer for us because the teachers in Texas offer health insurance to the families of retired teachers. If I wait ‘til my wife hits Medicare to pull the plug I can get pretty good coverage for $550/month. I just have to figure out when to leave this place. 
  • ryebreadryebread Posts: 2,160PFN Referee
    edited May 21
    Fastback: What you are saying is my reality...

    I need retirement, kids' college, mortgage and a big old fat tax bill (which is more than my mortgage, insurance AND taxes were in Raleigh).  I also realize that health insurance is a large bill that will come due in full that I only pay a fraction of now.

    I think I'll need 10k a month in today's money from passive income when I retire along with a paid off house (and no other debt).  It's not that I'm a big spender (I am not), but I don't want to get surprised either. 

    I also don't want to ever touch principle.  I mean I might have to for a health or legal emergency, but the plan would not to draw down the lump for general living. My kids will thank their miserly parents one day.

    I think if more thought that way, we'd collectively be in a better spot...... I've been maxing my 401k since my first year out of grad school and have always lived below my means.

    Philosophically I'd say I would be aligned to the Buffett/Orman school of thought.  Get rid of your debts, have a rainy day fund, live below your means, invest in sound businesses that you want to hold long term and scrutinize consumer discretionary spending.
  • AdventurooAdventuroo Posts: 2,727
    Texpack said:
    Our calculations are all about when to pull the plug on the JOB. Once I hit 67 our SS plus pensions will equal about 70% and the retirement accounts about 50% of our projected spending. Health insurance isn’t a killer for us because the teachers in Texas offer health insurance to the families of retired teachers. If I wait ‘til my wife hits Medicare to pull the plug I can get pretty good coverage for $550/month. I just have to figure out when to leave this place. 
    Tex & Fast.  No offense to all the planning and such.  But as you start down this path, there are more twists and turns and options that should be accounted for.  I spent about 4 years, with my tax savvy wife, being my sounding board and finally got a spreadsheet that had more variables than Nate Silver uses for his election forecasts...

    If I read some of your stories and try to sort it out, i would tell you to make sure you have all the bases covered.  I went through many...many iterations and kept adding columns and variables.

    SO.  I started out simple.  Had a budget.  Estimated my health insurance costs.  Put  in all my portfolio or “retirement” numbers....had to segregate due to IRA, Roth, and held long.  Then had to use “growth factors or percentages” for each.  Assumed that my IRA and Roth would be more conservative.  

    Next up was withdrawing.  Budget (variable expenses).  Threw in car purchases every 8 years or so.  Put in travel expenses....we were heavy for the the first 10 years as we wanted to be able to do things while we were “fit”.  I also put in several levels of inflation.  I used different values for different expenses.  I had to guesstimate the SS COLA.  

    THEN....I applied taxes....both NC & FED.  I also put in a fudge for capital gains with the long component.  Every example above required reconfiguration.  I also decided to annualize the “portfolio” increase....but I used an average gain.  A NIGHTMARE.... but it was taking shape.

    OPPS....laddies, have you looked at your RMD contributions in your planning.  I had them in ours.  

    I would play “what if” in 0.1% increments for what I ASSUMED I would need to withdraw.  Same for the average ROR or annual market gains for the three different components.

    My DW was also a doubting Thelma.  But, as I kept reworking the model and she began to follow the logic and that I had covered a lot of variables and assumptions, she came around.  WE COULD RETIRE NOW....even at 55 or so.

    So, I kept revising and reworking it.  I gave a clone to some folks and put in fake data.  They used it.  They might have found a few areas where I was too conservative or maybe had a logic or calculation issue...but they just kept passing it on.  My last count was that it was being used or distributed to at least 25 - 40 folks that were in a “high tax” bracket and had nice portfolios.

    Therefore....I quit updating it after the first year.  I was not hitting or getting or taking withdrawals....  I was basically, playing with the house’s money....or the appreciation due to market increase.

    NOW....forget all the above if your eyes are glazed.  Make sure that you realize that Uncle Sam is gonna make you TAKE out money....unless you pay the tax penalty and convert all to a Roth.  

    I deal in “piles”.  My SS is one pile.  DW is a second.  My deferred benefit (I did the math and ran the actuarial tables and opted to take a pension....every month until my DW, with long life genes, ain’t around).  That is half a pile.  Now...with dividends...the pension and them equals a second pile.  So...three piles.  I invested about 10% of my portfolio in Hard Money....which pays 8% per month...prorated.  That is an effective APR of 8.5X%.  Bingo...four piles.  Each about equal.  We lived, very nicely, on that.  We traveled.  We bought nicer cars.  I bought a very nice (not NASCAR a driver or owner Prevost) MH.  We were actually saving a little.

    BINGO....RMD time.  The RMD seems like such a small amount (read up on it....you can calculate how much your IRA/401K will be when you hit 70)....but even in my wildest expectations.....it grew.  

    This year....or at least before the great UNKNOWN....  our combined RMD’s would have exceeded our SS.  So...I needed 4 piles to live on.  The uncle makes me take out 2 more.  What am I gonna use it for?  GK’s 529 monthly drafts.  Nicer birthday presents to my kids.  Funding a small Roth for each of them....monthly....via Vanguard.  I bought my wife a nice Caddy for Valentines (actually took her Malibu and gave it....for a pittance... to my daughter and an equal amount to my son to be fair).   I financed that....RMD paid it off, early, last year.  I bought a 2016 C7 Vette.  Got a deal and my 2000 was overvalued....the dealer was a friend...

    SO....WAKE UP.  Do your due diligence.  Look at every little detail.  Also don’t forget about dental and hearing aids and stuff NOT covered by Medicare.   But DO NOT FORGET that your Midas golden IRA/401K portfolio will start to be sold and you will have taxable income....regardless if you need it or not.  I know one widow....school teacher....minister’s wife....retired and was frugal.  She was the book keeper for a small business.  She had saved and invested.  She is almost 90 and her RMD is close....very close....to 6 figures.  She has bond interest and SS and annuities and dividends and God only knows what else...she needs about 50% of her NON RMD income....

    It DOES add up if you keep it growing....

    Next CHAPTER....if you want....the magic formula for investing without being a day trader...

    good night...


  • AdventurooAdventuroo Posts: 2,727
    edited May 20
    ryebread said:
    Fastback: What you are saying is my reality...

    I need retirement, kids' college, mortgage and a big old fat tax bill (which is more than my mortgage, insurance AND taxes were in Raleigh).  I also realize that health insurance is a large bill that will come due in full that I only pay a fraction of now.

    I think I'll need 10k a month in today's money from passive income when I retire along with a paid off house (and no other debt).  It's not that I'm a big spender (I am not), but I don't want to get surprised either. 

    I also don't want to ever touch principle.  I mean I might have to for a health or legal emergency, but the plan would not to draw down the lump for general living. My kids will thank their miserly parents one day.

    I think if more thought that way, we'd collectively be in a better spot...... I've been maxing my 401k since my first year out of grad school and have always lived below my means.
    RYE....read my epistle....I was there.  The RMD, even though I KNEW they were coming blew all my calculations out of the water.  My needs were in the same ball park as yours....and as I said....I  never saw the snowball coming.  If we had told our parents where we are financially today....even my optimistic late FIL would have laughed.  He said the same thing when I asked him one day if he ever had dreamed of being in the financial shape he was in.  I knew his whole net worth as I set up an AOL portfolio for him, tracked his stock purchases and gains on Quicken and my wife did his taxes and we, jointly, would explain to him how to reduce his tax liability.  He said the worst mistake he ever made was not selling a high flyer that had quintupled because it was ordinary income.  It crashed and we had tried to get him to unload 50%....

    Now....a lot...a WHOLE LOT was timing and keeping the faith and some aggressive investing early on....

    You WILL, I predict, be SURPRISED...
  • TexpackTexpack Posts: 2,525
    Roo. I have run a lot of contingencies. Spending needs are based on SS being 100% taxable. I have a pension option to level income before SS that I’m still considering. That guards against sequence of returns risk, but puts me both more dependent on the markets and more susceptible to larger RMDs. Lots of people don’t think about going from the married to the single tax brackets after the first spouse passes. The RMDs don’t change but the tax bracket income levels are cut in half. RMDs have been calculated into my spreadsheet more a number of years at this point. 

    The biggest determinant of your portfolio longevity is how it does in the 10 years that bracket your retirement date. I’m in the five years before right now so I’m not starting off so well.   

    The podcast I referenced above posits retirement in three phases. The Go Go years. The Slow Go years. The No Go years. He recommends budgeting accordingly and that makes a lot of sense to us. 
  • ryebreadryebread Posts: 2,160PFN Referee
    edited May 21
    Roo:  I'm curious.... Are you suggesting positively surprised, or negatively surprised? 

    When it comes to RMD, I've kind of been planning for that.  Smart or dumb, my investments outside my 401k aren't in Roth/IRA.  They're just straight up portfolios and I pay big taxes on all my short term wins, dividends, etc..  That's big enough that two years ago my account called me and said "I'm not signing this until we talk.  Are you sure you don't want to find some more losses?"

    I think/hope that's going to leave me in better shape later when I'm forced to take RMD.  My goal would be for this "outside the tax haven" pool to have enough to cover me on passive income.  Dare to dream right?  Minimally I'm hoping it gets me enough to ride early retirement comfortably until the RMD.

    I know in one of your posts (see I do read them) you've seeming done deferred income.  A buddy of mine got completely burnt that way as he was still working when he said he was going to take the deferred payment.  Whoops!  I realize the obvious benefits, but haven't quite figured out how I want to play that.

    I agree with you that if you want to day trade, it is best to do it inside the 401k.  The tax man gets so much in short term that sound risk/reward decisions (take your 30% and get out) get skewed and people ride things longer than they should.

    One other thing I forgot to mention... I fully expect the tax man to be getting about what he gets today percentage wise even after I retire.  I don't for a second think I'm getting a break or into a lower bracket later.  The country will be insolvent if the current system continues so that isn't going to happen.
  • AdventurooAdventuroo Posts: 2,727
    ryebread said:
    Roo:  I'm curious.... Are you suggesting positively surprised, or negatively surprised? 

    When it comes to RMD, I've kind of been planning for that.  Smart or dumb, my investments outside my 401k aren't in Roth/IRA.  They're just straight up portfolios and I pay big taxes on all my short term wins, dividends, etc..  That's big enough that two years ago my account called me and said "I'm not signing this until we talk.  Are you sure you don't want to find some more losses?"

    I think/hope that's going to leave me in better shape later when I'm forced to take RMD.  My goal would be for this "outside the tax haven" pool to have enough to cover me on passive income.  Dare to dream right?  Minimally I'm hoping it gets me enough to ride early retirement comfortably until the RMD.

    I know in one of your posts (see I do read them) you've seeming done deferred income.  A buddy of mine got completely burnt that way as he was still working when he said he was going to take the deferred payment.  Whoops!  I realize the obvious benefits, but haven't quite figured out how I want to play that.

    I agree with you that if you want to day trade, it is best to do it inside the 401k.  The tax man gets so much in short term that sound risk/reward decisions (take your 30% and get out) get skewed and people ride things longer than they should.

    One other thing I forgot to mention... I fully expect the tax man to be getting about what he gets today percentage wise even after I retire.  I don't for a second think I'm getting a break or into a lower bracket later.  The country will be insolvent if the current system continues so that isn't going to happen.
    One at a time.  Right wrong or indifferent, my portfolio is 25% long or not tax sheltered.  So we have 75% sheltered.  Without opening my laptop, about 45% is IRA/401K.  We maxed all the IRA, ROTH, and special tax sheltered perks.  We did this early on when my wife was working part time.  I THINK that we were allowed to contribute more than she made.  I know that when I retired and she was still working, we funded my Roth.  That is per IRS code.  We moved a large portion of my 401K to my Roth and did very little to hers.  Her IRA/401K took off like a rocket.

    I have read so many articles on whether one should convert the IRA or keep it.  I have friends that probably are maybe 1.5 - 2X my net worth and they have paid CFP $$ and gotten several different recommendations.  It is all in how you set up the program and your assumptions.  

    PLEASANTLY.  Was not clear.  Our RMD, which we quickly killed this year, is excess cash.  We were living fine on my “piles”.  The RMD’s are money we don’t need for living expenses...as we are not extravagant, but do probably spend more on travel and entertainment now that before....maybe 3X as much.  We spend $6K annually for diesel fuels and campgrounds.  We also support 3 time shares that we use or let our kids and GK’s use...  

    Pension.  That was a semi gut call.  We needed an income stream when I retired.  I also wanted one for DW.  NOTE....she was very pleased with that decision.  It was a good deal....using the actuarial tables, we are earning 5% for life....and we will beat the tables. NOW....if I had taken the pension amount and invested it....you would add maybe 10-15% to our portfolio now....but that has to be offset by the monthly amount I got....so use 10%.  It was a good decision to do it and we, financially, have no regrets.

    We also planned, and had set aside $$ for REPAYMENT of my SS.  It was the CODE then that you could do that.  However, Congress and the past administration closed off that little perk....and I decided that it was stupid to “give back” my money.  I know someone that I retired early @ 60 and he plans on his wife being on SS @ 66 and he is waiting until 71.  Can not get him to understand how much cash he will be taking in then....as their RMD’s will be 1.5X their combined SS.  But, he wants the 25% “Prize” for waiting.  BTW....he ain’t gonna be a poster child for any senior fitness magazine, unless they run a “see what you will look like if you don’t change your lifestyle”.

    Day trading was never my goal.  Some “speculatiing”, yes.  I am doing it in the ROTH as I don’t need the gains in my IRA....left alone....it is gonna be enough of an estate issue.  

    Hope that answers the questions....
  • AdventurooAdventuroo Posts: 2,727
    Texpack said:
    Roo. I have run a lot of contingencies. Spending needs are based on SS being 100% taxable. I have a pension option to level income before SS that I’m still considering. That guards against sequence of returns risk, but puts me both more dependent on the markets and more susceptible to larger RMDs. Lots of people don’t think about going from the married to the single tax brackets after the first spouse passes. The RMDs don’t change but the tax bracket income levels are cut in half. RMDs have been calculated into my spreadsheet more a number of years at this point. 

    The biggest determinant of your portfolio longevity is how it does in the 10 years that bracket your retirement date. I’m in the five years before right now so I’m not starting off so well.   

    The podcast I referenced above posits retirement in three phases. The Go Go years. The Slow Go years. The No Go years. He recommends budgeting accordingly and that makes a lot of sense to us. 
    Tex....  Lucky trumps Smart.  I was in the King Midas Syndrome from 50 on....and in reality....all my life.  The more you got....the better your retirement will be.  If I had studied all the advice and such when I was younger....I would not be as solvent as I am today.  Remember, I was 100% in stock indexes in my retirement accounts....and also “playing” the market with a small self directed IRA for me and DW.  One night in a bar, one guy was bemoaning the fact that if he used the 3-5% retirement withdrawal (annual) rule of thumb, he would need to die at 75.  I was good to 85 and casually mentioned that.  OMG.  Silence.  OK....how are you invested?  100% market.  My GOD MAN.  You are 55, you are all out of whack....then the elder statesmen started spewing out formulas for CD’s, bonds, conservative MF, etc.  

    I thanked them. One guy called me the next day and gave me advice....I would be wiped out unless I changed my evil ways.

    OK...I moved 10-15 % over...

    NOW, I will tell you that if you compare the VG Total Stock Market index with a fund called Balanced (Growth and Income), you might lose 3/4 of a percent (annually), but it doesn’t have the swings,  SO...that fund is part of my “sleep walking” portfolio and my DW can use my simple approach.

    Figure out how to defer the minimum (as in taking less pension or using SS) to get to 65 or so.  I used options (on my stocks) and high distribution REIT’s and MLP’s and utility’s for income to supplement my wife’s PT salary....


  • ryebreadryebread Posts: 2,160PFN Referee
    Roo:  Good stuff.  Thanks.

    We'll see in time if my plan is correct.  Here's to hoping!
  • scouterprofscouterprof Posts: 173
    I have most of my retirement in TIAA-CREF. It is divided between different investment funds, one of which is a money market fund. I got an email from them today saying with interest rates so low the investment might not make enough money to cover fees. They are waiving fees until Dec. 31 but might try to recoup if interest rates go up. I think I will move the money to another one of their funds weighted towards stocks. I think stocks will recover, just don't know when. I am still 5 years or so from retirement. This thread has given me some things to think about and I plan to share some with my kids who are still young enough to have time on their side. 
  • AdventurooAdventuroo Posts: 2,727
    Whether Cref or Fidelity or Vsnguard or whoever ..... just look at the fees.  VG is the lowest and I understand their funds and their indexes.  I dabbled in Gone Fishin’ and rebalanced every year for a while.  The bond funds alluded me....and I never could get comfortable.  From that I migrated to a mixture of VG Balanced and Wellington.  About 50/50 mix of bonds and good quality stocks.  I went back and looked at the portfolios and decided to simplify and went with Balanced.  It was nice to my wife over the years and all my dabbling and rebalancing did not do that much better.   Then I got hooked on the Target 20XX funds that VG has.  That mix was compelling based on large cap, small cap, bonds, internationals, etc.  So....my sleeping walking portfolio ended up like this...

    Roth IRA’s.....even split.  50% Balanced and 50% in 2 different Target funds.  I slit up the 50% into 2035 and 2040.  These are then projected retirement dates for each child.  The fund managers do the mix changes as you get closer to needing them.  The same concept that the 529’s use if you let them manage or choose their “auto pilot” mix.  I figure that I was NOT going to be that conservative with the kid’s inheritances....so, I will never need the ROTH’s....  if you do some spreadsheets and look at the growth, based on 10, 5, and 3 years....it ain’t too shabby...

    IRA/401K....  OK.  Now this where my RMD’s come from.  Got a little feisty here....

    40 - 45 % in Balanced....  40-45% in the Tagets.  Again...equally split by 2035 and 2040.  I will keep skimming off the RMD’s and I want a little more growth.  The remaining 15% or so was “GUT FEEL”.  I put some in the Emerging Market Index and some in Small Cap Index ( neither Balanced nor Targets have much small cap).  The rebalancing each year then has some leeway to up or down that 15%.  

    Basically....10% of my portfolio is in the California Socotra Hard Money LLC.  That was my 8% interest and will be there for a long time for the income stream.  They will do a “held long” or a Roth or an IRA/401K so you choose what type of funds to put there.  Some high rollers with several million have a mix of the three.  You can also reinvest and plow the interest back into the funds or do an ACH like we do.  My wife smiles each month when I give her the number.  It is like a third SS check for us.

    10% is in Stocks held long.  Some utilities and an MLP that I will never sell and our heirs will get the stepped up basis for all of them.  

    5% in a VG brokerage account.  We kept dividend investing in the Total Stock Market fund and now it has over a 200% gain.  It ain’t gonna be sold.  I have another MMF in that account.  It is where I park spare money or tap into if I want to speculate on my buddies “cyclicals”.

    that is roughly 25% and the rest is tax sheltered or deferred.

    i have been using that strategy for 5 years or so and it is simple.   

    Have fun....
  • turkeydanceturkeydance Posts: 127
    "I was just curious about other people’s path to retirement."

    old saying: same house same wife.
  • TexpackTexpack Posts: 2,525
    This is also COVID related but I’ll post it here. Those of us born in 1960 are going to take a 7-10% hit on our SS retirement benefits due to COVID. Your PIA is based on your average lifetime earnings. Those are inflation adjusted based on average income figures for each of your 30 or 35 best years. The basis for the adjustment is the year you turn 60. The average income is calculated off of the number of W2s that get sent out for the year. Record numbers of people employed in Jan and Feb combined with record numbers of unemployed in April and May will collapse the average annual income figure for 2020. When you combine the hit for my PIA with the impacts on the COLA and the surviving spouse benefits this will be yet another rip off added to the SS ponzi scheme. 
  • GsoPackBackerGsoPackBacker Posts: 976
    Texpack, sadly you're speaking about things I have yet to learn about, the details of SS.  AT 53, I REALLY need to get on this.

    On the plus side, my retirement planning assumed a zero contribution from SS for both my wife and I (essentially my safety factor). 

    Time to put some of the tips here to good use.
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