Question for Retirees

[rokdog49]

Originally Posted by buddyhu

OP: How many years until you retire?


I gather you don’t have an accountant. If you do, have him help you to determine how much to pay in taxes and when to have them paid. Once you know that, the details of exactly how to pay them (and budget for the taxes) is simply a matter of what is comfortable for you. I make quarterly payments, draw the amount from my retirement accounts a couple of weeks before I am due to pay them.

This^^^^^^^^ but with one caveat. As I stated, don’t pay your taxes out of tax-deferred income or investments if you can avoid it.
You’ll pay more tax if you pay your taxes out of your 401k and you’ll have the double whammy of reducing its value for future earnings purposes.
Any honest financial advisor will tell you that.
Some folks don’t have options in this regard. Some don’t care.
YMMV.

[buddyhu]

D

Originally Posted by rokdog49

This^^^^^^^^ but with one caveat. As I stated, don’t pay your taxes out of tax-deferred income or investments if you can avoid it.
You’ll pay more tax if you pay your taxes out of your 401k and you’ll have the double whammy of reducing its value for future earnings purposes.
Any honest financial advisor will tell you that.

Rokdog and I have similar perspectives.

The idea is to let retirement accounts go untapped as long as possible, because over time, they will tend to grow (if properly invested). But the details can become complex.

If you get a guaranteed yearly increase in any funds (Social Security increases 8% each year you postpone taking benefits; my small pension for a job I had increase 6% a year), it is generally best to leave them untouched as long as possible; draw from other retirement accounts or non-tax sheltered savings first.

If possible, it is good to reduce or forego distributions from an IRA or 401K during a down market (like March of 2020). Hence, you want to have some wig I ant money outside of your retirement accounts so that you can forego or reduce the draws from these accounts during down markets, and to have money ready for emergencies that can’t wait for your money to be liquidated from a retirement account.

It is good to have competent, trustworthy advisors (fiduciaries, as others have noted) as well as knowledgeable friends to give you input and to support you in sticking with your plans once you have made your plans.

Anyone know a good investment forum where I can ask about guitar set ups?

[rokdog49]

Originally Posted by buddyhu

Rokdog and I have similar perspectives.

The idea is to let retirement accounts go untapped as long as possible, because over time, they will tend to grow (if properly invested). But the details can become complex.

If you get a guaranteed yearly increase in any funds (Social Security increases 8% each year you postpone taking benefits; my small pension for a job I had increase 6% a year), it is generally best to leave them untouched as long as possible; draw from other retirement accounts or non-tax sheltered savings first.

The Social Security thing depends largely on a roll of the dice and your needs for income at retirement.
No question the longer you wait, the higher the payments are when you do start taking them.
Let’s say your are 66 and you decide to wait until your are 70. That 8% increase each year for four years would balloon your monthly SS check 32% per month at age 70 over what it would be at 66.
That sounds good until you realize you have just lost four years of Social Security income had you stated at 66. For me that would have been well over six figures...well over.. But wait, there’s more. Your life expectancy in years at age 70 dwindles and you likely may not be able to recover that lost four years of SS income even with the 32% increase per month.
What if you die say at 75 even with the extra 32% you lose...at least I would’ve.
Uncle Sam loves it when we postpone our SS withdrawals. Trust me, the odds are in his favor.
Even though I could have waited, I decided I wanted my money. I paid into that system my whole life and I wasn’t taking any chances on what might happen.

[keith.rogers]

Originally Posted by guitargabor

The only financial advisor one should seek is a bona fide FIDUCIARY certified one.
The giant firms like Schwab ,Morgan Stanley,Raymond Jones etc. are totally opposed to the concept.
Don't be fooled by this who claim they act "like fiduciary".There is a rigorous process whereby an advisor can call themselves truly fiduciary.
...

Vanguard's advisor service is fiduciary, at least that's what they state on their website. They're also probably the lowest cost, though don't be surprised if they put you in Vanguard funds and ETFs, because those are also likely those with lowest fees.

Yes, I'm a fan, and have had some, and, since retiring, all of my retirement with them, gladly paying 0.3% annually for them to keep things balanced, deduct necessary taxes, etc., i.e., letting me spend my time playing guitar and doing other things *I* would rather do. Some folks enjoy dabbling, buying, selling, et al. (and second guessing themselves, perhaps) - but that's not me.

[ghostnote]

I retired 3 years ago. I got a financial adviser shortly before so that I'd have some answers to questions like yours. I discussed the fees right up front - it's your money so don't be shy about that. In my case:
The fee is 1% per year, which is far less than the rate of return, so I deemed it fair. No other fees.
Split my 401k into 2 different IRAs, smaller one for disbursement, larger one strictly for investment. (until I'm forced to withdraw due to age)
Taxes are taken out upon disbursement, so not an issue.
A good adviser develops a personal relationship with the client, and that is definitely true in my case, but:
As you know, the market has been mostly good, so everything is quite rosy and optimistic now - we all know there will also be bad times, so that'll be the real test of any financial plan.

Good luck

[Mr. Jelly]

Originally Posted by keith.rogers

Vanguard's advisor service is fiduciary, at least that's what they state on their website. They're also probably the lowest cost, though don't be surprised if they put you in Vanguard funds and ETFs, because those are also likely those with lowest fees.

I moved my 401k into a Vanguard IRA some time ago. I don't deal with anyone. No one from Vanguard has tried to influence me in any way. I move my investments at will via my computers. I have my non IRA money in tax exempt municipal bond funds. The dividends are put into my bank account monthly. If I want to move any money from my investments to my bank account it takes five minutes on my computer and I wait two business days to have the cash. I don't ever see me needing that much cash faster than that.

[buddyhu]

Originally Posted by rokdog49

The Social Security thing depends largely on a roll of the dice and your needs for income at retirement.
No question the longer you wait, the higher the payments are when you do start taking them.
Let’s say your are 66 and you decide to wait until your are 70. That 8% increase each year for four years would balloon your monthly SS check 32% per month at age 70 over what it would be at 66.
That sounds good until you realize you have just lost four years of Social Security income had you stated at 66. For me that would have been well over six figures...well over.. But wait, there’s more. Your life expectancy in years at age 70 dwindles and you likely may not be able to recover that lost four years of SS income even with the 32% increase per month.
What if you die say at 75 even with the extra 32% you lose...at least I would’ve.
Uncle Sam loves it when we postpone our SS withdrawals. Trust me, the odds are in his favor.
Even though I could have waited, I decided I wanted my money. I paid into that system my whole life and I wasn’t taking any chances on what might happen.

I agree with everything you have written.

Everything related to financing retirement is a crap shoot. If you plan to stretch your money to age 85, and you die at 68, you lose. If you plan to make your money last until age 75, and you live to 87, you lose. If you assume stocks will grow at an average of 6% a year for thirty years and they actually return 5%, you get squeezed. Etc. etc.

Knowledge of your family history can help. Making allowances for your lifestyle and vocation (laborers don’t tend to live as long as office workers...a bit surprising since a sedentary lifestyle tends to shorten lifespan) can help. But the future is uncertain....

Place your bets, ladies and gentlemen!!

[rokdog49]

Originally Posted by buddyhu

I agree with everything you have written.

Everything related to financing retirement is a crap shoot. If you plan to stretch your money to age 85, and you die at 68, you lose. If you plan to make your money last until age 75, and you live to 87, you lose. If you assume stocks will grow at an average of 6% a year for thirty years and they actually return 5%, you get squeezed. Etc. etc.

Knowledge of your family history can help. Making allowances for your lifestyle and vocation (laborers don’t tend to live as long as office workers...a bit surprising since a sedentary lifestyle tends to shorten lifespan) can help. But the future is uncertain....

Place your bets, ladies and gentlemen!!

All that and everyone has different circumstances and income needs.
As I mentioned earlier, having no indebtedness is the best place to start from if you can pull it off.
BTW, I don’t know about you, but I don’t have thirty years left for my stocks to grow. In fact, “growth” is not our main goal.
We’re just trying to stay even and hold on to what we have. That in itself is a crapshoot these days.

[Methos1979]

Timely thread for me. Coming up on 59.5 and so starting to get my ducks in a row. Meeting with several financial advisors to see if one is right for us. So far the general consensus of individual advice is to begin conversion of the 401k in chunks to a Roth. You pay the taxes up front but then the money that goes in is forevermore tax free, including any and all money made (capital gains). This is the big thing.

The other big thing is the money is not taxed when (if) it goes to your beneficiaries when you pass on. The only down side is any monies converted are subject to a '5 year rule' and cannot be touched without paying a 10% penalty fee. Apparently recent changes to the tax code make doing this rollover/conversion process a good deal right now. These changes are set to expire in 2026.

[rokdog49]

We took our entire 401k and put it in a money market cash account last year.
We still own several IRA’s that had significant growth due to the upswing in the market. If we decide to get back into another 401k it will be when and if the market goes to the dogs, which may happen.