Serious retirement savings question…
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Karla and I have a mild disagreement… My general view is that our retirement accounts should be at a level that we’re living off 4-5% interest on the principal plus whatever we’re getting in Social Security… The balance will be inherited by the kids…
Karla seems to think we should plan on the the interest, plus a 5% per year drawdown on the principal. Which means (since we’re both looking at the same “annual income” for retirement, that she thinks I am putting too much aside right now.
What do you guys think?
@LuFins-Dad I lean towards your side… and, if you are able to put more now as you say, all the better… the sooner you can retire, potentially.
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There’s also a bit of a middle ground between you two, taking a little bit from the principal. This, of course, presumes your Dogecoin doesn’t explode.
@89th said in Serious retirement savings question…:
There’s also a bit of a middle ground between you two, taking a little bit from the principal. This, of course, presumes your Dogecoin doesn’t explode.
Solana, baby, Solana…
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Start with the more conservative plan (@LuFins-Dad’s plan) for now, and observe how the kids do over time.
Maybe the kids will do so well that your inheritance will look like pittance to them, maybe not.
The answer will come in time, and you can adjust towards the less conservative plan (Karla’s plan) later depending on how kids do.
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Any such planning has to include what your projected expenses in retirement will be.
When I sat down with my guy, we went through all of our essential expenses (insurance, utilities, food, auto, etc) and developed a plan to guarantee that level of income (with Social Security being part of that plan).
"Touching the nut" is then for non-essential expenses - concerts, dining out, etc. Of course, when you reach a certain age (was 70, then 72 and now 73), you encounter the RMD - Required Minimum Distribution. Your uncle in DC doesn't want you hoarding your funds, so he REQUIRES you to withdraw a certain amount based on your age and what projected earnings will be.
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Any such planning has to include what your projected expenses in retirement will be.
When I sat down with my guy, we went through all of our essential expenses (insurance, utilities, food, auto, etc) and developed a plan to guarantee that level of income (with Social Security being part of that plan).
"Touching the nut" is then for non-essential expenses - concerts, dining out, etc. Of course, when you reach a certain age (was 70, then 72 and now 73), you encounter the RMD - Required Minimum Distribution. Your uncle in DC doesn't want you hoarding your funds, so he REQUIRES you to withdraw a certain amount based on your age and what projected earnings will be.
@George-K said in Serious retirement savings question…:
(was 70, then 72 and now 73), you encounter the RMD - Required Minimum Distribution. Your uncle in DC doesn't want you hoarding your funds, so he REQUIRES you to withdraw a certain amount based on your age and what projected earnings will be.
Wait, what? I have never heard about this….
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@George-K said in Serious retirement savings question…:
(was 70, then 72 and now 73), you encounter the RMD - Required Minimum Distribution. Your uncle in DC doesn't want you hoarding your funds, so he REQUIRES you to withdraw a certain amount based on your age and what projected earnings will be.
Wait, what? I have never heard about this….
@LuFins-Dad said in Serious retirement savings question…:
Wait, what? I have never heard about this….
Surprise, surprise, surprise.
Also that amount goes up every year.
In my case it's the amount in my IRA divided by 25.5 - so a bit more than 4%.
Here's a nice little calculator to see what you MUST take out. If you don't, penalties are YUGE - about 50%, iirc.
https://www.aarp.org/work/retirement-planning/required-minimum-distribution-calculator.html
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@LuFins-Dad said in Serious retirement savings question…:
Wait, what? I have never heard about this….
Surprise, surprise, surprise.
Also that amount goes up every year.
In my case it's the amount in my IRA divided by 25.5 - so a bit more than 4%.
Here's a nice little calculator to see what you MUST take out. If you don't, penalties are YUGE - about 50%, iirc.
https://www.aarp.org/work/retirement-planning/required-minimum-distribution-calculator.html
@George-K said in Serious retirement savings question…:
@LuFins-Dad said in Serious retirement savings question…:
Wait, what? I have never heard about this….
Surprise, surprise, surprise.
Also that amount goes up every year.
In my case it's the amount in my IRA divided by 25.5 - so a bit more than 4%.
Here's a nice little calculator to see what you MUST take out. If you don't, penalties are YUGE - about 50%, iirc.
https://www.aarp.org/work/retirement-planning/required-minimum-distribution-calculator.html
You seriously have to be effin with me… Yhose amounts are entirely too much. If you live to be 95 you’ll basically be living off of SS…
The Brad
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@George-K said in Serious retirement savings question…:
@LuFins-Dad said in Serious retirement savings question…:
Wait, what? I have never heard about this….
Surprise, surprise, surprise.
https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-required-minimum-distributions-rmds
Also that amount goes up every year.
In my case it's the amount in my IRA divided by 25.5 - so a bit more than 4%.
Here's a nice little calculator to see what you MUST take out. If you don't, penalties are YUGE - about 50%, iirc.
https://www.aarp.org/work/retirement-planning/required-minimum-distribution-calculator.htmlLook up RMD.
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@George-K said in Serious retirement savings question…:
@LuFins-Dad said in Serious retirement savings question…:
Wait, what? I have never heard about this….
Surprise, surprise, surprise.
https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-required-minimum-distributions-rmds
Also that amount goes up every year.
In my case it's the amount in my IRA divided by 25.5 - so a bit more than 4%.
Here's a nice little calculator to see what you MUST take out. If you don't, penalties are YUGE - about 50%, iirc.
https://www.aarp.org/work/retirement-planning/required-minimum-distribution-calculator.htmlLook up RMD.
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@George-K said in Serious retirement savings question…:
@LuFins-Dad said in Serious retirement savings question…:
Wait, what? I have never heard about this….
Surprise, surprise, surprise.
Also that amount goes up every year.
In my case it's the amount in my IRA divided by 25.5 - so a bit more than 4%.
Here's a nice little calculator to see what you MUST take out. If you don't, penalties are YUGE - about 50%, iirc.
https://www.aarp.org/work/retirement-planning/required-minimum-distribution-calculator.html
You seriously have to be effin with me… Yhose amounts are entirely too much. If you live to be 95 you’ll basically be living off of SS…
@LuFins-Dad said in Serious retirement savings question…:
If you live to be 95 you’ll basically be living off of SS…
Just because you take it out of the IRA doesn't mean you can't still invest it.
You just don't have as much to invest because the democrat IRS take it to pay for their office parties.
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@George-K said in Serious retirement savings question…:
@LuFins-Dad said in Serious retirement savings question…:
Wait, what? I have never heard about this….
Surprise, surprise, surprise.
Also that amount goes up every year.
In my case it's the amount in my IRA divided by 25.5 - so a bit more than 4%.
Here's a nice little calculator to see what you MUST take out. If you don't, penalties are YUGE - about 50%, iirc.
https://www.aarp.org/work/retirement-planning/required-minimum-distribution-calculator.html
You seriously have to be effin with me… Yhose amounts are entirely too much. If you live to be 95 you’ll basically be living off of SS…
@LuFins-Dad said in Serious retirement savings question…:
@George-K said in Serious retirement savings question…:
@LuFins-Dad said in Serious retirement savings question…:
Wait, what? I have never heard about this….
Surprise, surprise, surprise.
Also that amount goes up every year.
In my case it's the amount in my IRA divided by 25.5 - so a bit more than 4%.
Here's a nice little calculator to see what you MUST take out. If you don't, penalties are YUGE - about 50%, iirc.
https://www.aarp.org/work/retirement-planning/required-minimum-distribution-calculator.html
You seriously have to be effin with me… Yhose amounts are entirely too much. If you live to be 95 you’ll basically be living off of SS…
Roth. Either front door or back door.
You can also do a SPDA, although I don't think you can do that with a roll-over from a tex deferred fund such as a standard 401k.
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Secondly, do you have LTC insurance? If not, and y'all are in fairly decent health, do consider it. At 65, your chances of needing long term care are about 3 in 4, or a bit less. The average expenditure a couple of years ago was somewhere around $170,000.
If you don't have the money, the state will impoverish you, then put you on Medicaid. After your death, they will go after any other assets that don't count against Medicaid with a vengeance...This means your home and property, including your car.
For asset protection, you may wish to consider a revocable or irrevocable trust for one or both of you. The current look-back period is 5 years. That's a decision to be made in a good lawyer's office. The advantage of a trust, besides asset protection, is avoiding probate.
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And...be careful where you retire. Some states have no state income tax. My state does, but none of my 401A is taxed by the state.
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And...be careful where you retire. Some states have no state income tax. My state does, but none of my 401A is taxed by the state.
@Jolly said in Serious retirement savings question…:
And...be careful where you retire. Some states have no state income tax. My state does, but none of my 401A is taxed by the state.
You'll most likely get taxed one way or another. No state income tax can often mean high property taxes or sales tax.
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@Jolly said in Serious retirement savings question…:
And...be careful where you retire. Some states have no state income tax. My state does, but none of my 401A is taxed by the state.
You'll most likely get taxed one way or another. No state income tax can often mean high property taxes or sales tax.
@Doctor-Phibes said in Serious retirement savings question…:
@Jolly said in Serious retirement savings question…:
And...be careful where you retire. Some states have no state income tax. My state does, but none of my 401A is taxed by the state.
You'll most likely get taxed one way or another. No state income tax can often mean high property taxes or sales tax.
Sales tax is a bitch, 10% or 10.5%. My property tax on my home = $0. My daughter's home (which I own) is a bit less than $700/year. My property tax on my timberland (23 acres) is $65.
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One of my favorite websites (thank you, Jon)...
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That’s weird… My 401K has an app that shows in a glance your balance, rate of return, recent transactions, and estimated retirement income including SS at retirement… I give it a quick check once a month or so… Last month I noticed that the balance went up, the rate of return went up, but the estimated annual income went down. I wasn’t sure, so I screenshot it… I just checked for this month. The balance is higher again, the rate of return is up .26%, and the estimated annual income is down $1100 per year.
Any thoughts, @jon-nyc ?
