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Retiring at the end of the year
Posted: Wed Oct 27, 2021 4:17 pm
by nomadh
Been going through ideas and trying to think of what I should do before the end of the year. I have a pension and a 457 I've been putting money into for years and a smaller roth 457 that I'm very bummed about that the the 2 numbers aren't reversed. I'm considering moving a decent chunk of my pretax account to my tax free roth. That way I can pay the tax next year out of my pretax once retired. I think? How much to do I have no idea and paying a big tax hit before I have to eats at my soul. But paying double that in a few years will be even worse. Its a bet but it seems a no brainer. I will be getting my health insurance through my retirement for about $1400 a month paid out of my retirement. (Painful)
I have 2 rentals one paidoff. I'm retiring with about 85% of my pay not counting the $1200 that helped pay the health insurance.
Anyway just wondering if anyone here has some ideas or tricks that help or things I'm missing.
Thanks.
Re: Retiring at the end of the year
Posted: Wed Oct 27, 2021 4:47 pm
by mickey
My only suggestion is IF you are in an area where there are really good money men, avail yourself of their knowledge prior to retiring.
We were lucky when we were getting ready to retire in that we were living in the Nashville TN area which is a area with too many people who have too much money.
So there were plenty of good ones. We retired in 1998. Today, I as a single person have more income than we (as a couple) ever did when we were working.
I will add that in the area where we retired in Floriduh I know of only a single money man & I would trust my dog further to manage my finances than I would him.
Re: Retiring at the end of the year
Posted: Wed Oct 27, 2021 6:40 pm
by BatUtilityBelt
I don't feel qualified to give retirement advice except to the young, and then only in broad terms like "put away way more than you think you will need". That worked for me, but I still retired when I wasn't expecting to because of events, not plans.
Re: Retiring at the end of the year
Posted: Wed Oct 27, 2021 8:57 pm
by golem
I'm in my late 30s and several years from retirement at min (e.g., if I retire in the Phillipines) but I've chosen to max out 401Ks for a few years running now pre-tax and I thought about it a lot before doing so. People argue about which is better: pre-tax or post-tax contributions. The real wrong answer is not taking advantage of either! But statistically speaking, pretax made more sense to me based on the types of funds I wanted to invest in and what I presumed their growth would be. And, in fact, the growth in the SP500 funds I've invested in has been much better than I projected so I'm several years ahead of where I thought I'd be so I haven't regretted my decision yet. But yes, I'll have to pay those taxes some day.
So maybe the pretax choice wasn't so bad for you either? But the truth is I don't know what you chose to invest in. 85% of your current pay sounds impressive. It may mean that early on in your retirement you can take out some money each year pre-tax and then invest it in post-tax accounts. I don't know if doing this in a lump sum really makes sense unless you're absolutely certain your taxes will be doubled (and I don't see how you can be so certain of that).
Re: Retiring at the end of the year
Posted: Thu Oct 28, 2021 7:32 am
by mickey
@golem if I understand it correctly, if you plan on your income going down after you retire, go with pre-tax investments now.
but if you plan on your income going up after you retire you want after-tax investments now.
Guess it all depends on when you need the tax break, right?
The more you make, the higher your tax bracket? The less you make, the lower the tax bracket?
Thus pay the tax when it costs you less?
Am I wrong?
Re: Retiring at the end of the year
Posted: Thu Oct 28, 2021 11:08 am
by tonebender
Mickey is right, get a fiduciary who specializes in retirement plans and capital preservation. You won't regret it. I am a pretty sharp cat but these guys are well worth it and they all the rules and regulations that can work to your advantage.
Re: Retiring at the end of the year
Posted: Thu Oct 28, 2021 1:34 pm
by OMB
The key is finding a "good one". Lots of folks that just want to make money off you and with all the funds out there options are many. Read a little before you go talk with someone.
Re: Retiring at the end of the year
Posted: Thu Oct 28, 2021 6:45 pm
by nomadh
Got a start talking to a money guy from church. He plays sax and guitar so he must be legit, Right?
The key is how do you tell a good one? I checked into 2 a few years ago for the free checkup. 1 said everything looks good but its all locked up with the 457 and real estate and pension. Gave him no wiggle room for the most part. Another sent me a bill while I was considering anything from him at all. Later a friend of mine who got involved earlier said run!
So in a way I have been looking for answers and got nowhere or I'm as good as I get. Its hard to know when you have the good enough answer. I did currently step mostly out of the market after a 25% increase so far this yr.
Re: Retiring at the end of the year
Posted: Thu Oct 28, 2021 7:18 pm
by PoodlesAgain
If I had a lot of questions I would try to visit with a large firm's local office.
We did, once, spouse and I, not about retirement, and with Fidelity, and we learned quite a bit. Very soft sell, and they have a range of tools on hand to produce projections with your numbers/perspective.
Don't be like my late MIL who gave an cousin attorney handle her money, who put her into a NYC brokerage, and there she was in early 2008, invested in all kinds of exotic stocks! Did not end well. A real firm would not do that, out of fiduciary duty training and liability. A simple industry standard questionnaire coul have screened her out of investing in Countrywide or such nonsense.
Re: Retiring at the end of the year
Posted: Thu Oct 28, 2021 10:47 pm
by andrewsrea
invest in guitars!
Kidding aside, my undergrad was Finance with a minor in Economics. I've done well with my retirement planning and execution, but I've just hired a Financial Advisor to manage my pension funds. I am taking a lump-sum, because i don't trust my old company to sustain the pension. My advisor has a combined 18 years and he once worked for me for a couple years. Even so, I asked for references and a 10 year track record for each of his products he is offering.
Like others have said, pay things off and consider moving to a nice, but inexpensive area.
Do a comprehensive multi-year budget, so you understand what you need to cover costs. Track your actual expenses to your planned ones, to see how good you are at estimating. Don't forget to escalate costs in the future.
My strategy is to sustain my hard assets (house, belongings, etc.) and my 401k principle for my kids to inherit. My plans is to live off of the 401K interest, but eventually consume the lump-sum and its interest. I too have to pay for my and my wife's medical for another 6 years. Out plan now is to start collecting Social Security at 65, which may change depending on how the markets are doing and how the political climate is on sustaining SS.
You'll have to pay income tax on your pre-tax 401Kand its gains and pension, unless you lump-sum it and roll it into a retirement annuity - which you'll pay taxes on the payouts. Social Security is taxable.
It can be scary with a fixed income at first. But remember the S&P500 which is considered a diversified portfolio has averaged over 10% for the last 70 years.
Hope this helps. If you want to talk in real-time, PM me and I'll provide my number. Hope this gets you thinking.
Re: Retiring at the end of the year
Posted: Fri Oct 29, 2021 8:01 am
by golem
mickey wrote: ↑Thu Oct 28, 2021 7:32 am
@golem if I understand it correctly, if you plan on your income going down after you retire, go with pre-tax investments now.
but if you plan on your income going up after you retire you want after-tax investments now.
Guess it all depends on when you need the tax break, right?
The more you make, the higher your tax bracket? The less you make, the lower the tax bracket?
Thus pay the tax when it costs you less?
Am I wrong?
That's how I understand it. And I think the reality is a lot of people have their income go down after you retire. I can certainly think of a few scenarios where I might have it go up, but overall that seems less probable.
Re: Retiring at the end of the year
Posted: Fri Oct 29, 2021 9:27 am
by tobijohn
andrewsrea wrote: ↑Thu Oct 28, 2021 10:47 pm
invest in guitars!
Yup, that and your parents' basement. At least that's my retirement plan...
Re: Retiring at the end of the year
Posted: Mon Nov 01, 2021 11:42 am
by nomadh
golem wrote: ↑Fri Oct 29, 2021 8:01 am
mickey wrote: ↑Thu Oct 28, 2021 7:32 am
@golem if I understand it correctly, if you plan on your income going down after you retire, go with pre-tax investments now.
but if you plan on your income going up after you retire you want after-tax investments now.
Guess it all depends on when you need the tax break, right?
The more you make, the higher your tax bracket? The less you make, the lower the tax bracket?
Thus pay the tax when it costs you less?
Am I wrong?
That's how I understand it. And I think the reality is a lot of people have their income go down after you retire. I can certainly think of a few scenarios where I might have it go up, but overall that seems less probable.
The big scary is Income may go down but tax certainly will be going up. And inflation? Will it be 8-10% or 50%? At this point I truly think I jump out now with an 80% pension because in 3 years my 100% pension will only be worth 50%. Ca is now considering wealth tax? I own my house plus equity in a few rentals. We are at a big tipping point and with what I see floated and passing there is nothing that seems TOO crazy. And if the feds steer away from the cliff it seems CA will only stomp on the gas towards it. Its sort of to the point where its so crazy there is no predicting anything except at some point I will die and or be too impaired to enjoy my savings or time left. And there is no predicting that either.
Re: Retiring at the end of the year
Posted: Mon Nov 01, 2021 11:43 am
by nomadh
golem wrote: ↑Fri Oct 29, 2021 8:01 am
mickey wrote: ↑Thu Oct 28, 2021 7:32 am
@golem if I understand it correctly, if you plan on your income going down after you retire, go with pre-tax investments now.
but if you plan on your income going up after you retire you want after-tax investments now.
Guess it all depends on when you need the tax break, right?
The more you make, the higher your tax bracket? The less you make, the lower the tax bracket?
Thus pay the tax when it costs you less?
Am I wrong?
That's how I understand it. And I think the reality is a lot of people have their income go down after you retire. I can certainly think of a few scenarios where I might have it go up, but overall that seems less probable.
Or are we in a use it or lose it situation now?
Re: Retiring at the end of the year
Posted: Mon Nov 01, 2021 11:54 am
by nomadh
andrewsrea wrote: ↑Thu Oct 28, 2021 10:47 pm
invest in guitars!
Kidding aside, my undergrad was Finance with a minor in Economics. I've done well with my retirement planning and execution, but I've just hired a Financial Advisor to manage my pension funds. I am taking a lump-sum, because i don't trust my old company to sustain the pension. My advisor has a combined 18 years and he once worked for me for a couple years. Even so, I asked for references and a 10 year track record for each of his products he is offering.
Like others have said, pay things off and consider moving to a nice, but inexpensive area.
Do a comprehensive multi-year budget, so you understand what you need to cover costs. Track your actual expenses to your planned ones, to see how good you are at estimating. Don't forget to escalate costs in the future.
My strategy is to sustain my hard assets (house, belongings, etc.) and my 401k principle for my kids to inherit. My plans is to live off of the 401K interest, but eventually consume the lump-sum and its interest. I too have to pay for my and my wife's medical for another 6 years. Out plan now is to start collecting Social Security at 65, which may change depending on how the markets are doing and how the political climate is on sustaining SS.
You'll have to pay income tax on your pre-tax 401Kand its gains and pension, unless you lump-sum it and roll it into a retirement annuity - which you'll pay taxes on the payouts. Social Security is taxable.
It can be scary with a fixed income at first. But remember the S&P500 which is considered a diversified portfolio has averaged over 10% for the last 70 years.
Hope this helps. If you want to talk in real-time, PM me and I'll provide my number. Hope this gets you thinking.
I have 1 rental paid off and the house I live in is a pretty reasonable mort. I am considering paying off the house from my 457 but lots of tax there (but maybe not nearly as much as in the near future?)
I do think there is no better idea than leave CA but my 2 kids live within a block of us. One renting a house we own the other in a house he is buying. My idea is more to burn up my 457 and leave some of the property to my kids. I sailed through the chinese bat flu with the rentals but the precedent has been set, especially in ca, that I can't kick out renters and they don't have to pay. So technically I don't own anything it seems. Except a mort.
My medical looks to be 1400/ mo through my old employer. We too are 57 so medical in 8 years. Not that I expect that to exist. My plan was my rentals would be my inflation hedge but now we have rent control. Once again that if the courts let me even kick someone out at any price.
Re: Retiring at the end of the year
Posted: Mon Nov 01, 2021 2:09 pm
by PoodlesAgain
andrewsrea wrote: ↑Thu Oct 28, 2021 10:47 pm
invest in guitars!
Better
Cymbals. We know drummers are total dopes about their cymbals, that's what they live for.
Swiss. Paiste. The Patek Philippe of cymbals.
Bury them in a secure place.
Re: Retiring at the end of the year
Posted: Mon Nov 01, 2021 4:40 pm
by andrewsrea
PoodlesAgain wrote: ↑Mon Nov 01, 2021 2:09 pm
andrewsrea wrote: ↑Thu Oct 28, 2021 10:47 pm
invest in guitars!
Better
Cymbals. We know drummers are total dopes about their cymbals, that's what they live for.
Swiss. Paiste. The Patek Philippe of cymbals.
Bury them in a secure place.
I started life as a drummer. I have a 1976 Ludwig Smoked Vistalite kit with a 1973 A Ziljain 21" ride, a 1974 set of Zildjian 14" new beat hats, a 1977 18" Paste 2002 crash, a 1982 16" Paste 3000 thin crash and my favorite, a 1988 20" Paste 2002 crash. Sounds awesome.
Re: Retiring at the end of the year
Posted: Mon Nov 01, 2021 8:13 pm
by Tonray's Ghost
mickey wrote: ↑Wed Oct 27, 2021 4:47 pm
My only suggestion is IF you are in an area where there are really good money men, avail yourself of their knowledge prior to retiring.
We were lucky when we were getting ready to retire in that we were living in the Nashville TN area which is a area with too many people who have too much money.
So there were plenty of good ones. We retired in 1998. Today, I as a single person have more income than we (as a couple) ever did when we were working.
I will add that in the area where we retired in Floriduh I know of only a single money man & I would trust my dog further to manage my finances than I would him.
Is the dog taking on new clients currently ? Asking for a friend