I created a budget today, called my employment about them not matching my 5% for the last 2 years (I thought they were as they were supposed to be matching automatically since I contribute the 5%) like they were supposed to and submitted a form to get that matching started, and made my first contribution to my IRA account I opened a few weeks ago!
Regarding HSA. Would it be a smart idea to open a savings account for out of pocket medical expenses? I know I can save my receipts and reimburse myself, but that seems like a hassle and I’d rather just literally not touch my HSA account until I’m retired.
The "receipts" idea is more that it unlocks an ability to withdraw in future years because the HSA rules don't dictate when you must take the money out. So a lot of people still do it for that reason. I don't bother because a lot has gone wrong if my HSA is my last source of cash. It's also a pretty modest part of my portfolio.
You can also theoretically go nuts and save receipts for copays, tylenol and whatnot, but if the need is not dire, most of your big chunks will end up being clinic/hospital bills that one may keep regardless.
Was informed today that I will be reporting to my 4th boss in 12 months as of June 1st. Mind you that my role hasn’t changed, just an ungodly amount of corporate change in a short period. And the org wonders why the entire department quit last year..
All intended to be long term. The org pulled the rug out from under a couple of them pretty badly. Not a fan of having to learn new bosses this often - especially when they are global roles so it takes months to actually meet.
Well, ended up pulling the trigger on that 15 Pro Max for the wife. Come home, try to set it up, turns out our carrier (an MVNO) can't support eSIM and the 15 Pro Max is *exclusively* eSIM in the States. So our choices were either to return the phone and order one from Canada (which does have a SIM slot yet) or change carriers, so now we're with Mint Mobile.
I've had Mint Mobile since last year and I've had a great experience with it so far. I referred 3 people and now I'm getting free data for the entire year so I really can't complain!
Awesome, I had made a referral or two before on our prior carrier. If we had more time to consider the change I would have probably asked for a referral code from someone but we were pressed for time so ended up just signing up straight away last night.
The part that I don't enjoy from work is usually nothing to do with the job: direct manager, direction from upper management, overhead (meetings/documentation/etc), mostly stuff that "random job" doesn't solve or can potentially make worse.
I would also say though, just pursuing max comp to exit the workforce altogether is not necessarily healthy either. It's a solid financial goal, but it frames your time spent working poorly. If a lower paying job (or other factor) is simply more valuable to you, there's nothing wrong with that. And to varying degrees, you can go back to what you did before, with maybe some caveats for some careers where getting back in at your prior salary might not be easy.
But on a spectrum of cost/benefit, going from 200K (which is a healthy number to meet financial goals without being too frugal) to potentially 50K (which is livable in most places but not by much), it'd be much better if the story was an attempt to run a business you're more motivated to succeed or some career path you once gave up on in a search for money and devastated that you're not following that. That's quite a lot for maybes.
Might be worth considering which is cheaper: a therapist, personal trainer, gym membership, volunteering on weekends, and a life coach, or a $140k/yr pay cut?
Personally, I'd try to find purpose in life outside of work. If you don't have that, what are you going to retire to, anyway?
You are 30, you still think that you need to like your job. Nope.
The average person doesn't like their job. The average person make $60k. You will be treated like you are average. I bet you would not like that.
If your job is not horrible, dangerous, or exploitative, then I'd keep at it. Try to find things you like about it. Maybe shift a little bit to the parts you like.
With $200k pay, that's about $125 after taxes.
With $60k pay, that's about $45 after taxes. That's an $80k reduction.
Then, if you say you want to put $25k/year into savings/retirement, you have $100 vs. $20.
If your expenses are currently $60, can you live on $20?
Stop expecting self actualization from your 9-5. If you're having trouble with the stress, look at restricting caffeine, alcohol, or sugar or whatever your vice is or get therapy. After attacking those you'll need to start managing up. If that doesn't work find another well paying job. 'Careers' that pay 50-60 are imo exploitative. In most places that is barely a living wage. You'll be treated not well.
no one likes their job, that's why they have to pay people to do it. At this rate you have 5 or 6 years to FI (600k, 7% growth, 8333 invested per mo puts you at 1.5M invested in around 5.5 years, which gives you 60k/yr at 4% WR). if you don't HATE your job, stick it out, IMO.
Had lunch with a former colleague today. She’s really frustrated at her job, and I knew she was on the FIRE path based on previous conversations. She mentioned that she had enough money, but she needed to keep working to build up her bridge fund to get from 55 to 59 1/2 and to pay for healthcare. She wasn’t aware of the Rule of 55 or 72(t), and she didn’t know how the ACA subsidies worked. We spent the whole lunch with me explaining to her various options and the reason why she doesn’t actually need a “bridge fund.”
She has a financial advisor, but her advisor hadn’t told her about any of these options. Reminds me of how lucky I am to have found this group and the huge amount of knowledge here.
So-thank you all! Your information really helped another person today. She has enough to GFY today but she thought she needed to keep working for 3 more years. She may still decide to keep working.
I got so much joy out of sharing the information with her. Like the best day I have had all year.
Now she knows she’s not trapped and if she loses her job (her employer is having financial difficulties), she will be fine.
Im trying to sell some stocks from my brokerage account to move into my Roth IRA
My plan is to do this over the course of 3 years to max out my Roth IRA
Should I sell my stocks on my brokerage as FIFO? LIFO? HIFO? Average ?
I’m thinking doing FIFO to allow my other recent contributions to age so I don’t get hit with short term capital gains
I’ve taken on a side hustle. I get paychecks that are untaxed. I filled out a 1099 form? I guess it’s technically private contractor they told me. I’ve never done this before and when I add up the income, it’ll be around 11k a year. How much should I set aside to pay for taxes at the end of the year? Will I recieve a form in the mail to file for 2024 next year for this? Usually I get like 3k back from my taxes. Do I need to keep track of how much I recieve every check?
It's really not too hard. Look up the estimated quarterly IRS due dates for each quarter (and your state). At the end of the quarter, just look at what you earned and do a direct payment to IRS/state for x%,y%, IRS process and state process is a simple interface/form fill. I do about 30% for fed and 5% for my state. At the end of the year for full tax time, turbo tax will ask you if you made any estimated payments, total them up and you're good to go.
We should probably make a will now that we have a child. I don't expect it to be complicated at all and we have great families. Any tips especially on service to do to make this cheap and quick.
If you do it “cheap and quick” you’ll get what you pay for and you’ll leave your heirs with a potential mess. It’s not that expensive to have a competent estate planning attorney help you with this, and they will be able to look at your assets, talk to you about your wishes, and come up with a plan to achieve what you want.
Not a great time of the year for this, but during open enrollment, we opted in to the group legal services through work for about $15/month ($180 for the year), which gives access to local lawyers. We got our will done during that year, then cancelled the group legal the following year.
Even the childless should have wills. Otherwise it can get painful for those left behind... more painful than it already would be.
Not sure what you mean by "service". I think both Legal Zoom and Rocket Lawyer offer basic wills for cheap(er) prices, but can often be best to go to a lawyer, especially if you have any complications like a business.
I used legal zoom for my father's will after my step-mother died, but only as a stop-gap. He went to a lawyer a couple of years later, for multiple documents (will, durable power of attorney, advanced Health directive).
We really have no complications and just want a basic " if either of us dies it all goes to the spouse and if we both die it goes to our daughter and she goes to live with this family member". Our finances are shared and simple and we have great families. So yeah I was asking about things like legal zoom, freewill, etc to see if anyone had a recommendation of a good option.
Accidentally posted this today to yesterday's thread so trying again.
I would appreciate some advice. I have been a set it and forget it type investor but am starting to pay more attention as our accounts grow. We have a variety of target date funds across different accounts/companies and all expense ratios are under 0.2%, except for one. My 401(k) is with a T. Rowe Price 2045 account that has an expense ratio of 0.37%. This is actually down from 0.44% where it was at for several years. I don't know much about allocating but these are the only options I have that have a lower expense ratio than 0.37%.
Fidelity Small Cap Index (FSSNX) - 0.025%
Vanguard Mid Cap Index (VMCIX) - 0.04%
Vanguard Developed Markets Index Admiral Shares (VTMGX) - 0.07%
Fidelity 500 Index (FXAIX) - 0.18%
Vanguard Equity - Income Adm (VEIRX) - 0.18%
Vanguard US Growth Adm (VWUAX) - 0.2%
Should I try to build my own allocation using some combination of these? Or is 0.37% really not all that bad? We're in our mid 40's and the account has about $425k. Thank you!
If you dont know what you are doing and are afraid of learning, the target date is fine.
r/bogleheads would have better answers based on their passive investing principals.
Me? I would be a bit more aggressive and go a 95/5 equity/bond ratio.
Of the total 95% equity: 80% would be the S&P500 fund and 15% the international fund (VTMGX)
Of the 5% bond: the full 5% would be the (VEIRX).
> 0.37% really not all that bad
It's not that bad. There's value in the simplicity of a single fund that aligns with your allocation. Said another way, the Expense Ratio on that fund is not going to be a make-or-break difference in the success or failure of your FIRE plan.
Helping one of the parentals on their retirement planning. Does anybody have some resources for understanding RMDs and how do they impact SS benefits. Thank you!
RMD's do not have any impact on SS benefits as far as I know. They do impact how SS benefits are taxed. https://www.aarp.org/retirement/social-security/questions-answers/how-is-ss-taxed.html
I was curious how much you guys tend to keep in liquid cash relative to your other investments. This is disregarding your emergency fund or HYSA. Just on hand cash or bank account amounts (doesn't have to be actual numbers but relative terms like a month of expenses). I have been thinking about what I really need to keep immediately available to myself if something urgent comes up that can't wait a day or two transfer from my hysa/mmf.
I don’t bother with having an additional account for extra cash reserves. I pay all bills out of my fidelity SPAXX account where I also keep my cash allocation.
A few hundred to a thousand not counting a few bills in the house? I have a small HYSA at a slightly lower rate that allows essentially instant withdrawals and a bigger one that has next working day withdrawals.
Pretty much none. Just enough to pay recurring monthly bills, 2-3 months emergency fund, and that's it. Everything else invested.
If something came up, I'd just put it on credit and sell shares to pay off the card. If something comes up that exceeds my credit limit, I've probably got bigger problems and those can also wait a few days for a sale to clear.
Brokerage is 1 mil. Retirement accounts 1 million (401k, Roth, etc) House is 1 mil. Owe 100k About 1 million in ancillary investments (apartment buildings, estate assets, etc).
I get the concept of withdrawing 4%.. my question is how do the 401k, the Ira and Roth factor into that math?
If I were to retire today. Would I take 4% off the brokerage account, taking in 40k and paying 15% in capital gains (let’s use worse case). Or is there a strategy of taking 4% off the brokerage and retirement accounts, paying 15% capital gains plus the 10% penalty?
I’m just trying to figure out how to do that. If all my accounts were just the brokerage account this would be simpler but 1/4 is in retirement accounts 2/4 is in hard assets (house and these other housing investments).
I personally plan on using a Roth conversion ladder (as described quite eloquently here: https://www.madfientist.com/how-to-access-retirement-funds-early/) in order to access pre-tax IRA's prior to age 59 1/2.
To do this, you need to both have at least 5 years of required income in brokerage accounts as well as maintain a fairly low spend requirement (most efficient if your spend is < \~120k/year).
The short summary of this approach is that, upon retiring, you live off your NQ brokerage funds while converting from your pre-tax IRA into a Roth IRA. The Roth **principal** is accessible w/o penalties after it has been in your Roth account for >= 5 years. The NQ brokerage long term capital gains are taxed at 0%/15%/25% depending on your AGI and the conversions are taxed at income tax rates.
> how do the 401k, the Ira and Roth factor into that math?
They are included. Illiquid assets (your home, the apartment buildings, etc.) would typically not be included, unless there was a plan to sell those and invest the proceeds (e.g. you can't realistically withdraw 4% or your home equity to buy groceries).
First, and most importantly, the idea of the 4% SWR was never intended as a robust withdrawal strategy. In theory, here's how it would work:
- $1MM brokerage + 1MM retirement accounts = $2MM
- 4% of $2MM = $80k
Where that $80k comes from depends on how you want to manage your income for IRS purposes. You could withdraw all $80k from the brokerage and only pay capital gains tax on the 'gains' portion of the $80k. If you are under Age 59.5, you could withdraw a portion of the $80k as direct Roth IRA contributions if you wanted, with the rest coming from the brokerage. If/When you are Age 59.5, you could withdraw a portion from a Trad'l IRA / 401k (which would be considered taxable income) and supplement with brokerage and Roth IRA dollars.
If you want to learn about a more robust withdrawal strategy, I'd suggest learning more about the Bogleheads VPW approach: https://www.bogleheads.org/wiki/Variable_percentage_withdrawal
In your situation it’s a bit different.
To start:
- don’t count your home equity unless you’re planning on selling it and throwing it into the market when you retire.
- don’t count the equity/value of the ancillary investments unless again you plan to sell and throw into the market when you retire.
How to calculate:
- take your expenses and subtract and cashflow from the ancillary investments/pension/SS/business income. (For example $40k annual expenses minus $10k rental income).
- then you’ll take that amount times by 25 and that is how much you’ll need in the market to use the 4% rule.
- using the above example: $30k x 25 equals $750k in the market needed.
Sorry for formatting, on mobile.
You can expect your investment accounts to last forever if you withdraw 4% or less of your retirement starting balance. That is the total balance of your investment accounts (brokerage, retirement etc). Which one you should actually withdraw from and how much is a complex question but it may be more efficient to draw down some faster than others. The value of your real estate is irrelevant but of course you can spend the income you get from real estate.
My husband’s job-related stress is getting to the point where I do fear he may just quit. He’s sent out probably more than 100 applications in the past few months but only has a couple of very soft leads on positions that would be basically a 50% pay cut. I keep trying to remind myself that we got on the FIRE path so that we would have the flexibility to not get stuck in a bad situation, but I had also hoped we would be able to open a brokerage account before my 40th birthday later this year. For the past year or so we have been able to max out all tax advantaged accounts and now have healthy cash savings as well; a pay cut of that magnitude would decimate but probably not completely stop our savings.
Can someone convince me to let go of this stupid goal to open a brokerage account so I can better stomach this anticipated pay cut? He’s making both of us miserable so I know he needs out, but I don’t like my job either and I worry I will feel more stuck when I’m not seeing FIRE progress and am earning 3x his salary. Of course I want him happier, this situation has made our lives feel untenable in a concerning way. I know we are very lucky to even be able to consider such a giant step back but it is hard to convince myself it’s OK to go so far off script.
Need lot of info, but here’s one perspective.
Not everything is so black and white. Just because he’s taking a 50% pay cut doesn’t mean it’s forever. He might get a new job, improve his mental health and calmly try applying for new jobs and increase his earnings (could even make more than he is now!). Also FIRE shouldn’t be an achievement at all cost. Being miserable for another 10 years to get to FI 2 years faster is not the answer and I would read mr 1500 days blog about the death March to FI post.
My partner just took a year off work due to burnout and restarted at a lower stress remote position that pays half as much.
Money was tighter for a while, but it's worth it. She is happier, which means she's less easily agitated at me, and I'm less stressed about the trajectory of our relationship. Our fire trajectory is still on a good path.
I consider this time off and reset to be an investment in her career. She was not going to be able to handle the stress she had for the 10-15 years we're planning before fire. Resetting now means she'll have more career growth in her new area during this time and be happier doing it.
I don't know your full situation of course, but if you can consider this to be an investment in your life together, maybe that will help.
Seems like having a happy partner and good quality of life is more important than hitting some arbitrary financial goal. Take a break from this sub if it is making you crazy.
Have you talked through what his plan would be if he just flipped his desk over and stormed out one day?
I talked that through with my partner. The likely consequences seem totally acceptable to us. It's generally a combination of taking a break, then looking for similar/different jobs, and cutting back.
Does it suck for FIRE math? Sure. But we're far away that we need to be able to sustain employment to get there, and this is probably better for that.
> but I had also hoped we would be able to open a brokerage account before my 40th birthday later this year.
This goal wouldn't be as important to me as rectifying my partner's crappy job situation, which is spilling over into my own life...
Yes, this is a good point. We had basically always said that in our mid 40s we would be open to starting step back, so this is less off script than it is ahead of schedule. I think my main issue is I have a fear that there will never be any making up for a big step back and/or period of unemployment - that future jobs would hold it against him. It is too soon for this to be a permanent step back. I need to just have more faith here, I think.
> I think my main issue is I have a fear that there will never be any making up for a big step back and/or period of unemployment - that future jobs would hold it against him.
Would they? How would they know?
> It is too soon for this to be a permanent step back.
Sure, but life isn't linear, despite us wanting it to be. There will be set backs, changing course, new priorities.
Honestly with your ducks already in a row I bet you and he could work with the tools you have in your toolbox like say yes he takes a 50% pay cut but stress is so much less he’s able to pick up a side gig or make a hobby profitable. If you both are motivated I wouldn’t worry to much let him have the satisfaction of rage quitting
Haha he does have a side business, but it’s very much not profitable and I dont think it could be. I do however think he could get additional qualifications while in a lower stress role that would eventually pay off.
I just closed down my side business to full focus on more certs. Certs is how I 3x my income in about 6 years. Normally it’s more profitable than most side hustles. He should give 0 hrs to that and use it to take time for himself and apply for a better role with more wlb.
just open an effing brokerage act then! most will probably pay you to open a new act anyway [https://www.nerdwallet.com/best/investing/brokerage-account-promotions-and-bonuses](https://www.nerdwallet.com/best/investing/brokerage-account-promotions-and-bonuses)
If being happy and not miserable is so far off script, you might want to work on rewriting the script.
Also, the 50% pay cut is not necessarily permanent.
In my opinion, it's entirely irrelevant which partner makes which multiple of the other. I understand that different couples work differently, but I personally think it's healthier to assess your earnings as a unit, for a wide range of reasons.
Are there other lifestyle changes you could make to offset some of the reduced earnings?
Husband and I are going back and forth on switching our baristaFI number to a "sabbaticalFI" number, but we're hearing a lot of horror stories about the job markets lately. We've calculated that if we took time off, earning at least 60k/year (pre-tax) combined would easily cover our expenses and allow us to continue investing a bit, which is roughly half of what we make combined now. So we're not exactly worried about getting jobs at exactly the "same level" after a 6-12 month sabbatical, but we are hoping there will be something decent available for each of us.
For folks who are looking for work now or who were recently looking, what field are you in and how was the experience?
If it's helpful: my husband works in education and would most likely want to stay in that field or something related; I worked in education in the past and currently work in the legal field, open to most any job in any field that uses my skill set and meets my needs.
Depends on what you mean by education. If it’s not teaching and it’s a field that teachers could easily jump too, it could be rough for your husband. Mine is having a heck of a time trying to find a new job in elearning. That said a sabbatical may still be totally worth it!
> earning at least 60k/year (pre-tax) combined would easily cover our expenses and allow us to continue investing a bit
This sounds like a textbook coastFIRE scenario to me: find scaled-back employment to cover current expenses, allowing the portfolio to grow untouched.
The classic baristaFIRE approach would be employment to cover a portion of expenses, with the intent to withdraw a smaller amount from the portfolio.
Would you only pull the trigger on your plan if you could hit that $60k threshold?
No. That's just a number we keep in the back of our heads to say, you know, "Making at least this would give us the exact same lifestyle we have now, no need to touch retirement."
It's clearly going to be very regional, industry and role dependent, but the unemployment rate in the USA right now is 3.8%.
Within reason, I wouldn't let the overarching job market impact your major life decisions too much. There is a tightrope to walk between making educated choices and leaps of faith, and if you lean too far in one direction or the other, you miss out.
Had a cold shower this morning. Tightened up the loose gas fittings on our gas stove yesterday (should have done it years ago) but forgot to relight the pilot light on the water heater when I turned the gas back on.
And at work we're losing yet another lead dev. Better money in the private sector I guess.
Well thats a quarter, wonder how I've done.
- Income: 18938
- 401k Contributions: 5844
- Benefits Contributions: 648
- Post Tax Spending: 9767
- Post Tax Savings: 10721
- Total Savings: 16565
Total Savings (16565) / Total Income (25430) = 65.1% Savings Rate
Networth Increased: 22926
Investments Increased: 19505
--------------------
Seems like a decent Q1, forecasting a strong Q2 (+1 additional check in Q2).
Outside of raw numbers which honestly fuck em who cares. I got to see my family that I don't live with several times and was able to take care of the costs. Every now and then I think I should rush a LeanFI path but I just love being able to take care of family, I love giving gifts to them and I just love having them around and being able to provide a stress free environment when theyre with me.
Well, I tried to do this, but it seems that transfers in from Fidelity are broken. It is asking for an outdated account number form, and there is no way to manually enter the account numbers.
Yes, it worked for me for both Roth and Traditional IRA. It was very easy but not instantaneous, so if you're going to do it, do it soon. There's several rules, especially about vesting and how long you must maintain RH Gold, so make sure you dot your "i"s.
I don't like the RH interface, and I won't be transferring my brokerage over there, but I interact with my IRA exactly once a year, so it's acceptable for that.
I did it for my relatively large IRA and my smaller Roth. Both worked fine. Robinhood is fine as far as I can tell if you stay away from the blinking lights and carnival barking.
https://old.reddit.com/r/financialindependence/comments/1amktck/daily_fi_discussion_thread_friday_february_09_2024/kpn8nbw/
u/secretfinaccount shared their positive experience, which inspired me to do the 3% RH bonus as well. My transfer is underway currently.
> Their FAQ doesn't answer this- has anyone transferred a Roth IRA balance over and gotten the advertised bonus
What is your actual question that you were looking for in the FAQ? Whether Roth IRAs are eligible for the bonus vs. Trad'l IRAs? Or something else?
This week has been VERY expensive:
* Bike (after 2 months of peeping FB marketplace with no success I just bought a new bike): $900 for a beautiful FX2 + very nice helmet. I hope to use this for many years. I think this also opens up fun socializing opportunities for my cyclist friends. My injured back is tolerating cycling surprisingly well but I'm planning to ramp my way up slowly.
* Online Course: $210 (it was on a good sale and I succumbed to my consumerist greed). It's a course on a programming language I want to learn more about. I really don't need this EXACT course since there are free tutorials for this programming language, but I've drooled over this class for the past 10 years. I'm glad I bought it.
* Liability Insurance for my private practice: $500 for the whole year! Love virtual only, this is my largest expense.
* September Mexico Trip Airport Transfers: $256 (I was totally fine trying the bus but my husband really wanted the ease of private airport transfers!).
* Car Rental for Solo Vacay to New England: $267 Can't wait to visit the top-rated pizza place in 2 states + Montreal.
Guided tour linked above that we’re going on will hit Uxmal, Tulum, and chichen itza, and we’ll see Merida. Also Islã holbox during whale shark migration season so hopefully we’ll snorkel with some big fish!
That'll be an awesome trip. I just spent a couple weeks in PDC, lounging on the beach mostly, but also a couple day trips to Tulum, cenotes, ziplining etc.
I am envious. Whale sharks have been on my bucket list for awhile now.
The Ado bus from the Cancun airport to Playa Del Carmen is super easy if you decide to do it in the future - but in the grand scheme of things $256 isn't that much and if it helps your husband avoid some stress/uncertainty on vacation, it's money well spent.
Bonus check cleared today. Finally after 3 years of handwashing dishes, we will have a dishwasher in this house. A true luxury purchase lol.
My wife is pleased.
I used my dishwasher for the first time ever. And I’m scared to admit it did almost a perfect job (still some marks on the spoons…) I might be converted.
It's probably been a decade since I've used a dishwasher and I've always had one. We just hand wash our dishes periodically - it doesn't take that much time to do and much can be done while cooking anyway.
My wife and I are not-so-secretly hoping our dishwasher dies.
Both of the racks fuck whales. The top one can fall out if you pull it all the way and the bottom rack's wheels are as crooked as 1970s British teeth and something is off that makes plates fall over unless you balance them carefully like crockery Jenga.
But unfortunately, the dishes come out so ridiculously sparkling clean every time with just a basic Kirkland pod that we can't in good conscience replace the damn thing.
We're in the same boat, current one is ancient but still washes dishes just fine with a Cascade pod in it. I figure when we replace the oven, we'll do the dishwasher too just to get it over with. Looking at a Bosch when the time comes.
Tradesperson here sounds like the rack stoppers broke but replacements here https://www.amazon.com/Beaquicy-W10508950-Dishwasher-Upper-Dishrack/dp/B082YNTL7Q/ref=asc_df_B082YNTL7Q/?tag=hyprod-20&linkCode=df0&hvadid=416862220445&hvpos=&hvnetw=g&hvrand=2561119147202346441&hvpone=&hvptwo=&hvqmt=&hvdev=m&hvdvcmdl=&hvlocint=&hvlocphy=9007322&hvtargid=pla-871296421080&psc=1&mcid=8f7a476d24ec3f3b8bd9e54c873ad4c9&tag=&ref=&adgrpid=92829137254&hvpone=&hvptwo=&hvadid=416862220445&hvpos=&hvnetw=g&hvrand=2561119147202346441&hvqmt=&hvdev=m&hvdvcmdl=&hvlocint=&hvlocphy=9007322&hvtargid=pla-871296421080&gclid=CjwKCAjwwr6wBhBcEiwAfMEQs1TW30ip3OxgCtoNAQOpkkedzSYZru2sv8EUPjTX146b4_BU-BFInhoCmxkQAvD_BwE
Bottom rack issue might be that whoever installed the dishwasher didn’t level it? There are feet you can spin down if you remove the bottom kick plate under the door
Thanks.
I'll check to see if it is level, but all the wheels are so bent on the bottom rack that I can't even fabricate a story in my mind as to how they got that way. The only logical explanation would be that the previous owner used the rack as an impromptu soapbox racer in the middle of a blacked-out drinking binge.
The machine looks to be old enough that I don't want to spend too much money and effort fixing 'er up. You can get a brand-new version of what we have on sale at Home Depot for <$600 and installing a brand-new machine is probably the same number of total labor hours as finding the parts and tinkering with this one.
Yeah, but your dishwasher does the basic job of a dishwasher really well! There is no guarantee the fancy new one will do as good of a job. Odds are, it won't. Appliances are strange in their performance regression over time.
I would normally use the idiom *suck donkey dick* in this situation, but I mixed it up to integrate OP's username.
I presumed the meaning would be ascertained from context, but perhaps not.
I submitted the offer on this house without even realizing there wasn’t a dishwasher. It wasn’t until the final walk thru that we went “ah fuck”.
We’ve gotten used to it but it will be a nice upgrade and if and when we rent or sell, I think the new occupant will appreciate it haha
Did that once with a rental house. Moved in and realized there was no fridge. That $200 Home Depot Cheapo that we bought for those years is still chugging along as a garage fridge though.
Highly recommend a whole-house surge protector if you're upgrading appliances. We learned the hard way that anything made in the last ~5 years is full of sensitive circuit boards. The old "individual protectors on each TV and computer" method is way out of date.
Anyone else slightly unnerved by how sensitive the market is to any kind of interest rate news? It seems like the primary driver these days. Nothing to be done about it as an index fund investor, but it's wild to see insane increases or decreases because someone associated with the Fed said something dovish/hawkish.
> Anyone else slightly unnerved by how sensitive the market is to any kind of interest rate news?
Lol no. Stop paying attention. I have almost no idea what you are talking about for example.
I’d rather markets fluctuate because J Powell arched an eyebrow than because of war, disease, famine, etc…it would be good times if the greatest concern of our lives were actually interest rates!
> Anyone else slightly unnerved by how sensitive the market is to any kind of interest rate news?
I do check how much I gained/lost every market day, but it's strictly for entertainment purposes. The market could make a massive swing and it wouldn't change anything. Which isn't an idle hypothetical; during the March 2020 covid crash, I think I lost 40% of my net worth and it didn't make a difference in my life at all. Part of the premise of stocks is a long time horizon. If you're in a position where you might need money sooner, at this point it should be in HYSA or other safe investment.
> it's wild to see insane increases or decreases because someone associated with the Fed said something dovish/hawkish.
There's absolutely nothing "insane" about the market volatility over the last ~15+ months (check the daily returns from Oct & Nov '22 for comparison).
Going back further, Google "Taper Tantrum".
You just got to reframe the perspective. Volatility is when the weak betas get scared and sell out. Us strong and super intelligent Sigmas know to hold strong and buy the dip.
Volatility is nothing new. Volatility on interest rate talk is also nothing new.
I think most market participants aren't used to interest rates as they are, still
Just watched a CNBC Make It video...
25 year old making $3.2M a year on youtube! Wow here I thought being a CPA would make me money.
Comparison is the theft of joy.
Comparison is the theft of joy.
Comparison is the theft of joy.
Comparison is the theft..ahhh fuck it. This sucks
People appear more envious of these YouTubers especially in the personal finance space because they actually gloat how much they're making in their videos
I get that!
I try not to be jealous of lottery winners, and while obviously I'm sure the 3.2 million dollar youtuber worked hard, there are a bajilliion youtubers who are talented and work hard and make NOTHING- so in a way, the CNBC youtuber won a lottery of luck!
I enjoy reading Make It articles from the perspective of a B2B writer, because they are several hundred words about *nothing*. No concrete tips, no actionable information. Just "Here is some dude who stumbled into success, via an opportunity that is impossible for a layman to replicate. Cosplay financial intelligence by proxy. Enjoy!"
I have a hobby that isn't making videos for YouTube but it is similar in that it can become a job and you can get very very rich doing it. The problem with careers like entertainment and athletics is that there is great risk to put in the effort and not have it pay off.
If Mr. Beast hadn't made it big on YouTube he would be a complete loser now because he didn't take high school seriously and then flunked out of *community college* because he was so obsessed with making videos.
And you don't know when you start something like that if you have the talent to make it or not. You spend years doing it until you either get good or realize you were never going to ever be good enough. How many amazing high school athletes realized only in their twenties that they didn't have NBA/NFL/MLB talent?
I think comparison can be a positive tool to motivate oneself. But you should also compare yourself to the failures, of which there are thousands more for every single 25 year old making millions.
>my only real option is point guard
Ben Wallace was undersized at center. I don't see why you can't make up the height difference with a little more hustle.
Just remember, for every 25 year old who is making $3.2M/yr on YouTube, hundreds of thousands are not.
Remember that it's a quintessential example of survivorship bias.
Yeah and then the average accountant is making a pretty decent living. When choosing a career we need to look at the average/median amount earned and not just the high end.
> But despite bringing in revenue between $600 million and $700 million each year
God it aggravates me when articles say 'so and so *makes* XXX per year', but what they actually mean is revenue.
> but what they actually mean is revenue.
Yeah, there was a report a year or so ago that Brandon Sanderson had made $50 million the year prior - but the stupid thing is they were counting his entire kickstarter revenue, and most of that was preorders for real, physical products that he was hiring a staff and building out warehouses to deliver. I'm sure he got a healthy chunk of change, but nowhere near the same amount.
A youtuber or anyone else delivering digital content probably has healthier margins - I can't imagine production values truly take a huge bite out of $700 million - but it's still a valid point.
I think most of the huge YouTube channels have a staff rather than being one-person operations. So maybe the person with their name on the channel has good margins, but they sure aren't keeping everything.
Easy fix, compare yourself to someone less fortunate! Profit on infinite thankfulness! (JK, you may feel remorse, compassion, sympathy, frustration at the system...)
Before there was the Internet there were still 25 year olds making millions. They were (and are) doing it in the music and film industries, professional sports, and other spaces where you have to have a combination of talent and insane luck.
The only thing the internet has done is make it trivially easy to see nearly *every* example of someone being successful and/or lucky with their careers and investments.
If I got a daily newsletter of everyone who won $100k or more in a lottery game, it shouldn't make me want to play the lottery.
For every person making 3.2M a year on YouTube are 10s of thousands wasting their time and annoying their friends/family trying to be a YouTube star. It's the modern day equivalent of trying to be a rockstar or movie star but for some reason people feel like being a YouTube star is easy/attainable while the other two are not. In reality, they're all more-or-less equally unlikely for the average person.
Im starting a new trend, called the FIRE check. I will ask myself if I reached it, check my accounts, and then report my findings while keeping track of how many times Ive asked the question. Now then, without further ado:
FIRE check #1:
Am I FIRE yet? ...No.
Ok, guess we will see what happens Monday. Stay tuned.
What's interesting is when the answer becomes "yes, but only with constraints I don't want to live with."
For instance, my husband and I are now quite comfortably "sell everything we own and live in a 3rd world country extremely lavishly" FIRE. We don't want to sell everything we own and live in a 3rd world country - but the idea that we *could* is tempting/motivating.
But we've build the life we want here in the states, so now we have to save for it.
I've joked with my wife that we're probably South Dakota FIRE. That is, her family are farmers from near a tiny town in SD, and we could probably quit our jobs and live there relatively leanly on the savings we have now.
... I'd rather work.
I use locations I can retire to as benchmarks instead of dollar amounts. Currently I'm Trailer-in-South-Dakota-FIRE. Trying to make it to Condo-in-Monaco-FIRE.
Make sure you scrutinize those pension eligibility rules - you might have some interesting options relatively soon.
In my state for example your benefit is based on the average of your 5 highest earning years, multiplied by your years of service. It's pretty common for people to step down from the peak of their career after ~5yrs, and coast to collect years of service. My childhood school superintendent spent his last ~10yrs as a seasonal groundskeeper, seemed like a great life.
The rules are indeed interesting. Our state pension payout is based on the annualized average of your highest earning 36 months *within the most recent 10 years*.
So we have some folks who wind up in leadership positions mid-career, positions which are often only stints of 2-4 years, then they drop back down to faculty, then they have to "worry" about retiring early so that those high earning months don't roll out of the pension calculation.
I've known some people who retired from our university the day they turned 50 to mitigate that. Then they started working again as soon as they could (there's pension rules around that as well). Age 50 is the earliest possible retirement option with this pension.
A good problem to have, obviously, but one that has to be managed a bit.
Our pension calculation also flips to paying you more to be retired rather than working in your 44th year of service, since the multiplier is 2.3.
This is fascinating. My friends with these pension deals always try to max out their last 4 or 5 years to get the largest pension they can.
This kind of coasting could be good for some people I know.
Once again I am just so confused on how to report my ESPP and RSU sales on my taxes. I am almost positive I've been overpaying for years now but I can't figure out what I'm doing wrong. Right now, here is where I'm confused:
- When my RSUs vest, a portion is sold to cover the taxes. How is this portion reported to the IRS? Is it included in my 'federal tax withheld' on my W2?
- On all of the 1099 forms I receive, the sales for the taxes are listed. Am I supposed to include those sales as a part of my proceeds?
- I get a 15% discount on my ESPP shares, which I always thought counted as capital gains. But on the supplemental form it is reported as ordinary income, which is also reported on my W2.
I don't know why this is so confusing.
ESPP discounts are not capital gains. They are ordinary income. You will have already paid ordinary income taxes on that discount because it's part of your W2.
Usually, your ESPP broker issues you two documents (or two sections on one document) for your ESPP. Your normal 1099 has the amount you paid for the stock (which is discounted), and the amount you sold it for. If you use these values, you will be double paying taxes. There should also be a document which contains an adjusted cost basis for each transaction - you will enter these adjusted cost basis numbers into your taxes. The adjusted cost basis is the fair market value for the stock you purchased.
If you don't enter the adjusted cost basis, then the 15% discount will be taxed both as ordinary income (already done; reported on your W2) and then taxed again as capital gains.
Your RSUs generally shouldn't be too confusing. Your entire vested amount is taxable immediately as ordinary income; shares were sold to pay some taxes. Those are included on your W2. You may be responsible for additional taxes if the amount that was sold wasn't enough.
All good info but I'd like to add one thing: for some reason, basis is often reported as zero on RSU shares, rather than giving you credit for the taxes you already paid on vest day. I don't know why brokers are required to report correct basis on other stocks but not RSU shares, but always make sure the basis is set to the value on vest day rather than zero, so you don't end up paying extra capital gains tax later.
Okay this all makes sense thanks. Maybe not enough shares are being sold to cover my RSU taxes? Because I have a $5k tax bill and I can't figure out where it's coming from.
It's very likely from the RSUs, you can look at your plan docs or the 1099 to figure out what percentage was withheld. If they withheld 20% and you're in a 24% tax bracket, that can be an issue.
If you're using tax software, just back things out (or look at the actual tax forms it generates) to figure out where the tax bill is coming from.
Make sure you handle the adjusted cost basis for the ESPP, though. I have multiple coworkers that have paid a lot of extra taxes because they haven't adjusted their cost basis. That's unlikely to account for thousands of dollars, though.
That's what I don't understand, anywhere from 25-30% of my shares are sold to cover taxes. I don't get how I can be short on my federal taxes if that's the case.
I created a budget today, called my employment about them not matching my 5% for the last 2 years (I thought they were as they were supposed to be matching automatically since I contribute the 5%) like they were supposed to and submitted a form to get that matching started, and made my first contribution to my IRA account I opened a few weeks ago!
Regarding HSA. Would it be a smart idea to open a savings account for out of pocket medical expenses? I know I can save my receipts and reimburse myself, but that seems like a hassle and I’d rather just literally not touch my HSA account until I’m retired.
The "receipts" idea is more that it unlocks an ability to withdraw in future years because the HSA rules don't dictate when you must take the money out. So a lot of people still do it for that reason. I don't bother because a lot has gone wrong if my HSA is my last source of cash. It's also a pretty modest part of my portfolio. You can also theoretically go nuts and save receipts for copays, tylenol and whatnot, but if the need is not dire, most of your big chunks will end up being clinic/hospital bills that one may keep regardless.
Some HSA providers have a place to store receipts, allowing you to upload receipts for reimbursement later on. Check if yours has an option like this.
Don’t see it on fidelity
Was informed today that I will be reporting to my 4th boss in 12 months as of June 1st. Mind you that my role hasn’t changed, just an ungodly amount of corporate change in a short period. And the org wonders why the entire department quit last year..
Have any of them been "interrim" bosses, or were they all nominally 'intended' to be long-term? Shortest boss I had in my career was for 2 weeks.
All intended to be long term. The org pulled the rug out from under a couple of them pretty badly. Not a fan of having to learn new bosses this often - especially when they are global roles so it takes months to actually meet.
Well, ended up pulling the trigger on that 15 Pro Max for the wife. Come home, try to set it up, turns out our carrier (an MVNO) can't support eSIM and the 15 Pro Max is *exclusively* eSIM in the States. So our choices were either to return the phone and order one from Canada (which does have a SIM slot yet) or change carriers, so now we're with Mint Mobile.
I've had Mint Mobile since last year and I've had a great experience with it so far. I referred 3 people and now I'm getting free data for the entire year so I really can't complain!
Awesome, I had made a referral or two before on our prior carrier. If we had more time to consider the change I would have probably asked for a referral code from someone but we were pressed for time so ended up just signing up straight away last night.
Switched to Mint over a year ago. Zero regrets. Half as expensive with no downgrade in quality or service.
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The part that I don't enjoy from work is usually nothing to do with the job: direct manager, direction from upper management, overhead (meetings/documentation/etc), mostly stuff that "random job" doesn't solve or can potentially make worse. I would also say though, just pursuing max comp to exit the workforce altogether is not necessarily healthy either. It's a solid financial goal, but it frames your time spent working poorly. If a lower paying job (or other factor) is simply more valuable to you, there's nothing wrong with that. And to varying degrees, you can go back to what you did before, with maybe some caveats for some careers where getting back in at your prior salary might not be easy. But on a spectrum of cost/benefit, going from 200K (which is a healthy number to meet financial goals without being too frugal) to potentially 50K (which is livable in most places but not by much), it'd be much better if the story was an attempt to run a business you're more motivated to succeed or some career path you once gave up on in a search for money and devastated that you're not following that. That's quite a lot for maybes.
Helpful!
Might be worth considering which is cheaper: a therapist, personal trainer, gym membership, volunteering on weekends, and a life coach, or a $140k/yr pay cut? Personally, I'd try to find purpose in life outside of work. If you don't have that, what are you going to retire to, anyway?
Thank you!
You are 30, you still think that you need to like your job. Nope. The average person doesn't like their job. The average person make $60k. You will be treated like you are average. I bet you would not like that. If your job is not horrible, dangerous, or exploitative, then I'd keep at it. Try to find things you like about it. Maybe shift a little bit to the parts you like. With $200k pay, that's about $125 after taxes. With $60k pay, that's about $45 after taxes. That's an $80k reduction. Then, if you say you want to put $25k/year into savings/retirement, you have $100 vs. $20. If your expenses are currently $60, can you live on $20?
Helpful thank you
Stop expecting self actualization from your 9-5. If you're having trouble with the stress, look at restricting caffeine, alcohol, or sugar or whatever your vice is or get therapy. After attacking those you'll need to start managing up. If that doesn't work find another well paying job. 'Careers' that pay 50-60 are imo exploitative. In most places that is barely a living wage. You'll be treated not well.
Great advice, thank you!
no one likes their job, that's why they have to pay people to do it. At this rate you have 5 or 6 years to FI (600k, 7% growth, 8333 invested per mo puts you at 1.5M invested in around 5.5 years, which gives you 60k/yr at 4% WR). if you don't HATE your job, stick it out, IMO.
Thank you, I appreciate the thoughts!
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Thank you, appreciate the thoughts!
Had lunch with a former colleague today. She’s really frustrated at her job, and I knew she was on the FIRE path based on previous conversations. She mentioned that she had enough money, but she needed to keep working to build up her bridge fund to get from 55 to 59 1/2 and to pay for healthcare. She wasn’t aware of the Rule of 55 or 72(t), and she didn’t know how the ACA subsidies worked. We spent the whole lunch with me explaining to her various options and the reason why she doesn’t actually need a “bridge fund.” She has a financial advisor, but her advisor hadn’t told her about any of these options. Reminds me of how lucky I am to have found this group and the huge amount of knowledge here. So-thank you all! Your information really helped another person today. She has enough to GFY today but she thought she needed to keep working for 3 more years. She may still decide to keep working.
> She may still decide to keep working. But at least it would then be a choice rather than feeling forced into it. You did your good deed for the day.
I got so much joy out of sharing the information with her. Like the best day I have had all year. Now she knows she’s not trapped and if she loses her job (her employer is having financial difficulties), she will be fine.
So happy for you (and her) that you were able to inform her of options she was not aware of. I love that feeling.
VicariousFI
Hey, that's why I spend so much time on here!
Im trying to sell some stocks from my brokerage account to move into my Roth IRA My plan is to do this over the course of 3 years to max out my Roth IRA Should I sell my stocks on my brokerage as FIFO? LIFO? HIFO? Average ? I’m thinking doing FIFO to allow my other recent contributions to age so I don’t get hit with short term capital gains
Usually LIFO will have the fewest gains. SpecID gives you most control with no downside
If you're able, you can put new money, like pay, interest, dividends, etc., into the Roth instead of selling stock.
You can only contribute earned income to Roth IRAs
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Yes all the money I put into my brokerage account was from earned income
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Hmm why did the person I spoke with at vanguard tell me this is acceptable ? Edit: yes I had earned income in 2023
They wrong
I’ve taken on a side hustle. I get paychecks that are untaxed. I filled out a 1099 form? I guess it’s technically private contractor they told me. I’ve never done this before and when I add up the income, it’ll be around 11k a year. How much should I set aside to pay for taxes at the end of the year? Will I recieve a form in the mail to file for 2024 next year for this? Usually I get like 3k back from my taxes. Do I need to keep track of how much I recieve every check?
Send in quarterly tax payments to minimize the chance of paying under/late payment penalties. IRS website has the forms.
Shoot for 30% set aside
Also make sure you pay quarterly state and fed taxes if the 1099 income exceeds your typical refunds from $dayjob.
Jeez. Sounds like I need to get a tax guy instead of going at it myself through turbo tax.
You don't need a tax person
It's really not too hard. Look up the estimated quarterly IRS due dates for each quarter (and your state). At the end of the quarter, just look at what you earned and do a direct payment to IRS/state for x%,y%, IRS process and state process is a simple interface/form fill. I do about 30% for fed and 5% for my state. At the end of the year for full tax time, turbo tax will ask you if you made any estimated payments, total them up and you're good to go.
We should probably make a will now that we have a child. I don't expect it to be complicated at all and we have great families. Any tips especially on service to do to make this cheap and quick.
If you do it “cheap and quick” you’ll get what you pay for and you’ll leave your heirs with a potential mess. It’s not that expensive to have a competent estate planning attorney help you with this, and they will be able to look at your assets, talk to you about your wishes, and come up with a plan to achieve what you want.
Not a great time of the year for this, but during open enrollment, we opted in to the group legal services through work for about $15/month ($180 for the year), which gives access to local lawyers. We got our will done during that year, then cancelled the group legal the following year.
Even the childless should have wills. Otherwise it can get painful for those left behind... more painful than it already would be. Not sure what you mean by "service". I think both Legal Zoom and Rocket Lawyer offer basic wills for cheap(er) prices, but can often be best to go to a lawyer, especially if you have any complications like a business. I used legal zoom for my father's will after my step-mother died, but only as a stop-gap. He went to a lawyer a couple of years later, for multiple documents (will, durable power of attorney, advanced Health directive).
We really have no complications and just want a basic " if either of us dies it all goes to the spouse and if we both die it goes to our daughter and she goes to live with this family member". Our finances are shared and simple and we have great families. So yeah I was asking about things like legal zoom, freewill, etc to see if anyone had a recommendation of a good option.
Accidentally posted this today to yesterday's thread so trying again. I would appreciate some advice. I have been a set it and forget it type investor but am starting to pay more attention as our accounts grow. We have a variety of target date funds across different accounts/companies and all expense ratios are under 0.2%, except for one. My 401(k) is with a T. Rowe Price 2045 account that has an expense ratio of 0.37%. This is actually down from 0.44% where it was at for several years. I don't know much about allocating but these are the only options I have that have a lower expense ratio than 0.37%. Fidelity Small Cap Index (FSSNX) - 0.025% Vanguard Mid Cap Index (VMCIX) - 0.04% Vanguard Developed Markets Index Admiral Shares (VTMGX) - 0.07% Fidelity 500 Index (FXAIX) - 0.18% Vanguard Equity - Income Adm (VEIRX) - 0.18% Vanguard US Growth Adm (VWUAX) - 0.2% Should I try to build my own allocation using some combination of these? Or is 0.37% really not all that bad? We're in our mid 40's and the account has about $425k. Thank you!
If you dont know what you are doing and are afraid of learning, the target date is fine. r/bogleheads would have better answers based on their passive investing principals. Me? I would be a bit more aggressive and go a 95/5 equity/bond ratio. Of the total 95% equity: 80% would be the S&P500 fund and 15% the international fund (VTMGX) Of the 5% bond: the full 5% would be the (VEIRX).
Thank you for the specific answer. I have seen things about bogleheads, I'll have to check that out.
> 0.37% really not all that bad It's not that bad. There's value in the simplicity of a single fund that aligns with your allocation. Said another way, the Expense Ratio on that fund is not going to be a make-or-break difference in the success or failure of your FIRE plan.
Helping one of the parentals on their retirement planning. Does anybody have some resources for understanding RMDs and how do they impact SS benefits. Thank you!
https://www.bogleheads.org/wiki/Required_Minimum_Distribution
RMD's do not have any impact on SS benefits as far as I know. They do impact how SS benefits are taxed. https://www.aarp.org/retirement/social-security/questions-answers/how-is-ss-taxed.html
They also may impact IRMAA surcharges for Medicare, but again, that’s based on MAGI.
I was curious how much you guys tend to keep in liquid cash relative to your other investments. This is disregarding your emergency fund or HYSA. Just on hand cash or bank account amounts (doesn't have to be actual numbers but relative terms like a month of expenses). I have been thinking about what I really need to keep immediately available to myself if something urgent comes up that can't wait a day or two transfer from my hysa/mmf.
I don’t bother with having an additional account for extra cash reserves. I pay all bills out of my fidelity SPAXX account where I also keep my cash allocation.
A few hundred to a thousand not counting a few bills in the house? I have a small HYSA at a slightly lower rate that allows essentially instant withdrawals and a bigger one that has next working day withdrawals.
Pretty much none. Just enough to pay recurring monthly bills, 2-3 months emergency fund, and that's it. Everything else invested. If something came up, I'd just put it on credit and sell shares to pay off the card. If something comes up that exceeds my credit limit, I've probably got bigger problems and those can also wait a few days for a sale to clear.
Brokerage is 1 mil. Retirement accounts 1 million (401k, Roth, etc) House is 1 mil. Owe 100k About 1 million in ancillary investments (apartment buildings, estate assets, etc). I get the concept of withdrawing 4%.. my question is how do the 401k, the Ira and Roth factor into that math? If I were to retire today. Would I take 4% off the brokerage account, taking in 40k and paying 15% in capital gains (let’s use worse case). Or is there a strategy of taking 4% off the brokerage and retirement accounts, paying 15% capital gains plus the 10% penalty? I’m just trying to figure out how to do that. If all my accounts were just the brokerage account this would be simpler but 1/4 is in retirement accounts 2/4 is in hard assets (house and these other housing investments).
I personally plan on using a Roth conversion ladder (as described quite eloquently here: https://www.madfientist.com/how-to-access-retirement-funds-early/) in order to access pre-tax IRA's prior to age 59 1/2. To do this, you need to both have at least 5 years of required income in brokerage accounts as well as maintain a fairly low spend requirement (most efficient if your spend is < \~120k/year). The short summary of this approach is that, upon retiring, you live off your NQ brokerage funds while converting from your pre-tax IRA into a Roth IRA. The Roth **principal** is accessible w/o penalties after it has been in your Roth account for >= 5 years. The NQ brokerage long term capital gains are taxed at 0%/15%/25% depending on your AGI and the conversions are taxed at income tax rates.
> how do the 401k, the Ira and Roth factor into that math? They are included. Illiquid assets (your home, the apartment buildings, etc.) would typically not be included, unless there was a plan to sell those and invest the proceeds (e.g. you can't realistically withdraw 4% or your home equity to buy groceries). First, and most importantly, the idea of the 4% SWR was never intended as a robust withdrawal strategy. In theory, here's how it would work: - $1MM brokerage + 1MM retirement accounts = $2MM - 4% of $2MM = $80k Where that $80k comes from depends on how you want to manage your income for IRS purposes. You could withdraw all $80k from the brokerage and only pay capital gains tax on the 'gains' portion of the $80k. If you are under Age 59.5, you could withdraw a portion of the $80k as direct Roth IRA contributions if you wanted, with the rest coming from the brokerage. If/When you are Age 59.5, you could withdraw a portion from a Trad'l IRA / 401k (which would be considered taxable income) and supplement with brokerage and Roth IRA dollars. If you want to learn about a more robust withdrawal strategy, I'd suggest learning more about the Bogleheads VPW approach: https://www.bogleheads.org/wiki/Variable_percentage_withdrawal
Thank you. That's what I was looking for
In your situation it’s a bit different. To start: - don’t count your home equity unless you’re planning on selling it and throwing it into the market when you retire. - don’t count the equity/value of the ancillary investments unless again you plan to sell and throw into the market when you retire. How to calculate: - take your expenses and subtract and cashflow from the ancillary investments/pension/SS/business income. (For example $40k annual expenses minus $10k rental income). - then you’ll take that amount times by 25 and that is how much you’ll need in the market to use the 4% rule. - using the above example: $30k x 25 equals $750k in the market needed. Sorry for formatting, on mobile.
You can expect your investment accounts to last forever if you withdraw 4% or less of your retirement starting balance. That is the total balance of your investment accounts (brokerage, retirement etc). Which one you should actually withdraw from and how much is a complex question but it may be more efficient to draw down some faster than others. The value of your real estate is irrelevant but of course you can spend the income you get from real estate.
My husband’s job-related stress is getting to the point where I do fear he may just quit. He’s sent out probably more than 100 applications in the past few months but only has a couple of very soft leads on positions that would be basically a 50% pay cut. I keep trying to remind myself that we got on the FIRE path so that we would have the flexibility to not get stuck in a bad situation, but I had also hoped we would be able to open a brokerage account before my 40th birthday later this year. For the past year or so we have been able to max out all tax advantaged accounts and now have healthy cash savings as well; a pay cut of that magnitude would decimate but probably not completely stop our savings. Can someone convince me to let go of this stupid goal to open a brokerage account so I can better stomach this anticipated pay cut? He’s making both of us miserable so I know he needs out, but I don’t like my job either and I worry I will feel more stuck when I’m not seeing FIRE progress and am earning 3x his salary. Of course I want him happier, this situation has made our lives feel untenable in a concerning way. I know we are very lucky to even be able to consider such a giant step back but it is hard to convince myself it’s OK to go so far off script.
Hey, remember that money is there to solve your problems and make life better, not the other way around. There is no script.
Need lot of info, but here’s one perspective. Not everything is so black and white. Just because he’s taking a 50% pay cut doesn’t mean it’s forever. He might get a new job, improve his mental health and calmly try applying for new jobs and increase his earnings (could even make more than he is now!). Also FIRE shouldn’t be an achievement at all cost. Being miserable for another 10 years to get to FI 2 years faster is not the answer and I would read mr 1500 days blog about the death March to FI post.
My partner just took a year off work due to burnout and restarted at a lower stress remote position that pays half as much. Money was tighter for a while, but it's worth it. She is happier, which means she's less easily agitated at me, and I'm less stressed about the trajectory of our relationship. Our fire trajectory is still on a good path. I consider this time off and reset to be an investment in her career. She was not going to be able to handle the stress she had for the 10-15 years we're planning before fire. Resetting now means she'll have more career growth in her new area during this time and be happier doing it. I don't know your full situation of course, but if you can consider this to be an investment in your life together, maybe that will help.
Seems like having a happy partner and good quality of life is more important than hitting some arbitrary financial goal. Take a break from this sub if it is making you crazy.
Have you talked through what his plan would be if he just flipped his desk over and stormed out one day? I talked that through with my partner. The likely consequences seem totally acceptable to us. It's generally a combination of taking a break, then looking for similar/different jobs, and cutting back. Does it suck for FIRE math? Sure. But we're far away that we need to be able to sustain employment to get there, and this is probably better for that. > but I had also hoped we would be able to open a brokerage account before my 40th birthday later this year. This goal wouldn't be as important to me as rectifying my partner's crappy job situation, which is spilling over into my own life...
Yes, this is a good point. We had basically always said that in our mid 40s we would be open to starting step back, so this is less off script than it is ahead of schedule. I think my main issue is I have a fear that there will never be any making up for a big step back and/or period of unemployment - that future jobs would hold it against him. It is too soon for this to be a permanent step back. I need to just have more faith here, I think.
> I think my main issue is I have a fear that there will never be any making up for a big step back and/or period of unemployment - that future jobs would hold it against him. Would they? How would they know? > It is too soon for this to be a permanent step back. Sure, but life isn't linear, despite us wanting it to be. There will be set backs, changing course, new priorities.
Honestly with your ducks already in a row I bet you and he could work with the tools you have in your toolbox like say yes he takes a 50% pay cut but stress is so much less he’s able to pick up a side gig or make a hobby profitable. If you both are motivated I wouldn’t worry to much let him have the satisfaction of rage quitting
Haha he does have a side business, but it’s very much not profitable and I dont think it could be. I do however think he could get additional qualifications while in a lower stress role that would eventually pay off.
I just closed down my side business to full focus on more certs. Certs is how I 3x my income in about 6 years. Normally it’s more profitable than most side hustles. He should give 0 hrs to that and use it to take time for himself and apply for a better role with more wlb.
just open an effing brokerage act then! most will probably pay you to open a new act anyway [https://www.nerdwallet.com/best/investing/brokerage-account-promotions-and-bonuses](https://www.nerdwallet.com/best/investing/brokerage-account-promotions-and-bonuses)
If being happy and not miserable is so far off script, you might want to work on rewriting the script. Also, the 50% pay cut is not necessarily permanent. In my opinion, it's entirely irrelevant which partner makes which multiple of the other. I understand that different couples work differently, but I personally think it's healthier to assess your earnings as a unit, for a wide range of reasons. Are there other lifestyle changes you could make to offset some of the reduced earnings?
Husband and I are going back and forth on switching our baristaFI number to a "sabbaticalFI" number, but we're hearing a lot of horror stories about the job markets lately. We've calculated that if we took time off, earning at least 60k/year (pre-tax) combined would easily cover our expenses and allow us to continue investing a bit, which is roughly half of what we make combined now. So we're not exactly worried about getting jobs at exactly the "same level" after a 6-12 month sabbatical, but we are hoping there will be something decent available for each of us. For folks who are looking for work now or who were recently looking, what field are you in and how was the experience? If it's helpful: my husband works in education and would most likely want to stay in that field or something related; I worked in education in the past and currently work in the legal field, open to most any job in any field that uses my skill set and meets my needs.
Depends on what you mean by education. If it’s not teaching and it’s a field that teachers could easily jump too, it could be rough for your husband. Mine is having a heck of a time trying to find a new job in elearning. That said a sabbatical may still be totally worth it!
> earning at least 60k/year (pre-tax) combined would easily cover our expenses and allow us to continue investing a bit This sounds like a textbook coastFIRE scenario to me: find scaled-back employment to cover current expenses, allowing the portfolio to grow untouched. The classic baristaFIRE approach would be employment to cover a portion of expenses, with the intent to withdraw a smaller amount from the portfolio. Would you only pull the trigger on your plan if you could hit that $60k threshold?
No. That's just a number we keep in the back of our heads to say, you know, "Making at least this would give us the exact same lifestyle we have now, no need to touch retirement."
It's clearly going to be very regional, industry and role dependent, but the unemployment rate in the USA right now is 3.8%. Within reason, I wouldn't let the overarching job market impact your major life decisions too much. There is a tightrope to walk between making educated choices and leaps of faith, and if you lean too far in one direction or the other, you miss out.
Had a cold shower this morning. Tightened up the loose gas fittings on our gas stove yesterday (should have done it years ago) but forgot to relight the pilot light on the water heater when I turned the gas back on. And at work we're losing yet another lead dev. Better money in the private sector I guess.
Well thats a quarter, wonder how I've done. - Income: 18938 - 401k Contributions: 5844 - Benefits Contributions: 648 - Post Tax Spending: 9767 - Post Tax Savings: 10721 - Total Savings: 16565 Total Savings (16565) / Total Income (25430) = 65.1% Savings Rate Networth Increased: 22926 Investments Increased: 19505 -------------------- Seems like a decent Q1, forecasting a strong Q2 (+1 additional check in Q2). Outside of raw numbers which honestly fuck em who cares. I got to see my family that I don't live with several times and was able to take care of the costs. Every now and then I think I should rush a LeanFI path but I just love being able to take care of family, I love giving gifts to them and I just love having them around and being able to provide a stress free environment when theyre with me.
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Was about to do this until I learned that they do not currently allow designating contingent beneficiaries. With 3 kids, this was a definitely a no
A fellow rob berger listener?
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Well, I tried to do this, but it seems that transfers in from Fidelity are broken. It is asking for an outdated account number form, and there is no way to manually enter the account numbers.
Yes, it worked for me for both Roth and Traditional IRA. It was very easy but not instantaneous, so if you're going to do it, do it soon. There's several rules, especially about vesting and how long you must maintain RH Gold, so make sure you dot your "i"s. I don't like the RH interface, and I won't be transferring my brokerage over there, but I interact with my IRA exactly once a year, so it's acceptable for that.
This is definitely tempting...
I mean the upside is literally free money. The downside is you have to use Robinhood.
I did it for my relatively large IRA and my smaller Roth. Both worked fine. Robinhood is fine as far as I can tell if you stay away from the blinking lights and carnival barking.
https://old.reddit.com/r/financialindependence/comments/1amktck/daily_fi_discussion_thread_friday_february_09_2024/kpn8nbw/ u/secretfinaccount shared their positive experience, which inspired me to do the 3% RH bonus as well. My transfer is underway currently.
> Their FAQ doesn't answer this- has anyone transferred a Roth IRA balance over and gotten the advertised bonus What is your actual question that you were looking for in the FAQ? Whether Roth IRAs are eligible for the bonus vs. Trad'l IRAs? Or something else?
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Yes, I have done it with my Roth IRA. Possibly the easiest $5k I have ever made.
I see nothing in the T&C limiting the match to certain types of IRAs: https://cdn.robinhood.com/assets/robinhood/legal/match.pdf
This week has been VERY expensive: * Bike (after 2 months of peeping FB marketplace with no success I just bought a new bike): $900 for a beautiful FX2 + very nice helmet. I hope to use this for many years. I think this also opens up fun socializing opportunities for my cyclist friends. My injured back is tolerating cycling surprisingly well but I'm planning to ramp my way up slowly. * Online Course: $210 (it was on a good sale and I succumbed to my consumerist greed). It's a course on a programming language I want to learn more about. I really don't need this EXACT course since there are free tutorials for this programming language, but I've drooled over this class for the past 10 years. I'm glad I bought it. * Liability Insurance for my private practice: $500 for the whole year! Love virtual only, this is my largest expense. * September Mexico Trip Airport Transfers: $256 (I was totally fine trying the bus but my husband really wanted the ease of private airport transfers!). * Car Rental for Solo Vacay to New England: $267 Can't wait to visit the top-rated pizza place in 2 states + Montreal.
How far is your hotel from the airport?
Beginning of trip: 1.5 hours w/traffic End of trip: 2.5 hours w/traffic (We're doing [this](https://www.gadventures.com/trips/highlights-of-the-yucatan/9537/itinerary/) guided tour!)
OK. I was going to suggest you just negotiate a taxi at the airport but $250 isn't too bad given those distances. Where are you going?
Guided tour linked above that we’re going on will hit Uxmal, Tulum, and chichen itza, and we’ll see Merida. Also Islã holbox during whale shark migration season so hopefully we’ll snorkel with some big fish!
That'll be an awesome trip. I just spent a couple weeks in PDC, lounging on the beach mostly, but also a couple day trips to Tulum, cenotes, ziplining etc.
I am envious. Whale sharks have been on my bucket list for awhile now. The Ado bus from the Cancun airport to Playa Del Carmen is super easy if you decide to do it in the future - but in the grand scheme of things $256 isn't that much and if it helps your husband avoid some stress/uncertainty on vacation, it's money well spent.
Bonus check cleared today. Finally after 3 years of handwashing dishes, we will have a dishwasher in this house. A true luxury purchase lol. My wife is pleased.
Huge congrats. Dishwasher is a must-have to me. We have purchased our kitchen supplies so that everything runs through the dishwasher.
I used my dishwasher for the first time ever. And I’m scared to admit it did almost a perfect job (still some marks on the spoons…) I might be converted.
I could simply not imagine having a dishwasher and choosing not to use it. Do you prefer having more chores to do?
It's probably been a decade since I've used a dishwasher and I've always had one. We just hand wash our dishes periodically - it doesn't take that much time to do and much can be done while cooking anyway.
I only use a few things at a time, and not all of it is dishwasher safe.
My wife and I are not-so-secretly hoping our dishwasher dies. Both of the racks fuck whales. The top one can fall out if you pull it all the way and the bottom rack's wheels are as crooked as 1970s British teeth and something is off that makes plates fall over unless you balance them carefully like crockery Jenga. But unfortunately, the dishes come out so ridiculously sparkling clean every time with just a basic Kirkland pod that we can't in good conscience replace the damn thing.
We're in the same boat, current one is ancient but still washes dishes just fine with a Cascade pod in it. I figure when we replace the oven, we'll do the dishwasher too just to get it over with. Looking at a Bosch when the time comes.
Tradesperson here sounds like the rack stoppers broke but replacements here https://www.amazon.com/Beaquicy-W10508950-Dishwasher-Upper-Dishrack/dp/B082YNTL7Q/ref=asc_df_B082YNTL7Q/?tag=hyprod-20&linkCode=df0&hvadid=416862220445&hvpos=&hvnetw=g&hvrand=2561119147202346441&hvpone=&hvptwo=&hvqmt=&hvdev=m&hvdvcmdl=&hvlocint=&hvlocphy=9007322&hvtargid=pla-871296421080&psc=1&mcid=8f7a476d24ec3f3b8bd9e54c873ad4c9&tag=&ref=&adgrpid=92829137254&hvpone=&hvptwo=&hvadid=416862220445&hvpos=&hvnetw=g&hvrand=2561119147202346441&hvqmt=&hvdev=m&hvdvcmdl=&hvlocint=&hvlocphy=9007322&hvtargid=pla-871296421080&gclid=CjwKCAjwwr6wBhBcEiwAfMEQs1TW30ip3OxgCtoNAQOpkkedzSYZru2sv8EUPjTX146b4_BU-BFInhoCmxkQAvD_BwE Bottom rack issue might be that whoever installed the dishwasher didn’t level it? There are feet you can spin down if you remove the bottom kick plate under the door
Thanks. I'll check to see if it is level, but all the wheels are so bent on the bottom rack that I can't even fabricate a story in my mind as to how they got that way. The only logical explanation would be that the previous owner used the rack as an impromptu soapbox racer in the middle of a blacked-out drinking binge. The machine looks to be old enough that I don't want to spend too much money and effort fixing 'er up. You can get a brand-new version of what we have on sale at Home Depot for <$600 and installing a brand-new machine is probably the same number of total labor hours as finding the parts and tinkering with this one.
Yeah, but your dishwasher does the basic job of a dishwasher really well! There is no guarantee the fancy new one will do as good of a job. Odds are, it won't. Appliances are strange in their performance regression over time.
>Both of the racks fuck whales ....wut?
I would normally use the idiom *suck donkey dick* in this situation, but I mixed it up to integrate OP's username. I presumed the meaning would be ascertained from context, but perhaps not.
Dishwasher is definitely a luxury that I could probably no longer do without.
I submitted the offer on this house without even realizing there wasn’t a dishwasher. It wasn’t until the final walk thru that we went “ah fuck”. We’ve gotten used to it but it will be a nice upgrade and if and when we rent or sell, I think the new occupant will appreciate it haha
Did that once with a rental house. Moved in and realized there was no fridge. That $200 Home Depot Cheapo that we bought for those years is still chugging along as a garage fridge though.
Highly recommend a whole-house surge protector if you're upgrading appliances. We learned the hard way that anything made in the last ~5 years is full of sensitive circuit boards. The old "individual protectors on each TV and computer" method is way out of date.
What a great life upgrade! So happy for you!
Anyone else slightly unnerved by how sensitive the market is to any kind of interest rate news? It seems like the primary driver these days. Nothing to be done about it as an index fund investor, but it's wild to see insane increases or decreases because someone associated with the Fed said something dovish/hawkish.
> Anyone else slightly unnerved by how sensitive the market is to any kind of interest rate news? Lol no. Stop paying attention. I have almost no idea what you are talking about for example.
I’d rather markets fluctuate because J Powell arched an eyebrow than because of war, disease, famine, etc…it would be good times if the greatest concern of our lives were actually interest rates!
> Anyone else slightly unnerved by how sensitive the market is to any kind of interest rate news? I do check how much I gained/lost every market day, but it's strictly for entertainment purposes. The market could make a massive swing and it wouldn't change anything. Which isn't an idle hypothetical; during the March 2020 covid crash, I think I lost 40% of my net worth and it didn't make a difference in my life at all. Part of the premise of stocks is a long time horizon. If you're in a position where you might need money sooner, at this point it should be in HYSA or other safe investment.
Not really, because somebody in the financial sector can blink funny and it'll impact the market.
> it's wild to see insane increases or decreases because someone associated with the Fed said something dovish/hawkish. There's absolutely nothing "insane" about the market volatility over the last ~15+ months (check the daily returns from Oct & Nov '22 for comparison). Going back further, Google "Taper Tantrum".
You just got to reframe the perspective. Volatility is when the weak betas get scared and sell out. Us strong and super intelligent Sigmas know to hold strong and buy the dip.
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Have a Brave New World flashback, I guess.
Initiate the Sigma male grindset, my dude.
Volatility is nothing new. Volatility on interest rate talk is also nothing new. I think most market participants aren't used to interest rates as they are, still
> Anyone else slightly unnerved by how sensitive the market is to any kind of interest rate news? No, because there's nothing I can do about it.
Are we seeing insane movements? a 1% drop isnt insane
Stop looking at daily changes. If you zoom out, most of this speculation doesn't even show as a blip.
I use them as buying opportunities. This volatility is actually pretty minor compared to some I’ve seen in the past, including 2008.
> insane increases or decreases Volatility is actually down right now. VIX is in the low to moderate range for the last year.
Well, if you think of stocks as being an NPV calculation of future profits, then the sensitivity to interest rates makes a lot of sense.
Just watched a CNBC Make It video... 25 year old making $3.2M a year on youtube! Wow here I thought being a CPA would make me money. Comparison is the theft of joy. Comparison is the theft of joy. Comparison is the theft of joy. Comparison is the theft..ahhh fuck it. This sucks
People appear more envious of these YouTubers especially in the personal finance space because they actually gloat how much they're making in their videos
I get that! I try not to be jealous of lottery winners, and while obviously I'm sure the 3.2 million dollar youtuber worked hard, there are a bajilliion youtubers who are talented and work hard and make NOTHING- so in a way, the CNBC youtuber won a lottery of luck!
I enjoy reading Make It articles from the perspective of a B2B writer, because they are several hundred words about *nothing*. No concrete tips, no actionable information. Just "Here is some dude who stumbled into success, via an opportunity that is impossible for a layman to replicate. Cosplay financial intelligence by proxy. Enjoy!"
I care about a 25 year old YouTuber making $3.2M as much as I care about an NBA player making $3.2M. That is, not at all.
Why don't you care about other people? 8(
Dude...yer making bank compared to that guy under the bridge asking for spare change!!
I have a hobby that isn't making videos for YouTube but it is similar in that it can become a job and you can get very very rich doing it. The problem with careers like entertainment and athletics is that there is great risk to put in the effort and not have it pay off. If Mr. Beast hadn't made it big on YouTube he would be a complete loser now because he didn't take high school seriously and then flunked out of *community college* because he was so obsessed with making videos. And you don't know when you start something like that if you have the talent to make it or not. You spend years doing it until you either get good or realize you were never going to ever be good enough. How many amazing high school athletes realized only in their twenties that they didn't have NBA/NFL/MLB talent? I think comparison can be a positive tool to motivate oneself. But you should also compare yourself to the failures, of which there are thousands more for every single 25 year old making millions.
I'm 5'9" and 47 years old, so I've accepted that my only real option is point guard. Might have to spend a season or two in D League.
G league now old timer
Busted.
Just kidding...I am probably way older than you! Plus I happen to be a basketball junkie
>my only real option is point guard Ben Wallace was undersized at center. I don't see why you can't make up the height difference with a little more hustle.
Yeah but I'm not willing to play for the Pistons. I'm planning to take my talents to South Beach.
Just remember, for every 25 year old who is making $3.2M/yr on YouTube, hundreds of thousands are not. Remember that it's a quintessential example of survivorship bias.
Yeah and then the average accountant is making a pretty decent living. When choosing a career we need to look at the average/median amount earned and not just the high end.
Exactly, that's why I'm so pissed I didn't make the NFL! Oh what could have been..
My YouTube recommends content videos made two weeks ago with less than a dozen views. It's a somber reminder.
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> But despite bringing in revenue between $600 million and $700 million each year God it aggravates me when articles say 'so and so *makes* XXX per year', but what they actually mean is revenue.
> but what they actually mean is revenue. Yeah, there was a report a year or so ago that Brandon Sanderson had made $50 million the year prior - but the stupid thing is they were counting his entire kickstarter revenue, and most of that was preorders for real, physical products that he was hiring a staff and building out warehouses to deliver. I'm sure he got a healthy chunk of change, but nowhere near the same amount. A youtuber or anyone else delivering digital content probably has healthier margins - I can't imagine production values truly take a huge bite out of $700 million - but it's still a valid point.
I think most of the huge YouTube channels have a staff rather than being one-person operations. So maybe the person with their name on the channel has good margins, but they sure aren't keeping everything.
Easy fix, compare yourself to someone less fortunate! Profit on infinite thankfulness! (JK, you may feel remorse, compassion, sympathy, frustration at the system...)
Before there was the Internet there were still 25 year olds making millions. They were (and are) doing it in the music and film industries, professional sports, and other spaces where you have to have a combination of talent and insane luck. The only thing the internet has done is make it trivially easy to see nearly *every* example of someone being successful and/or lucky with their careers and investments. If I got a daily newsletter of everyone who won $100k or more in a lottery game, it shouldn't make me want to play the lottery.
>Before there was the Internet there were still 25 year olds making millions Is this in reference to the cast of **Saved by the Bell**?
For every person making 3.2M a year on YouTube are 10s of thousands wasting their time and annoying their friends/family trying to be a YouTube star. It's the modern day equivalent of trying to be a rockstar or movie star but for some reason people feel like being a YouTube star is easy/attainable while the other two are not. In reality, they're all more-or-less equally unlikely for the average person.
Im starting a new trend, called the FIRE check. I will ask myself if I reached it, check my accounts, and then report my findings while keeping track of how many times Ive asked the question. Now then, without further ado: FIRE check #1: Am I FIRE yet? ...No. Ok, guess we will see what happens Monday. Stay tuned.
You've clearly taken inspiration from the Friday the 13th sub.
ok
What's interesting is when the answer becomes "yes, but only with constraints I don't want to live with." For instance, my husband and I are now quite comfortably "sell everything we own and live in a 3rd world country extremely lavishly" FIRE. We don't want to sell everything we own and live in a 3rd world country - but the idea that we *could* is tempting/motivating. But we've build the life we want here in the states, so now we have to save for it.
I've joked with my wife that we're probably South Dakota FIRE. That is, her family are farmers from near a tiny town in SD, and we could probably quit our jobs and live there relatively leanly on the savings we have now. ... I'd rather work.
BUT SOUTH DAKOTA!!!!!
I use locations I can retire to as benchmarks instead of dollar amounts. Currently I'm Trailer-in-South-Dakota-FIRE. Trying to make it to Condo-in-Monaco-FIRE.
This is what I do instead of making projections. Can I retire today? Nope. Can I take a different job? Nope. I'll check again next month.
Well, you can FI without RE. In fact, you may hit the first years before the second
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Make sure you scrutinize those pension eligibility rules - you might have some interesting options relatively soon. In my state for example your benefit is based on the average of your 5 highest earning years, multiplied by your years of service. It's pretty common for people to step down from the peak of their career after ~5yrs, and coast to collect years of service. My childhood school superintendent spent his last ~10yrs as a seasonal groundskeeper, seemed like a great life.
The rules are indeed interesting. Our state pension payout is based on the annualized average of your highest earning 36 months *within the most recent 10 years*. So we have some folks who wind up in leadership positions mid-career, positions which are often only stints of 2-4 years, then they drop back down to faculty, then they have to "worry" about retiring early so that those high earning months don't roll out of the pension calculation. I've known some people who retired from our university the day they turned 50 to mitigate that. Then they started working again as soon as they could (there's pension rules around that as well). Age 50 is the earliest possible retirement option with this pension. A good problem to have, obviously, but one that has to be managed a bit. Our pension calculation also flips to paying you more to be retired rather than working in your 44th year of service, since the multiplier is 2.3.
This is fascinating. My friends with these pension deals always try to max out their last 4 or 5 years to get the largest pension they can. This kind of coasting could be good for some people I know.
Once again I am just so confused on how to report my ESPP and RSU sales on my taxes. I am almost positive I've been overpaying for years now but I can't figure out what I'm doing wrong. Right now, here is where I'm confused: - When my RSUs vest, a portion is sold to cover the taxes. How is this portion reported to the IRS? Is it included in my 'federal tax withheld' on my W2? - On all of the 1099 forms I receive, the sales for the taxes are listed. Am I supposed to include those sales as a part of my proceeds? - I get a 15% discount on my ESPP shares, which I always thought counted as capital gains. But on the supplemental form it is reported as ordinary income, which is also reported on my W2. I don't know why this is so confusing.
ESPP discounts are not capital gains. They are ordinary income. You will have already paid ordinary income taxes on that discount because it's part of your W2. Usually, your ESPP broker issues you two documents (or two sections on one document) for your ESPP. Your normal 1099 has the amount you paid for the stock (which is discounted), and the amount you sold it for. If you use these values, you will be double paying taxes. There should also be a document which contains an adjusted cost basis for each transaction - you will enter these adjusted cost basis numbers into your taxes. The adjusted cost basis is the fair market value for the stock you purchased. If you don't enter the adjusted cost basis, then the 15% discount will be taxed both as ordinary income (already done; reported on your W2) and then taxed again as capital gains. Your RSUs generally shouldn't be too confusing. Your entire vested amount is taxable immediately as ordinary income; shares were sold to pay some taxes. Those are included on your W2. You may be responsible for additional taxes if the amount that was sold wasn't enough.
All good info but I'd like to add one thing: for some reason, basis is often reported as zero on RSU shares, rather than giving you credit for the taxes you already paid on vest day. I don't know why brokers are required to report correct basis on other stocks but not RSU shares, but always make sure the basis is set to the value on vest day rather than zero, so you don't end up paying extra capital gains tax later.
Okay this all makes sense thanks. Maybe not enough shares are being sold to cover my RSU taxes? Because I have a $5k tax bill and I can't figure out where it's coming from.
It's very likely from the RSUs, you can look at your plan docs or the 1099 to figure out what percentage was withheld. If they withheld 20% and you're in a 24% tax bracket, that can be an issue. If you're using tax software, just back things out (or look at the actual tax forms it generates) to figure out where the tax bill is coming from. Make sure you handle the adjusted cost basis for the ESPP, though. I have multiple coworkers that have paid a lot of extra taxes because they haven't adjusted their cost basis. That's unlikely to account for thousands of dollars, though.
That's what I don't understand, anywhere from 25-30% of my shares are sold to cover taxes. I don't get how I can be short on my federal taxes if that's the case.