What retirement strategy other than SS?

[SonofJoe]

I 'pre-tired' at 53 as working every day in an asylum isn't much fun (not an actual one, just a US multinational populated by lunatics). Wifey followed a couple of years later.

I started seriously thinking about 'jumping' about five years before I actually did the deed. Saved like crazy (about 85% of what I earned towards the end). Spent a lot of time pondering the question, 'when is enough, enough?'. Also formulated a philosophy that would both suit me & be sustainable over the long term. I call it 'smallism' (as in small house, small car & small wife!). I've eschewed status symbols in their entirety and deliberately pursue a policy of buying stuff that is demonstrably cost-effective. It gives me great pleasure to know I am an ad man's worst nightmare! After eight years, I can honestly say I'm happier now than I've ever been.

Money-wise, I simply live off the fat I saved. I don't do shares. Yes I'm well aware they are soaring right now but I'm also aware that money in shares can evaporate before your eyes incredibly quickly (think Enron, think Carillion). It may seem odd but I'm sort of okay with a bit of depreciation via inflation. It's relatively small vs the swings you can get stung by in the markets. At some stage I'll take my occupational pensions but right now I figure I don't need them.

One final thing I've noted is that as you age in retirement, you logically have less time that you need to cover financially because you're that much closer to shirking off your mortal coil. As time passes, you tend to find you have cash that you're logically never ever going to get around to spending. You find yourself getting ever more creative in finding reasons to give 'surplus money' away to the kids which is fun.

 

[GemStater]

- Employer match 401k
- Personal Roth IRA
- Living debt free

I'll be 40 this year and I'm not counting on one dime from Social Security of which I continue to pay into unfortunately.

 

[UncleDave]

SS is the baseline.

401K
Stock account
IRA - Roth IRA
real estate

Own my own businesses I can continue to run after full time external employment ends.

UD

 

[Pike51]

Powerball and Mega Millions

 

[JohnnyJohnson]

Originally Posted By: ZZman
What retirement strategies do you use other than expecting SS in the future?
Stocks? Bonds? 401k, Roth? Pension? Real estate/income properties? , rich parents? etc..

I am one of the lucky few to still get a pension. That is it for me.


All of the above except rich parents and bonds. Started late in life at 33 building for my retirement.

 

[jstert]

i worked hard, saved like a fiend and was very, uh, frugal in my younger days. i got divorced, lost a chunk on a condo home sale, and helped mom, ex mother in law and sister over the years. payroll deduction savings bonds (and rotc) largely paid for my kids’ bachelors degrees. im now living off a 2/3 govt pension (divorce) and a small military reserve pension. i havent touched my ira or annuity or other funds yet, and will likely delay receiving my small s.s. pension.

my advice to youngers is to max out all retirement opportunities, then save at least 10% more. also buy life, disability and long term care insurance when you are young and healthy. im unsure if buying a house is the great financial opportunity that it once was.

i always consider the cost of my investments, and used tsp, vanguard, tiaa, usaa and credit unions. stocks were in balanced index funds, not individual stocks.

 

[JohnnyJohnson]

Originally Posted By: redhat
I am 26 years old with a generous 401k plan. My employer's match is unbelievable. Besides that... savings account that keeps working.

I have no idea on what IRAs are and the differences, but would like to set one up. Any suggestions?


Get a hold of Fidelity Investments and start yourself a ROTH IRA.

 

[redbone3]

Pensions seem to be largely being replaced by 401K's. Since this is an oil forum, I'll give you an oil analogy. It is more important that you have oil than what oil you use. So, it is much more important that you save for retirement than how you do it. Real estate, IRA's, stock trading accounts are all viable alternatives. Choose what you are comfortable with and do it!

 

[Wolf359]

Originally Posted By: csandste
I wish I'd put more money directly into the market instead of funding my pre-Roth IRA to the max-- my MDR is killing me, paying capital gains would have been less painful.


I don't understand your problem with MDR. I think you're referring to required minimum distribution requirements. Maybe you just need to switch the account to a different brokerage. My mom deals with those, and at Fidelity, she has it set up so that they automatically sell off whatever is needed and sends her a check every year. You can then invest those in a regular account. They don't really charge any extra fees. The roth has tax savings that you don't get with a regular account. Believe me, some years even when I didn't think I made that much money percentage wise, some mutual funds have kicked out enough in capital gains to exceed the price of a new car.

 

[Alfred_B]

Originally Posted By: Wolf359
Originally Posted By: csandste
I wish I'd put more money directly into the market instead of funding my pre-Roth IRA to the max-- my MDR is killing me, paying capital gains would have been less painful.


I don't understand your problem with MDR. I think you're referring to required minimum distribution requirements. Maybe you just need to switch the account to a different brokerage. My mom deals with those, and at Fidelity, she has it set up so that they automatically sell off whatever is needed and sends her a check every year. You can then invest those in a regular account. They don't really charge any extra fees. The roth has tax savings that you don't get with a regular account. Believe me, some years even when I didn't think I made that much money percentage wise, some mutual funds have kicked out enough in capital gains to exceed the price of a new car.


It's not the MDR itself, it's the tax on it. 401k is deferred income and when you draw, it's ordinary income, not capital gains. In this case, the RMDA is large enough to have bumped to a higher income bracket.

 

[oil_film_movies]

I recommend gold as an investment, in addition to SS. Combine the two: a gold SS.

 

[Mr Nice]

Alfred,

It's much better to have all that money and be Taxed on it rather than..... being retired and working part-time collecting shopping carts in a Walmart parking lot because you didn't have enough retirement investments.

In retirement I'll get over $12K a month not even counting Social Security that is really not needed.

 

[csandste]

Most of my money in my regular IRA is in fact transferred from my 457 and a contribution buy back on my retirement plan. The max (pre-Roth) funding of IRA's wasn't that great but I was throwing $30,000 plus into my 457 and that has to go into an IRA account (unless you keep it in the 457 which has lots of hidden fees). In addition to my MDR, I take additional distributions from my IRA into my Roth (but the regular MDR has to be taken first)-- I lowered the additional distribution to my Roth a bit this year because out years should be taxed a bit lower with the increased standard deductions in '18. Anyway, once money gets into a regular IRA (as far as I know), it has to come out as taxable income, not capital gains.

Transferred Fidelity and Vanguard accounts into Schwab, so my kids would have a local source to get the money out when I'm dead. Schwab's ETF's and index funds are even cheaper than Vanguard, although the Vanguard funds remain within my Schwab account. Admiral Class Funds remain, but new purchases would have to be made through Vanguard and transferred. No problem, in indexes, Schwab even beats Admiral for low costs.

 

[csandste]

Originally Posted By: Wolf359
Originally Posted By: csandste
I wish I'd put more money directly into the market instead of funding my pre-Roth IRA to the max-- my MDR is killing me, paying capital gains would have been less painful.


I don't understand your problem with MDR. I think you're referring to required minimum distribution requirements. Maybe you just need to switch the account to a different brokerage. My mom deals with those, and at Fidelity, she has it set up so that they automatically sell off whatever is needed and sends her a check every year. You can then invest those in a regular account. They don't really charge any extra fees. The roth has tax savings that you don't get with a regular account. Believe me, some years even when I didn't think I made that much money percentage wise, some mutual funds have kicked out enough in capital gains to exceed the price of a new car.


I had meant to quote you on my response, which is directly above. Short answer is capital gains are less than paying it on regular income, at least for me. All brokerage houses have MDR calculators and both Vanguard and Schwab are cheaper than Fidelity. I'm a Bogelite-- cheap is always good, and it's always better to use a Roth. If there was a Roth 457, like a Roth 401 I would have used it.

 

[Shannow]

Only thing I have debt on ATM is the Colorado, own my home outright...all savings have been used to pay that off, as at 3.9% can't get anywhere near that on savings, and pay 30% tax on the interest anyway.

Wife's superannuation isn't that flash, as being a teacher's aid, she's at the whim of school principals.

Have some shares in each of her names, sell the old house and get more in dividend returning shares in her name.

50 Y.O. and paying the max I can into superannuation without hitting the limits applied arbitrarily two years ago (they keep moving the goalposts).

Keep playing worker-bee for the next 10-15. Structure it so wife gets all of it when I croak.

 

[Wolf359]

Originally Posted By: Alfred_B
Originally Posted By: Wolf359
Originally Posted By: csandste
I wish I'd put more money directly into the market instead of funding my pre-Roth IRA to the max-- my MDR is killing me, paying capital gains would have been less painful.


I don't understand your problem with MDR. I think you're referring to required minimum distribution requirements. Maybe you just need to switch the account to a different brokerage. My mom deals with those, and at Fidelity, she has it set up so that they automatically sell off whatever is needed and sends her a check every year. You can then invest those in a regular account. They don't really charge any extra fees. The roth has tax savings that you don't get with a regular account. Believe me, some years even when I didn't think I made that much money percentage wise, some mutual funds have kicked out enough in capital gains to exceed the price of a new car.


It's not the MDR itself, it's the tax on it. 401k is deferred income and when you draw, it's ordinary income, not capital gains. In this case, the RMDA is large enough to have bumped to a higher income bracket.


But you would have had the same problem if you didn't put it in. You would have paid taxes on it back then. The way it's supposed to work in theory is that when you're working, you're in a higher tax bracket and then when you retire, you would be in a lower tax bracket. Now if it turns out that you're actually in a higher tax bracket, well, no planning is perfect. You might actually still be ahead if you did the math because you had all those years for the initial investment to grow tax deferred.

 

[csandste]

That was the theory. My AGI after retirement increased by 50% because I sheltered everything when I worked. My Federal taxes as percent of income went from 10.7% when I was working (2010) to 18.31% in 2016. My broker says there are several cheapskate clients like me who are paying more in retirement. It would be fun to run various options as to the value of untaxed investments vs. paying capital gains up front but that's water under the bridge and above my paygrade-- not going to pay to have it done. If I had to do it over again it would be 457 up to the match, then full Roth, then investments with a low tax rate--i.e. Vanguard's tax efficient fund. Or..given the costs of taxes up front, maybe it's better the way I did it.

 

[grampi]

Military pension

VA disability

GS pension (FERS)

TSP (civil service version of a 401K)

My SS

My wife's SS

 

[Alfred_B]

Originally Posted By: Wolf359
Originally Posted By: Alfred_B
Originally Posted By: Wolf359
Originally Posted By: csandste
I wish I'd put more money directly into the market instead of funding my pre-Roth IRA to the max-- my MDR is killing me, paying capital gains would have been less painful.


I don't understand your problem with MDR. I think you're referring to required minimum distribution requirements. Maybe you just need to switch the account to a different brokerage. My mom deals with those, and at Fidelity, she has it set up so that they automatically sell off whatever is needed and sends her a check every year. You can then invest those in a regular account. They don't really charge any extra fees. The roth has tax savings that you don't get with a regular account. Believe me, some years even when I didn't think I made that much money percentage wise, some mutual funds have kicked out enough in capital gains to exceed the price of a new car.


It's not the MDR itself, it's the tax on it. 401k is deferred income and when you draw, it's ordinary income, not capital gains. In this case, the RMDA is large enough to have bumped to a higher income bracket.


But you would have had the same problem if you didn't put it in. You would have paid taxes on it back then. The way it's supposed to work in theory is that when you're working, you're in a higher tax bracket and then when you retire, you would be in a lower tax bracket. Now if it turns out that you're actually in a higher tax bracket, well, no planning is perfect. You might actually still be ahead if you did the math because you had all those years for the initial investment to grow tax deferred.


Somewhat true, except that when the higher income is due to capital gains. If they were in the market, you would pay income tax on the principal and 15% capital gains tax on the gains. With 401k type vehicle, you defer the income tax on the principal, and then you pay income tax on the principal AND the gains. So you can potentially lose a lot of money.

 

[supton]

401k & SS. Currently I'm the breadwinner so it'd be pretty much whatever I save & get back from SS.

Plan on working until 70 or so. Maybe the last couple of decades I could "coast" but I don't think full retirement is in the works until 70.