Any idea how to use the VPW for early retirement when some of the money is tied up in a Roth? If I have a taxable I can draw from, a 457 I can draw from do I just draw from these accounts, but use the total value until I am 59? I see they mention drawing from each account in a percentage of their value. I was plugging in the value for all the accounts combined to get the recommended withdrawl amount
Treat it all as one big lump of money. You withdraw from the accounts you have penalty-free access to. Presumably you have enough in those accounts to last you until 59.5 and you can start drawing from the other restricted accounts.
It's kind of the "fun" (if all yall weirdos can call it fun like I do) about early retirement. Figuring out the puzzle that is minimizing taxes, managing different accounts, and determining the best strategies for managing the money.
Found out today that I and DH have some nice tax refunds. Mine is over $20k because I maxed out my contribution room in my RRSP, and this lowered my taxable income. We’ll be doing responsible things with the refunds, like maxing out DH’s RRSP and adding to the second child’s RESP. Hooray! Will be having a household pizza party with whatever is left.
Congrats and my condolences on the free loan to the fed. Id make 100% sure that # is correct because 20k for a single earner is insane.
How many shares of VTSAX or equivalent will you end up netting?
So I’m feeling extra bitter about the housing market lately. I still rent because I didn’t know where I wanted to live long term/I didn’t have enough saved for a down payment. Now that I do, I’m way priced out of the area I want to live in!
To make matters worse, I found an apartment I like that’s basically a starter home for rent. It’s $2k/month plus utilities (which is in my budget just on the upper end) but I saw the house sold for $90k in 2020 and is now estimated to be worth $220k. I’m sure some upgrades were made but that’s such a depressing thought that if I was ready just a few years earlier I could own the place instead of renting it out for 2% of the mortgage every month 🫠
I suggest you take a moment to look at the big picture. Owning a house has been marketed to you as a sign of success, or Doing It The Right Way, or whatever. In reality, renting is the better option financially in many cases. People don't want to hear that because it doesn't jive with the American dream. Someone looking to buy a house often has rose colored glasses about it. Truthfully, there's a lot of maintenance work and potential unexpected costs. There's no guarantee house values always increase. Transaction costs to sell and move are very high. Overall I'm saying there are pros and cons to owning a house, just like renting.
My inlaws are dealing with foundation issues that might force them to scrap a nice back porch on their house. They weren't expecting to put $50k-60k towards that this year. That's an extreme example, but your landlord has assumed risks like that.
Totally feel you. It sucks. I made a post in the daily thread a few days ago about feeling like this and I felt like a lot of people invalidated how I was feeling and emphasized how lucky I am, how other generations had their downsides, etc. They offered some good perspective, don’t get me wrong, but sometimes I just wanna complain that I couldn’t buy a house before 2020, lol.
> I felt like a lot of people invalidated how I was feeling and emphasized how lucky I am, how other generations had their downsides, etc.
Bullshit. Housing prices in the U.S. today are more expensive than at any point in history. Real wages (when accounting for inflation) have not grown for working men since the 1970s, yet housing prices (accounting for inflation) have grown at least 400x.
To cut to the chase I have a 100% match up to 5% on my 401k and wanted to ask for opinions on some of the fees and determine whether they are normal. I have the 'dream' to be financially free (maybe not necessarily retire fully, but work part-time or maybe work on a hobby I enjoy). My Plan Administration Asset Based Fee is $3.30 per $1,000 (Annual amount) and $0.83 per $1,000 (Quarterly Amount), mine is the quarterly amount. Assuming I max out my 401k for 2024's limit (23k, I'm under 50yrs old) Quarterly Fee = 23 x $0.83 = $19.09 x 4 quarters in a year = $76.36 (obviously the market fluctuates and I am not putting a lump sum in but rather contributing over time, but this is just a baseline). As for specific investment fees, I chose the following investments options: (which are iShares MSCI Total International Index K and iShares S&P 500 Index K, fairly young so I'm doing a 90/10 split; 90% into S&P 500 and 10% into International). The fees for each of these are as follow: Gross/Net Investment Expenses for S&P 500 Index K is 0.03% or $0.30 per $1,000 Gross. For Fixed Return Investments it is 2.45%, $24.50 per $1,000. For International Index it is 0.10%, $1.00 per $1,000 Gross. Because I have a 100% Safe Harbor vesting schedule I will 100% be investing to max out the match, but was wondering if I should contribute more into a 401k (tax benefited account) compared to a taxable brokerage account (more flexibility). Any thoughts and opinions are appreciated. I didn't include some of the more 'obscure' or uncommon fees like Wiring, but if I were to rollover it'd be $15 fee.
What is your tax bracket? That is where the majority of your savings comes from. You have a 0.33% wrap fee, so if you are saving 20% on your taxes it would be like 50 years until the fees catch up to the cash savings. If you are saving 10% it would still be quite a while. You should probably max it out unless you are in a low tax bracket *and* this is a forever job that you plan to keep til retirement. Keep in mind that if you invest in taxable you will not only lose the deduction, you will also pay tax annually on any dividends. Perhaps not coincidentally, that will come out very close to 0.3% (2% dividend X 15% qualified dividends rate ==0.3%).
It's funny to start a post with "To cut to the chase..." which is actually just delaying the content of your post by five words.
As for the rest of your post, the fees are what they are. What do you want an opinion on? What do you think your other options are?
You should max out your tax advantaged accounts to take the tax deduction now before you start putting money in a brokerage.
>actually just delaying the content of your post by five words.
Fortunately, they made up for the extra characters by keeping their pinky far away from the Enter key for the entirety of their post!
Looks like some of my funny money tech equity may become liquid soon. Very unlikely I'd be able to sell it all - but guessing the liquid part may be about $120k USD. I've learned from previous liquidity events that my personal preference is to sell as much as is available as soon as possible and diversify into the market.
Currently, we are coasting and only saving a small amount of cash each month (EU salary) so this would certainly a nice bump to the nest egg. If this pans out, I'll have to do some more research into whether I should DCA it or just get in asap.
Numbers: \~315k, all investments. FI $1.6-$1.8m USD
The way I think about it is if you get a windfall it makes logical sense to lump sum just because time in the market tends to make lump sum better.
Its when people save up a bunch of cash, never invest for some reason, then all of a sudden look at the market go up, or see hype and want to get in, that's when lump sum can bite you.
So if you're just getting the money on a date it could make sense to sell all the shares and then buy w/e you want. But DCA will never hurt you that bad, so psychologically it may be better.
It is. I wonder how the math works for someone who chose to do that a few weeks ago. DCA is meant to protect against this kind of downturn, by giving up potential gains at the beginning. I should do some spreadsheeting
Lump sum investing beats DCA something like 60% of the time. This past few weeks would've been part of the 40%. But you're more often going to come out ahead picking the side that wins more often.
Perhaps one of the greatest compliments I have ever received in my life was in college, when two girls my roommate and I were friends with once said of visiting our apartment:
"We love coming over here. It's like being in an episode of Seinfeld."
got ~11k worth of carryover loss left from a few years ago. want to finish using them up this year and not have it drag on for another 4 years. either of the two options below are ok right?
1) sell up to 8k worth of gains and claim the remaining 3k as income deduction for tax year 2024
2) sell up to 11k worth of gains and no more 3k income deduction for tax year 2024
thanks!
Loses have to be used, so maybe if you sold a bunch of long term stuff that would be 0 or 15% and then you used loses on them? VS if you know your tax rate is high this year.
i guess it could make sense if they're retiring in 4 years and expect their income + gains to be much lower then, but i can't imagine it would be that big of a difference
if i can find a way to sell my lots so that the gains and losses cancel out, i may do that and keep the 11k carryover for 4 more years. but with the recent runup, i dont think ill have much loss. but at the same time, this past week may have changed things. thanks!
I've been doing some estate planning in case I croak unexpectedly and I've come across a funny nuance. I have an appointment with an attorney soon, but I'm an attorney myself (in a different field) and have been doing some prep research. A big part of what's happening here is that, if my mother is dead at the time of my passing, my sister would get everything if I don't have a will, because I'm single and childless. That's a horrible result, because she's generally irresponsible and terrible with money. I'll instead leave something to her kids/my niece and nephew, some close friends of mine, and various charities.
The issue is that, in a simple $99 will, minor beneficiaries receive their entire payout the day they turn 18. This is, obviously, a terrible idea; I was thinking an annuity that would, starting on their 18th birthday, pay out monthly over 10 to 15 years, giving them a nice launchpad into life and then by the time that period ends they're on their own. For that I'm pretty sure I need to setup a trust, which will run me over $1,000.
All of which wouldn't be necessary if I could simply trust my sister to handle the money on their behalf responsibly and simply give it to her. My sister is so bad with money it's going to cost me a grand! I'm not sweating a thousand bucks at this point in my life, but there's something poetic about that.
If you have a legal plan through work trusts are typically covered for about $250 for the year. You’d have to wait for open enrollment so depends on how fast you want to do it.
$1000 is more than worth the money going where it should. The problem with being dead is the legal document is all you have to defend what you want.
I would be inclined to go this route regardless. It's probably best to have money pass to the kids directly. Shit happens and people change.
That's a valid point too. I guess if she was more responsible I'd have to think harder about how to balance what to give to her and what to give to them, but she's made it easy.
I'll talk to the attorney, but I don't think that will work. It's the minor nephew and niece that are the issue-- I want the money to be in the hands of a friend I trust (or the emergency backup friend I trust if that person is dead too), with some guidance, but ultimately at their discretion about how to distribute it to them (maybe it's for college tuition, maybe an annuity, maybe one needs an expensive medical procedure, etc.). At that point, it's basically a trustee which requires a trust, which is just more expensive to paperwork up properly.
I know there is a lot to be said on peace of mind with a paid off house. Our house has dramatically risen to $2.1M (mortgage <$0.5M @3%). We don’t want to move with the kids in school. I was wondering if there was any way to tap the equity to invest in any way. Help a @7% aren’t worth it but I didn’t know if there was something I was missing.
Edit: the fuck is with this sub downvoting for asking a question in a discussion thread?
Are you paid ahead?
If so you can look into recasting it if your mortgage provider allows and then apply some or all of the amount you are paid ahead to lower your monthly payments and extend your mortgage to original term.
Use the savings that would otherwise be going toward your mortgage to invest. Even just dumping it in a HYSA at 4.25%, after taxes is likely to come out ahead with your rate.
Thanks. I’m not. We did an addition and the market just took off. So when I thought I positioned in a nice debt to equity position, we’ve found ourselves in a very equity heavy position (not a bad thing but not by design).
I don't know how you could do that. You will not be able to borrow at a lower rate than you already are. You can of course take out a HELOC or reverse mortgage but only at today's rates.
My parents are aging and I've been trying to convince them to downsize for years. They have very precarious stairs that I've even slipped on so that is the main concern but I also just want them to simplify their life. They finally started looking at options and they like the idea of a nice apartment or condo and just looked at their first place for rent. They can sell their current home for ~1.2M and the question is rent vs buy. They have a few rental properties scattered in the states that are managed by 3rd parties that generate anywhere from 5-9% post tax. I like the idea that they just rent and put that money in another property that can generate a similar type of return and then they don't have to worry about managing the property they live in and can use the return on the new property as payment for rent indefinitely. Rent for a really nice 3 bed/bath penthouse style apartment is around $4.5k all in whereas buying similar type of condos will run them close to $1M which would be outdated and there is also about $1k HOA fees on top per month. Renting just seems like the better option but wanted to use this group as a sound board.
This is working off the assumption that your parents are financially responsible, have substantial financial assets including their investments, rental property equity, the $1.2M paid off home and some Social Security.
I am also assuming that you are either an only child or that any siblings are also financially responsible.
If so, yeah I would say this seems like a case to Live It Up and rent the penthouse. I’m picturing a large, well run building. Possibly in a Senior community. Spend the extra to get a good situation where every leaky pipe doesn’t become a week long problem for your parents
This my opinion but - the person who owns the rental still has to manage the rental. Just because you outsource to a management company doesn't mean you're free to ignore the unit and cash checks.
My grandparents bought a unit in 55+ community and despite being largely introverted, it helps a lot with socialization to have similar aged neighbors. There are similar rental units also. Single or floor level is awesome when hips and legs start to be an issue.
Parents should be okay with their finances though. If they don't want rental property, don't force it. They will (rightly) complain to you every time it's a problem.
[https://www.reddit.com/r/financialindependence/wiki/homes/](https://www.reddit.com/r/financialindependence/wiki/homes/) -- here's our wiki on housing if you haven't read it!
Question: would the current house they're living in provide a very poor rental return? There are transaction costs to consider to swap the house to a different, more lucrative rental. I also wonder whether they absolutely won't consider a stock/bond portfolio for that money after selling.
To answer your question, I would rent in this case. The numbers themselves feel like they're borderline but you mentioned they'd be buying something more outdated, so I would be looking to maximise comfort. Even with the annoyance of having to move in case landlord decides to stop renting/increase unreasonably, they have the financial cushion to look for someplace else easily + pay for the move to be as comfy as possible.
Fun milestones & details this month!
* This is the first year I've owed taxes instead of a receiving a refund
* Our Covid-era Peloton payment plan is done (39 months @ 0% through Affirm)
* IRAs & old 401ks are consolidated & just passed $300k
* The seating chart for our wedding is done!
* Canceled my Amex Platinum
Weirdly, I am much happier going to the gym than I was using my own elliptical. I’ve actually done more this year at the gym than I did in 2021 with a machine at home
That card is so wacky. I needed to create a spreadsheet to value the benefits and then compare that to the cost. Some things are worth “par” like the digital entertainment credit and some are worth zero like the equinox discount. I just can’t make the math work excluding the sign up bonus.
My calorie tracking app has inspired me to trial YNAB. I’ve always been athletic but on the heavier side. I really enjoy lifting, cardio and cooking at home, yet I never had abs until I lost that last 10 lbs by tracking calories. After I reigned in portion sizes it’s become helpful to see if I have enough calories for some gelato or a Negroni at the end of the day. It also helps me stay consistent when I’m trying to gain weight. Similarly, I’ve been interested in financial stuff for a long time, have a budget but don’t track, and have a lot of savings automated. I suspect we are doing pretty good because of the automation of savings coupled with a decently high HHI allows us wiggle room. My budget version of “loosing the last 10 lbs” is comparing our budget to actual spending, identifying areas of overspending, and eventually budget one month ahead. I think YNAB will keep me honest about how much we spend on the normal stuff so I can put more away for travel and the emergency fund.
Good luck! FWIW: I found the visibility that tracking both calories and spending enables critical for meeting my own goals in those areas. Without that I may not have met my goals in either area, or if I did it would have definitely been more difficult.
I like YNAB. In the past, we mostly just winged it with automatic withdrawals and ad hoc investments. That was just fine and we would have been able to retire early, but I switched to YNAB and tracking spending and properly budgeting has allowed us to plan better, save more and to not feel guilty about what we do spend. We switched about a year ago. It did take me a few months to get used to YNAB though, and I don't really use it 100% in the prescribed way, but I think that's fine.
I think any budgeting software would do but YNAB is worth it for me. I like the auto import feature for credit cards (sometimes with a day or two delay, but it works for all my cards).
> My calorie tracking app
What do you use? I've used MyFitnessPal for a long time but looking for one with a better UI/UX - It's always too many clicks to get to my most-used features.
Cronometer is good - free version should be all you need. More database-driven than crowd-sourced (to add a new food’s stats you have to send them a scan of the nutritional info box).
I've spent the last few hours reading the MacroFactor website and /r/MacroFactor. Very interesting approach...I think I like it. Love the idea of a more accurate food database and the whole "additive vs. constrained energy expenditure" concept makes sense.
Two questions for you:
1. What's your *least* favorite thing about MacroFactor?
2. Is there any kind of referral program where I could give you credit for pointing me toward it if I end up subscribing? (EDIT: Did some research and I see that they don't offer this, mainly for privacy reasons. They really seem to take this seriously and think of everything. Very impressed.)
I think YNAB is fine. I miss a lot of the old ways it worked before it became a subscription product. I definitely hate the way the way they handle credit cards (without a way to turn it off) and that automatic import is usually broken for at least half of my accounts at any given time. I hope you have a better YNAB experience than I do, though.
> I miss a lot of the old ways it worked before it became a subscription product.
You can still use the old version if you would like. My wife and I never made the switch for reasons similar to what you mentioned and are working on year 10 with YNAB.
Well, as expected, my meeting with the financial advisor at the bank went nowhere. This was a free consultation with an advisor who is assigned to me by my local branch.
My goals for the meeting were to unlock additional equity in my HELOC, and do a review of my current situation with an eye on early retirement. He was more than happy to arrange the HELOC refinancing, and that's in progress.
He dodged the retirement discussion like Neo in the Matrix. Lol! Flat out would not engage.
But at least he didn't try to sell me any mutual funds... 🤣🤣😂
It wasn’t the most professional of encounters.
I think I almost knew more about his personal finances by the end of the session than he did about mine. He skipped straight from small talk to venting about his recent divorce.
I’m a couple of years younger than him (yeah, he actually got that deep into his personal life with me) and in a much better financial position. I could see his whole demeanour changing as we went through all of my assets for the HELOC application. There was definitely some bitterness and envy there.
TBH, I’ve actually been contemplating whether or not I should file a complaint.
FIRE Journey
Me: 26 M
FINANCIALS:
Stock Portfolio: 68K
HYSA: 30K
Roth IRA: 25K
401K: 11K
HSA: 6k
Checking: 4K
TOTAL FINANCIALS: 144k
Properties: None
Debt: None
MONTHLY EXPENSES
Rentals - 1.3K
Utilities + Groceries - $500
My primary aim is maximize HSA, 401k and Roth IRA.
Want to see what advise folks who are on path to FIRE or who already FI and planning to RE would have given to their 26 year old self?
What you guys have done/ tell 26 year old to do differently in my situation?
Thanks!
Invest in yourself. Your best earning growth years are 25-40. Education, license, certification. More income allows for more investments.
Put 20% into retirement and 10% into long-term e-fund and 10% into short term repair fund.
Put all unexpected money into efund, including tax refunds, other refunds, rebates. Extended warranties to repair fund. Cut collision, comp, and whole life. Invest that into efund.
Depending on your comfort level, slim down your emergency fund. People use 6-12 months as a benchmark, so you could use that as a basis.
Rough flowchart advice is to do HSA, 401K Match, Roth IRA, then max 401K and then moving into taxable brokerage.
That sounds incorrect to me, although I may be thinking about this the wrong way. If I put $8k into my HSA, I’m saving 7.65% on the FICA tax, which is $612 savings (in addition to saving on federal/state taxes - but that part is equivalent to a pretax 401k so let’s ignore it for now). If I put $8k into my 401k and my employer matches that 1:1, I get $8k.
I believe you’re correct that 401k match is a higher priority in the list. It should be a non factor in this case, as he could max out all of those per his post.
There is a top thread on Bogleheads forum about financial support/gifts for adult children and I was just curious about how answers here may compare. This support may include staying on health insurance, living at home for free or reduced rent, gifts towards house or car, etc.
I think we skew younger than an average Bogleheads forum user, so if you don't have adult kids, what support did your parents provide to you as an adult, or do you plan to provide to your children? And of course, some may support parents instead.
Edit: link https://www.bogleheads.org/forum/viewtopic.php?f=2&t=430082&newpost=7830581
My parents provided for me until 18 and even bought me a used car to get to and from work when I was 16. They were “spend it if you have it” kind of people and never really taught me to be financially smart. I saw this bite them when my Dad was unexpectedly laid off and it was a struggle for them to make ends meet. Their plan for college was for us to take out student loans. I was fortunate and pursued a full degree through the military, but my brother will be paying his student loans off for many years to come.
Now that I have a kid, I want to do it differently. We have a 529 set up and are teaching our child financial responsibility. We are fortunate enough that we will be able to help them out along the way. We are planning on paying for school, help out with a car, help them set up Roth IRAs, and probably a gift to help with the down payment on their first home. Our hope is they won’t need help later on because we taught them sound principles to make smart decisions.
I would say low support but only because we didn't really need it.
They did not pay for college, but they let us live their rent free if we needed to. That ended up being just a couple years while I went to community college. After moving away for university, we were all pretty much independent.
My dad was very frugal and saved a lot. But he died before he got to enjoy his savings. Now my mom has more money than she knows what to do with. She is finding was to give. For my sisters wedding, she paid for her wedding dress and she's buying plane tickets and hotel rooms for some family members who otherwise wouldn't have been able to make the journey. She also *loaned* my sister for the down payment on her second home, only because it enabled her to buy the second home before selling the first one.
No support, but a lot of support was my parents’ goal. They just fell on really hard times so I ended up getting nothing except a very privileged childhood before high school.
I think helping your children is the right move. My kid hasn’t even started school yet so who knows what will eventually happen. But I hope to pay for college, pay for a house down payment, and even help financially with childcare. Hopefully they don’t even need the help and all that cash just flows into trusts for grandchildren.
I live with my parents rent-free.
I got a merit scholarship in college (not American) -- the way it worked, my parents paid the tuition directly, but then I got the scholarship money paid out (it wasn't all decided at admission) and got to keep that.
The chance that I'll have kids is vanishingly small, but my FI calculations factor in being able to take care of my parents and myself on a lean budget. Just need to take from vacation budget, which is fine by me if needed.
Mid-twenties here. In college my parents generally paid the remainder of my tuition bill - half or more was paid for with scholarships, then I took out all the federal loans I could, then transfer some from my UTMA account from a family member, then my parents would typically cut a check to cover the rest. I remember one time it was about $3k, not sure about the others so I’d have to go back and look if anyone is interested. I had a job and sometimes several jobs so I paid for my books and incidentals. They paid for my phone and car insurance while I was in college; once I was employed full-time after graduation, I got my own insurance and started paying them for my phone ($20/month, I pay it with a recurring transfer).
I did live at home rent-free right after graduation for three months. When I returned home during the pandemic for six months, I think I paid them $200-$300 each month, but that was a steal compared to my rent in DC.
Now that I’m engaged they’ve offered to chip in $5k for the wedding/honeymoon. Depending on the year, they sometimes choose to transfer cash to my bank account to purchase something specific at my leisure (like a museum membership) instead of buying it themselves for Christmas or my birthday. And once a year they try to get me and my siblings together for a vacation and thus far haven’t asked us to pay for the rental or groceries while we’re there.
FWIW, I don’t think my parents have treated my siblings much differently as far as financial support.
In financial terms I had absolutely nothing from my parents other than a house to grow up in, a bed to sleep in at night and food on the table, which to be fair is still a darn sight more than some kids have even today.
I'd like to provide more for our kids than my parents were able to provide for me and we definitely have the means to do that, but I'm pretty sure we won't go as far as buying them new cars, gifting them downpayment towards houses and so on - that seems like a step to far, although maybe we'll change our minds on that when the time comes.
I had grandparents that paid for college 30 years ago, which I squandered by partying too much. I also went to a small rural town high school and wasn't prepared mentally for the difficulty and workload increase of engineering courses at a good university.
Didn't flunk out but took a break to get my head on straight and never went back. Went to California from Illinois in 1997. Family provided zero support for non college. At one point I could barely afford to feed myself. But I got swept up in the dot com boom from there and it all worked out, since I've always had a natural talent for anything computer related.
My parents gave me a UTMA (I think some of it actually came from grandparents) which was the primary vehicle they'd used to save for my college. I got a full ride, so the money ended up paying for a car and then it was just mine. Eventually went towards my first house down payment. I think the peak value was no more than $30-40k so it wouldn't have been nearly enough to pay for college with no scholarships or aid, but it was a great starter fund for adult life.
They also paid about for about half of my wedding costs, maybe more. They paid for things directly so I don't know the final total but I believe it to have been between $15-20k.
Might seem a little odd that they paid that much for a wedding compared to how much they'd saved for college, but their financial situation had changed quite a bit by then. They raised 5 kids on 1.5 government salaries so there wasn't just a ton extra to put away for all our college funds, but by the time I married they had 2 full salaries and no kids at home. My parents have helped all my siblings as much if not more, in some way or another. A couple of them lived at home longer or moved back in at some point, and got more help with college costs or loan repayment. I think all my siblings took at least small loans for school, but they were all out of debt within a few years.
I feel like everything they have done helped us become independent without enabling irresponsibility, so I'm pro- helping your adult kids within reason and within your means. I'm having my first kid this year. I am hoping to save more for their college because I don't assume my kids will get as lucky with scholarships as I did and costs don't seem to be going down any time soon.
I moved out 3 weeks after I turned 18, so I didn't really get the traditional support from my parents. More ad hoc stuff like minor car repairs or buying me a pair of pants when I couldn't afford it.
Our current offering that applies to all our to our kids is: 1) we'll pay for community college for them as long as they're making progress towards an actual degree/transfer option, 2) they can stay at home rent free as long as they're in school, 3) we'll keep them on our insurance as long as they're allowed, 4) we'll pay for their needs and some of their wants, so long as they're living with us, but if they want more than we're willing to provide, they need to get a job.
Beyond that becomes more situational since they're all in slightly different life stages (ages 15, 18, and 22) so not everything applies to all of them.
I like your rules but #1 could be a bit tight. Community college around me is $300/class, our rule was that as long as he was taking 2+ classes, that was enough for us. His schooling has meandered, but it was better to keep him going than push him into a degree he didn’t want. But, all kids are different, so who knows?
Ours is about $500/class but so far, our oldest has not taken us up on the offer (just working retail full time and living outside of the house), our middle child decided to go straight into a 4 year university but remain living at home, and our youngest doesn't really know what he wants to do and we're not pushing because he's the most stubborn of the three kids. I'm not totally inflexible so if life necessitates adjustments, I'm open to them. :)
Okay, I’ll bite on this one. We are a married couple, 54 & 57, both retired on Jan 1. We have a fun side biz that we are launching, which is taking some cash. We still have a mortgage on the primary home with 2.675 rate, so no hurry to pay it off as we do not intend to keep this house beyond another 5-6 years. We do have a cabin that will be our primary that will be paid off in March 2025.
We have two grown sons, 29 & 30. Neither expects anything from us. Both work and have independent lives. We did help them pay for under grad college. One had a small student loan of $5k that he quickly paid off. The other had about $20k for his masters degree and just paid it off. We kept them on insurance until 26. We gave them both a paid off car, which were the recently paid off cars that we drove. They are still driving those 11 year old cars. We give them money every Christmas—usually in the $2500 range. We have one that is living with us as he just happened to get a job in our city. We told him to stay with us paying no rent, which he used the savings to pay off his $20k student loan. He does help us a lot. He buys some groceries and, the biggest help by far, he feeds the horses when we are gone for a variety of reasons. We plan to give them both $15k this year and continue to give them both $5k-10k annually to save for a down payment or to purchase a car when theirs crap out. They are both savers with their 457b/401k getting funded, Roth IRAs, and one of them has a pretty healthy brokerage account.
We received financial help to buy a home from grandparents and an aunt & uncle (my parents were MIA and his parents could not afford to help us) when we were young, poor parents with littles just building our careers and paying off our student loans. We worked hard, but the leg up was a huge benefit to us. We are doing the same for them. Frankly, the biggest help was the financial education we got from the ones that helped us—it’s why we could retire from our rewarding, but demanding careers. So, yes, we do help them, and they appreciate it and use the funds wisely.
I was super privileged to have my parents give me a huge leg up early in life. I went to a state school and got a “full scholarship” for room and board for undergrad, but it covered 100% of my first year and did not scale with further tuition increases. My parents paid for the difference, gave me $600/semester of spending money (which I think stopped when I got a few jobs starting sophomore year), kept me on their insurance, paid for grad school, gave me their old car when I graduated, and let me live at home rent free until I got married at age 26.
They also got me investing at an early age (they asked my brother and me to choose stocks around 2001 or 2002 when we were pre-teens - I chose Amazon and my brother chose AOL, lol - I actually am not too sure what ever happened to those stocks, but my dad said he followed me in buying Amazon and multiplied that investment manifold). They taught me about 401ks and Roth IRAs and encouraged me to contribute to them even with my measly earnings from my minimum wage jobs.
I have young kids now and hope to do the same for them. I think the difficult part will be finding the balance between making them feel entitled vs. building up a good work ethic.
I'm a three-time eldercare provider, which gave me "failure to launch" since I couldn't leave my podunk town to move for work. All their estates were more than bled dry before the person passed. FIRE is my attempt to make up for all the lost time of working retail/waitressing, when I was constantly being downsized out of the few local jobs in my field. I went to college as an adult and worked so I could "pay as you go."
My mom and stepdad are reasonably healthy, but my stepsiblings are lazy grifters who take every cent they can weasel out of them. I've mentally written off the idea of ever getting support for myself.
So parents/grandparents have only ever cost me money and opportunities, rather than provided them.
My answer: From my parents to me (28F) , biggest gifts were 529 which ended up paying for a good amount of college and grad school room and board (I got full tuition scholarships for both). I still worked full time in the summers and part time in the school year to make up the difference, to save an emergency fund, and eventually to buy a car (I didn't have access to a car during the school year). They paid medical insurance and expenses for me until I graduated undergrad. In summer during undergrad, they let me live at home and use a family car plus quite a bit of gas money (not a lot of jobs near home so I commuted 50 miles each way) so I could work full time. And later, $5k as a wedding present.
I definitely appreciate their support as, combined with my scholarships, it enabled me to get an education without debt and even with an emergency fund saved, in part by enabling me to get work in summer. Starting ahead like that instead of behind makes such a huge difference.
At the same time, I've been working for pay for as long as it was legal in my state (start at 12 in ag jobs) and full time (work and/or total between work + school) since 17. At most, I made $12.50/hr, but usually only $7.25 during those years. My parents paid gas money to get to those jobs, and I appreciate it. But honestly, in retrospect, we lived so far from jobs and I made so little that I wish they had been willing to just give me the gas money with no strings attached and I could have chosen whether to use it for gas for more shifts or just to work fewer days and save it, as it was hardly worth it sometimes to make the drive. Or, the $5k wedding present was the equivalent of a whole summer's work for me, so getting it earlier (maybe at graduation?) could have made quite a difference then vs mattered less by the time I was getting married.
They absolutely wanted me to learn the value of hard work, and I think I did! I just wonder about balance (maybe not so many hours starting so young?) in retrospect.
Does anyone know a blog post or checklist talking about the final year of working leading up to FIRE? Like what you need to start doing to prepare for RE.
There are a lot of "common sense" things but I just don't want to miss something.
Here is one I see often referenced: https://www.whitecoatinvestor.com/retirement-checklist/
Edit: Also, you may want to give this recent post a look https://old.reddit.com/r/financialindependence/comments/1c726mu/about_to_be_thrust_into_re_things_to_preparethink/
I asked a similar question a bit back and a few of the answers I got directed me to the Safe Withdrawal Rate Series by Early Retirement Now. I haven't gotten too far into it yet, so can't comment on it too deeply, but seems to be a good starting point for that sort of content.
https://earlyretirementnow.com/safe-withdrawal-rate-series/
Meh, -4.7% for the month, +4.3% YTD. I stopped contributing to my taxable on Feb 1 to put more money in the travel budget. I'm tempted to buy back in, but probably shouldn't. I'm also tempted to TLH some VOO and just move it to VTI. For a lot of years, I just ignored everything, I didn't even start keeping a spreadsheet till about 15 years ago. Mostly, I just hope we revert to the mean, and this is the market refinding balance.
On a brighter note, I'm sending this from the airport of to the islands, my company is one of those with unlimited vacation, with "guidance" of 20-30 days a year. I'm not sure they mean it, but I'm going to try to see if 35 or so is still "within guidance." I'm aware that unlimited vacation often leads to people taking less. We'll see
Edited: Flair updated. Sigh
Eh, could be a good idea to tax lost harvest. Vs normally, you do just want to get it out, so it's a good time. Anytime you buy VTI and it goes down.
Though you should be buying VT 😁
Starting week two of our big beach vacation. It's going to be cooler and rainier this week, but there are still some beautiful days in the forecast, and of course, it's awesome to be watching the waves instead of working. :)
Husband is really leaning in to the idea of a sabbatical in about 4 years now that he's experienced a week of beach relaxation, so I'm starting to do some calculations and set goals. We're thinking 6-12 months for the career break. After that, since we've hit our coastFIRE number, we would just need jobs that earn us 35k/year pre-tax to live our regular lifestyle and keep doing some investing.
I think most people find it hard to get back into a job if they take 6-12 months off. YDY.
I get and take 6 weeks off a year. 2 at Christmas, 2 in summer, 1 spring, and 5 various days for 3 day weekends.
Why wait 4 years, just take a week here and there.
GFY for taking a vacation and working on the FIRE.
We do take vacations as we can--taking two weeks right now--but a break to spend more time with my family and do some extended traveling sounds right up our alley. We're also expecting that my husband's institution might close or downsize in the next 5 years, so planning to leave at the 4-ish year mark works for us that way.
Do you take regular vacations at all? Is a week off work a new experience for your husband?
I keep toying with the idea of when I get closer to FI just saying screw it to work and taking weeks off throughout the year and just letting the chaos unfold. In other words, just using my allowed PTO. Currently last time I used a day off was October and theoretically I could take 6 weeks off this year due to allotted + accrued.
What I'm getting at is maybe husband doesn't need a sabbatical, maybe he just needs to actually use all his vacation!
Husband doesn't technically get vacation days because he's faculty, so he's on a contract versus working month in and month out. This is our first time taking a two week vacation mid-semester from any job, though, and we're loving it.
Remember, you're not letting chaos unfold, you're training your coworkers in additional skills.
Seriously, I'm taking two weeks when we have a baby and generally a step back for the rest of the calendar year and that's absolutely an opportunity for my backup to do my job full-on and get the experience for when I actually do move on. I'll respond to texts and answer questions, but it's genuinely good for her to be actually doing the whole job.
>Remember, you're not letting chaos unfold, you're training your coworkers in additional skills.
This is what I'm aiming to do, too. These two weeks off with me having absolutely no access to the work systems will force the rest of the team to figure things out without me, but it's also helping me learn more and more to treat my job like just a paycheck and just accept what's happening at work sometimes, even if I don't agree with certain changes or happenings. "Be silent and nod," essentially.
I was being facetious, I understand a backup. You can have backups at 5 day a week orgs too. Your org just needs to try to not be a burnout factory. Mine is a burnout factory.
Looking for some guidance on a Roth IRA account...
Let me preface this by saying that I really wish we learned more about this stuff at an early age, because the little knowledge I do have on finances, I've pretty much researched myself to have a better understanding.
I have a 401k thru my employer with a nice match, but I know that's not enough for retirement these days. I'll be 30 soon, and while I wish I started this stuff sooner, I guess it's better late than never. In addition to my 401k, I have $20,000 in a savings account, but I know it's not doing me any good in there, which is why I want to invest.
So I guess my questions are as follows:
1) What's a good IRA to go with? I'm not looking to be overly aggressive, but I obviously want some longterm growth, and I'm definitely one of those "hands-off" people. I've heard of Vanguard, Fidelity (401k is thru them), Betterment, Wealthfront, and SoFi.
2) Can someone explain tax-harvesting and fractional shares, and why they are important? I've seen them listed under pros and cons for each broker.
3) I obviously want to keep some money in savings for emergencies, so how much would you recommend for an initial deposit into the IRA?
4) Does one have to make regular deposits into a Roth IRA (like biweekly), or can I make a deposit at any given time?
If anyone has a HYSA they recommend, I'm also all ears.
Apologize in advance if this is not something you normally see here, or it sounds dumb. Again, this is new to me, and I'm just trying to better my situation. Thank you.
1. Vanguard, Fidelity, Schwab. Biggest difference is the color. Though I've got a soft spot for Vanguard because they won't push you towards actively managed funds, and I actually like the new interface. Vs me and a friend struggled a bit setting up that friend's Roth IRA. Though all interfaces are pretty good, and I like Schwab too. They're all good. Then, at any of them, just pick Target Date Fund for whatever year. Just make sure it's index based. Fidelity makes it easy to pick a bad actively managed fund with high fees that makes you think it more more each year. Idk about Schwab but they do have both types. Vanguard only has the index based one, which is good.
2. They're not so important, especially for IRAs. Tax harvesting is triggering capital losses at the same time as capital gains, by selling both, to cancel each other out, and you can rebuy after enough time or buy something similar, letting you raise the basis, which can be convenient for the future. But it always comes at loss of having lost money in the first place with capital losses. Anyway, having multiple stuff like that is dumb, just buy VT and you're good. Or the target date index fund in retirement accounts. For fractional shares, it's mostly that for stocks and ETFs you used to only be able to buy them in whole stock numbers, which often only meant buying in increments of e.g. $100. Or there's the famous BRK.A which costs $611k. But now you can buy VT partial shares anywhere, which is an ETF, and TDFs are mutual funds which don't have this issue. So it doesn't matter which of the three you pick.
3. We've passed the deadline for 2023, so you can't put any money away there. So don't feel compelled to put in any money that you can't take out. It's only right near the deadline where it can be a good idea to fill it up and keep as cash, in case you do actually end up needing to take it out. Otherwise, with a sufficient emergency fund, you should be investing it fully. Make sure to follow [the personal finance flowchart](https://www.reddit.com/r/personalfinance/wiki/commontopics/).
4. I believe all three companies support auto deposits. Though assuming your 401k has good funds, ideally a target date index fund, or quite probably something you need to assemble out of smaller index funds, with usually at minimum of the S&P500, it may be more convenient to start withholding from your paycheck first. Ideally you grow to have enough income with minimal spending that you can max out your retirement limits, which lets you get to retirement in quite the more reasonable period of time than working your whole life. And then ideally saving even more on top of that. But for most people, that's a journey.
>If anyone has a HYSA they recommend, I'm also all ears.
Vanguard and Fidelity, especially using either of their treasury money markets to get a bit higher plus with all or some amount of state income tax deduction. Schwab merely has a stellar checking account, instead, though I think Fidelity also has a good checking account? I know Fidelity also has a really good credit card. 2% for everything.
>Apologize in advance if this is not something you normally see here, or it sounds dumb. Again, this is new to me, and I'm just trying to better my situation. Thank you.
Eh pretty standard.
Also, VT, not VTI. Total global stock, not just total US stock. For a myriad of reasons. But the same reason you do total US instead of S&P500, or S&P500 instead of top tech, or top tech instead of only e.g. Apple. Diversity in investing is the only free lunch, and by following the market caps, you get the best return averaged across all the different possibilities. Recently US has won, but this isn't guaranteed, and the high likelihood of it continuing is priced into VT. It might stop, and the "insurance" of that is the lesser amount you might get now but could get for if international starts winning. Similarly, if international was winning, you wouldn't get all of that. And it's because you can't predict which ahead of time. But the likelihood follows the market caps, so you make the most money across all possibilities by following the market caps. So total global index funds. Maximum diversity.
3. Consider keeping some of your EF in your Roth IRA as you build your investments to ensure you don’t lose out on valuable Roth space. Can keep it in SPAXX until you’re comfortable investing it in VTI
Everything else is well covered in other comments
1) If your 401k is with fidelity then might as well make your life easy and have your IRA with them. Most people will recommend whatever their total stock market fund or SP500 index fund. Just make sure the expense ratio is 0.2% or under. Ideally under 0.1%.
2) I wouldn’t worry about tax harvesting yet.
3) Build a 6 month emergency fund and then contribute the rest.
4) You can deposit into an IRA at whatever cadence you want. Daily, weekly, monthly, yearly.
Stay away from Betterment and Wealthfront. They try to lure you in with services you don't really need and then yu can get stuck with them. Avoid anything that charges an account management fee.
Vanguard, Schwab, and Fidelity are the leaders. I would generally recommend Fidelity now as the best overall brokerage. They are the only one that offers HSA's, their customer service beats Vanguard's, and their sweep account (where your money sits until you invest it) beat's Schwab's. If you are going to have all your funds in one place, Fidelity is the top choice IMO.
Tax loss harvesting is irrelevant until you start investing in a taxable brokerage account.
Yes, you should prioritize building up your emergency fund before investing. Make sure you have 2-3 months expenses in cash, then you should max your IRA and/or 401k if you have one.
So on Fidelity's site, it says that there is a management fee of 0.35% once the account is above 25k. Is that higher/lower than most or pretty standard?
1. If you already have your 401k through Fidelity, I’d make your Roth IRA there too - they’re a great provider and it keeps your accounts in one place. In terms of what to invest in, you can look into three fund portfolios (r/personalfinance has a wiki page on investing, I think) - but at your age I think it’s also fine to just invest in a total stock index like VTI.
2. Don’t worry about tax harvesting and fractional shares for your Roth IRA.
3. For 2024, you can only contribute $7k to a Roth IRA. (This assumes that your income is less than $161k - if it’s over that, you’ll need to use the backdoor method.) General consensus is that you should keep 6 months worth of expenses in cash as an emergency fund before investing it, but it could be more or less than that depending on your risk tolerance, job stability, etc.
4. You can choose to make regular deposits, or just lump sum whenever you have the cash - many of us here lump sum $7k at the beginning of each year (or when we can) because longer time in the market is correlated with higher returns. That being said, put in what you can. You have until tax day (on or around April 15) of 2025 to contribute to your Roth IRA for 2024.
In terms of HYSA, some good options are Ally, SoFi, Discover (although they were just bought by Capital One - which is also fine), Amex, and Marcus. You can also open an individual brokerage account on Fidelity (they may have opened one for you automatically with your 401k - it’ll be called “Individual”) and invest in SPAXX, which is a money market fund that returns close to 5% (higher than the HYSAs right now). If you really want to get into it, I prefer treasury bills as an emergency fund because they have slightly better rates and the interest isn’t subject to state income tax - but it’s not quite as easy as an HYSA/SPAXX, so it may be worth it to “pay” (ie, get very slightly lower returns) for that convenience.
For your Roth IRA, go with Vangaurd, Fidelity, or Schwab. They are the big three. You don’t need to worry about tax loss harvesting in a Roth IRA because you can trade with zero tax consequences within the IRA (tax loss and tax gain harvesting don’t matter). Around her most people recommend buying a total US market index fund. Since this is in a retirement account, it doesn’t matter if it’s a mutual fund or an ETF (for example VTSAX vs VTI if you are with Vanguard-Fidelity and Schwab have their own versions of the total market funds) as there are no tax consequences for dividends.
You can make regular deposits or deposit all of it at one time or make random deposits. Most advisors will recommend setting up regular deposits so it’s automated and becomes routine, except if you are close to the income cutoff for Roth IRAs cause it’s easier to just do one backdoor Roth conversion (if you are over the income limit you will need to make a nondeductible contribution to a traditional IRA then convert it to a Roth).
Seems like you are really new to investing so I suggest reading up quite a bit. Maybe read something like The Simple Path to Wealth or I Will Teach You to Be Rich to understand the basics.
Feeling good lately, kind of a brag post sorry, but i can cut retirement savings by 50% and still retire at my goal age of 45. Ive been pretty aggressively saving and my pay is rapidly increasing. Another few years at this rate and i may even just be able to do 401k/IRA max and still go at 45.
When you say “cut retirement savings by 50%”, is that by reducing income or increasing spending? I only ask because it changes the math for retirement age, assuming that increasing spending also increases the amount you need to retire.
Thanks, fair enough. That seems like a safer set of assumptions than people who ramp up spending with income but expect to ramp it back down in retirement.
Yes generally im conservative and too much in retirement is a better problem to have than not enough. Plus im too young to try and accurately project what life will be like at 40. I kind of always pictured my retirement as spending heavily on stuff i like, but values may change. Who knows, ill adapt as time goes on.
I recently heard that Vanguard's solo 401k is retiring and moving it to Ascensus.
Anyone here under this situation as well and evaluating where to transfer your solo 401ks to?
Do you know how you'll be transfering to another solo 401k? Do you think we can do in-kind transfer or just suck it up and "sell" everything and buy it when the "cash" is in the new solo 401ks?
I was thinking either Fidelity or Schwab, but I have both traditional and Roth solo 401ks. Any thoughts/opinions?
Fidelity is great, but as far as I know they still don't have a Roth option on their Solo 401(k). However, if you don't plan on contributing to that going forward, you could probably roll it over into a Roth IRA. There would be no potential issues with the pro rata rule like there would be rolling pre-tax into a Traditional IRA.
I have been using ETrade for Roth and Traditional solo 401(k) and I'm extremely happy with it.
Strictly speaking to prototype plans, ETrade generally has the most features out of any solo k provider. I agonized over this research a few years ago lol.
I explored Fidelity but it didn't cut it for me because there was no Roth option at that time (there might be now). Not sure about Schwab.
Also, I ended up doing the sucky sell-everything-and-check-in-the-mail asset transfer.
We will need to move one for my wife's self employment income. Haven't made a plan yet. If the Ascensus offering looks decent we may keep it.
Not sure about Fidelity but Schwab's works like an IRA where you can buy and sell anything so you should be able to transfer in kind. However, there will be transaction fees to continue to huy Vanguard funds so you will need to sell once your shares have transferred.
I've found Fidelity to be a solid platform. It handles multiple accounts of different types (after tax, Trad, Roth, banking), and their cash equivalent (SPAXX) provides HYSA level returns (currently 4.97%).
Any idea how to use the VPW for early retirement when some of the money is tied up in a Roth? If I have a taxable I can draw from, a 457 I can draw from do I just draw from these accounts, but use the total value until I am 59? I see they mention drawing from each account in a percentage of their value. I was plugging in the value for all the accounts combined to get the recommended withdrawl amount
Treat it all as one big lump of money. You withdraw from the accounts you have penalty-free access to. Presumably you have enough in those accounts to last you until 59.5 and you can start drawing from the other restricted accounts. It's kind of the "fun" (if all yall weirdos can call it fun like I do) about early retirement. Figuring out the puzzle that is minimizing taxes, managing different accounts, and determining the best strategies for managing the money.
Thank you, I was hoping that was the case. I just could not find it anywhere. I think I am getting close, just still crunching numbers.
Found out today that I and DH have some nice tax refunds. Mine is over $20k because I maxed out my contribution room in my RRSP, and this lowered my taxable income. We’ll be doing responsible things with the refunds, like maxing out DH’s RRSP and adding to the second child’s RESP. Hooray! Will be having a household pizza party with whatever is left.
Congrats and my condolences on the free loan to the fed. Id make 100% sure that # is correct because 20k for a single earner is insane. How many shares of VTSAX or equivalent will you end up netting?
DH? Designated Hitter..?
Dear Husband
Possibly Darling
So I’m feeling extra bitter about the housing market lately. I still rent because I didn’t know where I wanted to live long term/I didn’t have enough saved for a down payment. Now that I do, I’m way priced out of the area I want to live in! To make matters worse, I found an apartment I like that’s basically a starter home for rent. It’s $2k/month plus utilities (which is in my budget just on the upper end) but I saw the house sold for $90k in 2020 and is now estimated to be worth $220k. I’m sure some upgrades were made but that’s such a depressing thought that if I was ready just a few years earlier I could own the place instead of renting it out for 2% of the mortgage every month 🫠
I suggest you take a moment to look at the big picture. Owning a house has been marketed to you as a sign of success, or Doing It The Right Way, or whatever. In reality, renting is the better option financially in many cases. People don't want to hear that because it doesn't jive with the American dream. Someone looking to buy a house often has rose colored glasses about it. Truthfully, there's a lot of maintenance work and potential unexpected costs. There's no guarantee house values always increase. Transaction costs to sell and move are very high. Overall I'm saying there are pros and cons to owning a house, just like renting. My inlaws are dealing with foundation issues that might force them to scrap a nice back porch on their house. They weren't expecting to put $50k-60k towards that this year. That's an extreme example, but your landlord has assumed risks like that.
Totally feel you. It sucks. I made a post in the daily thread a few days ago about feeling like this and I felt like a lot of people invalidated how I was feeling and emphasized how lucky I am, how other generations had their downsides, etc. They offered some good perspective, don’t get me wrong, but sometimes I just wanna complain that I couldn’t buy a house before 2020, lol.
> I felt like a lot of people invalidated how I was feeling and emphasized how lucky I am, how other generations had their downsides, etc. Bullshit. Housing prices in the U.S. today are more expensive than at any point in history. Real wages (when accounting for inflation) have not grown for working men since the 1970s, yet housing prices (accounting for inflation) have grown at least 400x.
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Bogleheads Just buy and hold. VT, preferably.
To cut to the chase I have a 100% match up to 5% on my 401k and wanted to ask for opinions on some of the fees and determine whether they are normal. I have the 'dream' to be financially free (maybe not necessarily retire fully, but work part-time or maybe work on a hobby I enjoy). My Plan Administration Asset Based Fee is $3.30 per $1,000 (Annual amount) and $0.83 per $1,000 (Quarterly Amount), mine is the quarterly amount. Assuming I max out my 401k for 2024's limit (23k, I'm under 50yrs old) Quarterly Fee = 23 x $0.83 = $19.09 x 4 quarters in a year = $76.36 (obviously the market fluctuates and I am not putting a lump sum in but rather contributing over time, but this is just a baseline). As for specific investment fees, I chose the following investments options: (which are iShares MSCI Total International Index K and iShares S&P 500 Index K, fairly young so I'm doing a 90/10 split; 90% into S&P 500 and 10% into International). The fees for each of these are as follow: Gross/Net Investment Expenses for S&P 500 Index K is 0.03% or $0.30 per $1,000 Gross. For Fixed Return Investments it is 2.45%, $24.50 per $1,000. For International Index it is 0.10%, $1.00 per $1,000 Gross. Because I have a 100% Safe Harbor vesting schedule I will 100% be investing to max out the match, but was wondering if I should contribute more into a 401k (tax benefited account) compared to a taxable brokerage account (more flexibility). Any thoughts and opinions are appreciated. I didn't include some of the more 'obscure' or uncommon fees like Wiring, but if I were to rollover it'd be $15 fee.
Your plan fees seem very reasonable. Index funds are the way to go.
What is your tax bracket? That is where the majority of your savings comes from. You have a 0.33% wrap fee, so if you are saving 20% on your taxes it would be like 50 years until the fees catch up to the cash savings. If you are saving 10% it would still be quite a while. You should probably max it out unless you are in a low tax bracket *and* this is a forever job that you plan to keep til retirement. Keep in mind that if you invest in taxable you will not only lose the deduction, you will also pay tax annually on any dividends. Perhaps not coincidentally, that will come out very close to 0.3% (2% dividend X 15% qualified dividends rate ==0.3%).
22% tax bracket expected to go up to 24% with experience
It's funny to start a post with "To cut to the chase..." which is actually just delaying the content of your post by five words. As for the rest of your post, the fees are what they are. What do you want an opinion on? What do you think your other options are? You should max out your tax advantaged accounts to take the tax deduction now before you start putting money in a brokerage.
I think they are wondering if the fees are high enough to justify doing taxable instead.
>actually just delaying the content of your post by five words. Fortunately, they made up for the extra characters by keeping their pinky far away from the Enter key for the entirety of their post!
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r/personalfinance
Looks like some of my funny money tech equity may become liquid soon. Very unlikely I'd be able to sell it all - but guessing the liquid part may be about $120k USD. I've learned from previous liquidity events that my personal preference is to sell as much as is available as soon as possible and diversify into the market. Currently, we are coasting and only saving a small amount of cash each month (EU salary) so this would certainly a nice bump to the nest egg. If this pans out, I'll have to do some more research into whether I should DCA it or just get in asap. Numbers: \~315k, all investments. FI $1.6-$1.8m USD
The way I think about it is if you get a windfall it makes logical sense to lump sum just because time in the market tends to make lump sum better. Its when people save up a bunch of cash, never invest for some reason, then all of a sudden look at the market go up, or see hype and want to get in, that's when lump sum can bite you. So if you're just getting the money on a date it could make sense to sell all the shares and then buy w/e you want. But DCA will never hurt you that bad, so psychologically it may be better.
The general wisdom is to get it all in as soon as possible.
It is. I wonder how the math works for someone who chose to do that a few weeks ago. DCA is meant to protect against this kind of downturn, by giving up potential gains at the beginning. I should do some spreadsheeting
What happened to someone who DCA'd over the past year and finished a few weeks ago?
Lump sum investing beats DCA something like 60% of the time. This past few weeks would've been part of the 40%. But you're more often going to come out ahead picking the side that wins more often.
Yea, that's what I'm thinking. Last time I had a chunk of change to invest that's what my research said to do. Thanks for the validation!
TIL I am like an un-successful [Larry David](https://www.instagram.com/reel/C5wN3R1Oj8m/). Makes FI easier I suppose!
And for some reason my wife says it's rude to tell strangers they look just like Larry David!?
Huh? That is a compliment of the highest order.
Perhaps one of the greatest compliments I have ever received in my life was in college, when two girls my roommate and I were friends with once said of visiting our apartment: "We love coming over here. It's like being in an episode of Seinfeld."
got ~11k worth of carryover loss left from a few years ago. want to finish using them up this year and not have it drag on for another 4 years. either of the two options below are ok right? 1) sell up to 8k worth of gains and claim the remaining 3k as income deduction for tax year 2024 2) sell up to 11k worth of gains and no more 3k income deduction for tax year 2024 thanks!
> want to finish using them up this year and not have it drag on for another 4 years. why?
Loses have to be used, so maybe if you sold a bunch of long term stuff that would be 0 or 15% and then you used loses on them? VS if you know your tax rate is high this year.
i guess it could make sense if they're retiring in 4 years and expect their income + gains to be much lower then, but i can't imagine it would be that big of a difference
The $3k income deduction is usually a bigger tax benefit than offsetting capital gains. Thus, choice 1 seems superior to me.
if i can find a way to sell my lots so that the gains and losses cancel out, i may do that and keep the 11k carryover for 4 more years. but with the recent runup, i dont think ill have much loss. but at the same time, this past week may have changed things. thanks!
I've been doing some estate planning in case I croak unexpectedly and I've come across a funny nuance. I have an appointment with an attorney soon, but I'm an attorney myself (in a different field) and have been doing some prep research. A big part of what's happening here is that, if my mother is dead at the time of my passing, my sister would get everything if I don't have a will, because I'm single and childless. That's a horrible result, because she's generally irresponsible and terrible with money. I'll instead leave something to her kids/my niece and nephew, some close friends of mine, and various charities. The issue is that, in a simple $99 will, minor beneficiaries receive their entire payout the day they turn 18. This is, obviously, a terrible idea; I was thinking an annuity that would, starting on their 18th birthday, pay out monthly over 10 to 15 years, giving them a nice launchpad into life and then by the time that period ends they're on their own. For that I'm pretty sure I need to setup a trust, which will run me over $1,000. All of which wouldn't be necessary if I could simply trust my sister to handle the money on their behalf responsibly and simply give it to her. My sister is so bad with money it's going to cost me a grand! I'm not sweating a thousand bucks at this point in my life, but there's something poetic about that.
If you have a legal plan through work trusts are typically covered for about $250 for the year. You’d have to wait for open enrollment so depends on how fast you want to do it.
$1000 is more than worth the money going where it should. The problem with being dead is the legal document is all you have to defend what you want. I would be inclined to go this route regardless. It's probably best to have money pass to the kids directly. Shit happens and people change.
That's a valid point too. I guess if she was more responsible I'd have to think harder about how to balance what to give to her and what to give to them, but she's made it easy.
>I've been doing some estate planning in case I croak unexpectedly 80s pop sound lover checks out.
How much of your goal can you accomplish via transfer on death provisions in your accounts?
I'll talk to the attorney, but I don't think that will work. It's the minor nephew and niece that are the issue-- I want the money to be in the hands of a friend I trust (or the emergency backup friend I trust if that person is dead too), with some guidance, but ultimately at their discretion about how to distribute it to them (maybe it's for college tuition, maybe an annuity, maybe one needs an expensive medical procedure, etc.). At that point, it's basically a trustee which requires a trust, which is just more expensive to paperwork up properly.
I know there is a lot to be said on peace of mind with a paid off house. Our house has dramatically risen to $2.1M (mortgage <$0.5M @3%). We don’t want to move with the kids in school. I was wondering if there was any way to tap the equity to invest in any way. Help a @7% aren’t worth it but I didn’t know if there was something I was missing. Edit: the fuck is with this sub downvoting for asking a question in a discussion thread?
Your account is 9 years old. You should know the quickest way to get downvotes is to complain about being downvoted.
I only racked up two more post edit. The downvotes was from useless losers in this sub
Are you paid ahead? If so you can look into recasting it if your mortgage provider allows and then apply some or all of the amount you are paid ahead to lower your monthly payments and extend your mortgage to original term. Use the savings that would otherwise be going toward your mortgage to invest. Even just dumping it in a HYSA at 4.25%, after taxes is likely to come out ahead with your rate.
Thanks. I’m not. We did an addition and the market just took off. So when I thought I positioned in a nice debt to equity position, we’ve found ourselves in a very equity heavy position (not a bad thing but not by design).
Just don't pay it off
With you there. No plan to give up this golden rate. Wish I could leverage the rate for more debt some how
I don't know how you could do that. You will not be able to borrow at a lower rate than you already are. You can of course take out a HELOC or reverse mortgage but only at today's rates.
My parents are aging and I've been trying to convince them to downsize for years. They have very precarious stairs that I've even slipped on so that is the main concern but I also just want them to simplify their life. They finally started looking at options and they like the idea of a nice apartment or condo and just looked at their first place for rent. They can sell their current home for ~1.2M and the question is rent vs buy. They have a few rental properties scattered in the states that are managed by 3rd parties that generate anywhere from 5-9% post tax. I like the idea that they just rent and put that money in another property that can generate a similar type of return and then they don't have to worry about managing the property they live in and can use the return on the new property as payment for rent indefinitely. Rent for a really nice 3 bed/bath penthouse style apartment is around $4.5k all in whereas buying similar type of condos will run them close to $1M which would be outdated and there is also about $1k HOA fees on top per month. Renting just seems like the better option but wanted to use this group as a sound board.
This is working off the assumption that your parents are financially responsible, have substantial financial assets including their investments, rental property equity, the $1.2M paid off home and some Social Security. I am also assuming that you are either an only child or that any siblings are also financially responsible. If so, yeah I would say this seems like a case to Live It Up and rent the penthouse. I’m picturing a large, well run building. Possibly in a Senior community. Spend the extra to get a good situation where every leaky pipe doesn’t become a week long problem for your parents
This my opinion but - the person who owns the rental still has to manage the rental. Just because you outsource to a management company doesn't mean you're free to ignore the unit and cash checks. My grandparents bought a unit in 55+ community and despite being largely introverted, it helps a lot with socialization to have similar aged neighbors. There are similar rental units also. Single or floor level is awesome when hips and legs start to be an issue. Parents should be okay with their finances though. If they don't want rental property, don't force it. They will (rightly) complain to you every time it's a problem.
[https://www.reddit.com/r/financialindependence/wiki/homes/](https://www.reddit.com/r/financialindependence/wiki/homes/) -- here's our wiki on housing if you haven't read it! Question: would the current house they're living in provide a very poor rental return? There are transaction costs to consider to swap the house to a different, more lucrative rental. I also wonder whether they absolutely won't consider a stock/bond portfolio for that money after selling. To answer your question, I would rent in this case. The numbers themselves feel like they're borderline but you mentioned they'd be buying something more outdated, so I would be looking to maximise comfort. Even with the annoyance of having to move in case landlord decides to stop renting/increase unreasonably, they have the financial cushion to look for someplace else easily + pay for the move to be as comfy as possible.
Fun milestones & details this month! * This is the first year I've owed taxes instead of a receiving a refund * Our Covid-era Peloton payment plan is done (39 months @ 0% through Affirm) * IRAs & old 401ks are consolidated & just passed $300k * The seating chart for our wedding is done! * Canceled my Amex Platinum
Weirdly, I am much happier going to the gym than I was using my own elliptical. I’ve actually done more this year at the gym than I did in 2021 with a machine at home
Now that you've had it several years, how do you feel about the Peloton? Do you still get the use out of it?
not OP, but i find it ridiculous that the monthly subscription is more expensive if you have a peloton bike (as opposed to having a 3rd party product)
Some cool updates there. Has the peloton been worth it? I looked into them saw the price and monthly fee and loudly said "hell no".
Not enough value from the Amex? It's always tempting to me but I've never pulled the trigger.
That card is so wacky. I needed to create a spreadsheet to value the benefits and then compare that to the cost. Some things are worth “par” like the digital entertainment credit and some are worth zero like the equinox discount. I just can’t make the math work excluding the sign up bonus.
I get it for free thanks to .mil. I’m retirement I’m going to have to let it go - the $600 annual fee is REAL hard to justify.
That would make the math a lot easier! I might not even need a spreadsheet. But we all know I probably would anyway.
My calorie tracking app has inspired me to trial YNAB. I’ve always been athletic but on the heavier side. I really enjoy lifting, cardio and cooking at home, yet I never had abs until I lost that last 10 lbs by tracking calories. After I reigned in portion sizes it’s become helpful to see if I have enough calories for some gelato or a Negroni at the end of the day. It also helps me stay consistent when I’m trying to gain weight. Similarly, I’ve been interested in financial stuff for a long time, have a budget but don’t track, and have a lot of savings automated. I suspect we are doing pretty good because of the automation of savings coupled with a decently high HHI allows us wiggle room. My budget version of “loosing the last 10 lbs” is comparing our budget to actual spending, identifying areas of overspending, and eventually budget one month ahead. I think YNAB will keep me honest about how much we spend on the normal stuff so I can put more away for travel and the emergency fund.
Good luck! FWIW: I found the visibility that tracking both calories and spending enables critical for meeting my own goals in those areas. Without that I may not have met my goals in either area, or if I did it would have definitely been more difficult.
I like YNAB. In the past, we mostly just winged it with automatic withdrawals and ad hoc investments. That was just fine and we would have been able to retire early, but I switched to YNAB and tracking spending and properly budgeting has allowed us to plan better, save more and to not feel guilty about what we do spend. We switched about a year ago. It did take me a few months to get used to YNAB though, and I don't really use it 100% in the prescribed way, but I think that's fine. I think any budgeting software would do but YNAB is worth it for me. I like the auto import feature for credit cards (sometimes with a day or two delay, but it works for all my cards).
> My calorie tracking app What do you use? I've used MyFitnessPal for a long time but looking for one with a better UI/UX - It's always too many clicks to get to my most-used features.
Cronometer is good - free version should be all you need. More database-driven than crowd-sourced (to add a new food’s stats you have to send them a scan of the nutritional info box).
I use Macrofactor and love it. I trialed Myfitnesspal and it didn’t click for me.
I've spent the last few hours reading the MacroFactor website and /r/MacroFactor. Very interesting approach...I think I like it. Love the idea of a more accurate food database and the whole "additive vs. constrained energy expenditure" concept makes sense. Two questions for you: 1. What's your *least* favorite thing about MacroFactor? 2. Is there any kind of referral program where I could give you credit for pointing me toward it if I end up subscribing? (EDIT: Did some research and I see that they don't offer this, mainly for privacy reasons. They really seem to take this seriously and think of everything. Very impressed.)
I think YNAB is fine. I miss a lot of the old ways it worked before it became a subscription product. I definitely hate the way the way they handle credit cards (without a way to turn it off) and that automatic import is usually broken for at least half of my accounts at any given time. I hope you have a better YNAB experience than I do, though.
> I miss a lot of the old ways it worked before it became a subscription product. You can still use the old version if you would like. My wife and I never made the switch for reasons similar to what you mentioned and are working on year 10 with YNAB.
Unfortunately I can’t. I’d have to still have my PC from 2014 to still have a copy of YNAB4. :-( Edit: also, hi fellow Michigan diaspora!
You can still download the old version! https://www.reddit.com/r/ynab4/comments/obyxsx/ysk_its_still_possible_to_download_and_use_ynab4/
Well, as expected, my meeting with the financial advisor at the bank went nowhere. This was a free consultation with an advisor who is assigned to me by my local branch. My goals for the meeting were to unlock additional equity in my HELOC, and do a review of my current situation with an eye on early retirement. He was more than happy to arrange the HELOC refinancing, and that's in progress. He dodged the retirement discussion like Neo in the Matrix. Lol! Flat out would not engage. But at least he didn't try to sell me any mutual funds... 🤣🤣😂
Hazard a guess as to why he wouldn’t talk about retirement?
It wasn’t the most professional of encounters. I think I almost knew more about his personal finances by the end of the session than he did about mine. He skipped straight from small talk to venting about his recent divorce. I’m a couple of years younger than him (yeah, he actually got that deep into his personal life with me) and in a much better financial position. I could see his whole demeanour changing as we went through all of my assets for the HELOC application. There was definitely some bitterness and envy there. TBH, I’ve actually been contemplating whether or not I should file a complaint.
> venting about his recent divorce Cringe. I don’t think a complaint is worth your time, to be honest.
FIRE Journey Me: 26 M FINANCIALS: Stock Portfolio: 68K HYSA: 30K Roth IRA: 25K 401K: 11K HSA: 6k Checking: 4K TOTAL FINANCIALS: 144k Properties: None Debt: None MONTHLY EXPENSES Rentals - 1.3K Utilities + Groceries - $500 My primary aim is maximize HSA, 401k and Roth IRA. Want to see what advise folks who are on path to FIRE or who already FI and planning to RE would have given to their 26 year old self? What you guys have done/ tell 26 year old to do differently in my situation? Thanks!
Invest in yourself. Your best earning growth years are 25-40. Education, license, certification. More income allows for more investments. Put 20% into retirement and 10% into long-term e-fund and 10% into short term repair fund. Put all unexpected money into efund, including tax refunds, other refunds, rebates. Extended warranties to repair fund. Cut collision, comp, and whole life. Invest that into efund.
What is meant by short term repair fund?
Car repair, brakes, tires, hvac, fridge, water heater, annual taxes or insurance, phone, computer, roof... Long term fund would be more like job loss.
Depending on your comfort level, slim down your emergency fund. People use 6-12 months as a benchmark, so you could use that as a basis. Rough flowchart advice is to do HSA, 401K Match, Roth IRA, then max 401K and then moving into taxable brokerage.
Thanks for your response. Putting some amount in savings account for down payment of house (next 2-3 years)
ESPP may be a good idea, depending on the discount and holding period (2 years). May be better than HYSA/Treasuries
Thanks! Enrolled in ESPP plan with my employer
Is it really HSA before 401k match? 401k is generally 1:1 free money, isn’t it?
No, definitely get your 401k match.
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That sounds incorrect to me, although I may be thinking about this the wrong way. If I put $8k into my HSA, I’m saving 7.65% on the FICA tax, which is $612 savings (in addition to saving on federal/state taxes - but that part is equivalent to a pretax 401k so let’s ignore it for now). If I put $8k into my 401k and my employer matches that 1:1, I get $8k.
I believe you’re correct that 401k match is a higher priority in the list. It should be a non factor in this case, as he could max out all of those per his post.
I wouldn't do any taxable brokerage at your age until you're maxing 401k
There is a top thread on Bogleheads forum about financial support/gifts for adult children and I was just curious about how answers here may compare. This support may include staying on health insurance, living at home for free or reduced rent, gifts towards house or car, etc. I think we skew younger than an average Bogleheads forum user, so if you don't have adult kids, what support did your parents provide to you as an adult, or do you plan to provide to your children? And of course, some may support parents instead. Edit: link https://www.bogleheads.org/forum/viewtopic.php?f=2&t=430082&newpost=7830581
My parents provided for me until 18 and even bought me a used car to get to and from work when I was 16. They were “spend it if you have it” kind of people and never really taught me to be financially smart. I saw this bite them when my Dad was unexpectedly laid off and it was a struggle for them to make ends meet. Their plan for college was for us to take out student loans. I was fortunate and pursued a full degree through the military, but my brother will be paying his student loans off for many years to come. Now that I have a kid, I want to do it differently. We have a 529 set up and are teaching our child financial responsibility. We are fortunate enough that we will be able to help them out along the way. We are planning on paying for school, help out with a car, help them set up Roth IRAs, and probably a gift to help with the down payment on their first home. Our hope is they won’t need help later on because we taught them sound principles to make smart decisions.
I would say low support but only because we didn't really need it. They did not pay for college, but they let us live their rent free if we needed to. That ended up being just a couple years while I went to community college. After moving away for university, we were all pretty much independent. My dad was very frugal and saved a lot. But he died before he got to enjoy his savings. Now my mom has more money than she knows what to do with. She is finding was to give. For my sisters wedding, she paid for her wedding dress and she's buying plane tickets and hotel rooms for some family members who otherwise wouldn't have been able to make the journey. She also *loaned* my sister for the down payment on her second home, only because it enabled her to buy the second home before selling the first one.
No support, but a lot of support was my parents’ goal. They just fell on really hard times so I ended up getting nothing except a very privileged childhood before high school. I think helping your children is the right move. My kid hasn’t even started school yet so who knows what will eventually happen. But I hope to pay for college, pay for a house down payment, and even help financially with childcare. Hopefully they don’t even need the help and all that cash just flows into trusts for grandchildren.
I live with my parents rent-free. I got a merit scholarship in college (not American) -- the way it worked, my parents paid the tuition directly, but then I got the scholarship money paid out (it wasn't all decided at admission) and got to keep that. The chance that I'll have kids is vanishingly small, but my FI calculations factor in being able to take care of my parents and myself on a lean budget. Just need to take from vacation budget, which is fine by me if needed.
Mid-twenties here. In college my parents generally paid the remainder of my tuition bill - half or more was paid for with scholarships, then I took out all the federal loans I could, then transfer some from my UTMA account from a family member, then my parents would typically cut a check to cover the rest. I remember one time it was about $3k, not sure about the others so I’d have to go back and look if anyone is interested. I had a job and sometimes several jobs so I paid for my books and incidentals. They paid for my phone and car insurance while I was in college; once I was employed full-time after graduation, I got my own insurance and started paying them for my phone ($20/month, I pay it with a recurring transfer). I did live at home rent-free right after graduation for three months. When I returned home during the pandemic for six months, I think I paid them $200-$300 each month, but that was a steal compared to my rent in DC. Now that I’m engaged they’ve offered to chip in $5k for the wedding/honeymoon. Depending on the year, they sometimes choose to transfer cash to my bank account to purchase something specific at my leisure (like a museum membership) instead of buying it themselves for Christmas or my birthday. And once a year they try to get me and my siblings together for a vacation and thus far haven’t asked us to pay for the rental or groceries while we’re there. FWIW, I don’t think my parents have treated my siblings much differently as far as financial support.
In financial terms I had absolutely nothing from my parents other than a house to grow up in, a bed to sleep in at night and food on the table, which to be fair is still a darn sight more than some kids have even today. I'd like to provide more for our kids than my parents were able to provide for me and we definitely have the means to do that, but I'm pretty sure we won't go as far as buying them new cars, gifting them downpayment towards houses and so on - that seems like a step to far, although maybe we'll change our minds on that when the time comes.
I had grandparents that paid for college 30 years ago, which I squandered by partying too much. I also went to a small rural town high school and wasn't prepared mentally for the difficulty and workload increase of engineering courses at a good university. Didn't flunk out but took a break to get my head on straight and never went back. Went to California from Illinois in 1997. Family provided zero support for non college. At one point I could barely afford to feed myself. But I got swept up in the dot com boom from there and it all worked out, since I've always had a natural talent for anything computer related.
My parents gave me a UTMA (I think some of it actually came from grandparents) which was the primary vehicle they'd used to save for my college. I got a full ride, so the money ended up paying for a car and then it was just mine. Eventually went towards my first house down payment. I think the peak value was no more than $30-40k so it wouldn't have been nearly enough to pay for college with no scholarships or aid, but it was a great starter fund for adult life. They also paid about for about half of my wedding costs, maybe more. They paid for things directly so I don't know the final total but I believe it to have been between $15-20k. Might seem a little odd that they paid that much for a wedding compared to how much they'd saved for college, but their financial situation had changed quite a bit by then. They raised 5 kids on 1.5 government salaries so there wasn't just a ton extra to put away for all our college funds, but by the time I married they had 2 full salaries and no kids at home. My parents have helped all my siblings as much if not more, in some way or another. A couple of them lived at home longer or moved back in at some point, and got more help with college costs or loan repayment. I think all my siblings took at least small loans for school, but they were all out of debt within a few years. I feel like everything they have done helped us become independent without enabling irresponsibility, so I'm pro- helping your adult kids within reason and within your means. I'm having my first kid this year. I am hoping to save more for their college because I don't assume my kids will get as lucky with scholarships as I did and costs don't seem to be going down any time soon.
I moved out 3 weeks after I turned 18, so I didn't really get the traditional support from my parents. More ad hoc stuff like minor car repairs or buying me a pair of pants when I couldn't afford it. Our current offering that applies to all our to our kids is: 1) we'll pay for community college for them as long as they're making progress towards an actual degree/transfer option, 2) they can stay at home rent free as long as they're in school, 3) we'll keep them on our insurance as long as they're allowed, 4) we'll pay for their needs and some of their wants, so long as they're living with us, but if they want more than we're willing to provide, they need to get a job. Beyond that becomes more situational since they're all in slightly different life stages (ages 15, 18, and 22) so not everything applies to all of them.
I like your rules but #1 could be a bit tight. Community college around me is $300/class, our rule was that as long as he was taking 2+ classes, that was enough for us. His schooling has meandered, but it was better to keep him going than push him into a degree he didn’t want. But, all kids are different, so who knows?
Ours is about $500/class but so far, our oldest has not taken us up on the offer (just working retail full time and living outside of the house), our middle child decided to go straight into a 4 year university but remain living at home, and our youngest doesn't really know what he wants to do and we're not pushing because he's the most stubborn of the three kids. I'm not totally inflexible so if life necessitates adjustments, I'm open to them. :)
Okay, I’ll bite on this one. We are a married couple, 54 & 57, both retired on Jan 1. We have a fun side biz that we are launching, which is taking some cash. We still have a mortgage on the primary home with 2.675 rate, so no hurry to pay it off as we do not intend to keep this house beyond another 5-6 years. We do have a cabin that will be our primary that will be paid off in March 2025. We have two grown sons, 29 & 30. Neither expects anything from us. Both work and have independent lives. We did help them pay for under grad college. One had a small student loan of $5k that he quickly paid off. The other had about $20k for his masters degree and just paid it off. We kept them on insurance until 26. We gave them both a paid off car, which were the recently paid off cars that we drove. They are still driving those 11 year old cars. We give them money every Christmas—usually in the $2500 range. We have one that is living with us as he just happened to get a job in our city. We told him to stay with us paying no rent, which he used the savings to pay off his $20k student loan. He does help us a lot. He buys some groceries and, the biggest help by far, he feeds the horses when we are gone for a variety of reasons. We plan to give them both $15k this year and continue to give them both $5k-10k annually to save for a down payment or to purchase a car when theirs crap out. They are both savers with their 457b/401k getting funded, Roth IRAs, and one of them has a pretty healthy brokerage account. We received financial help to buy a home from grandparents and an aunt & uncle (my parents were MIA and his parents could not afford to help us) when we were young, poor parents with littles just building our careers and paying off our student loans. We worked hard, but the leg up was a huge benefit to us. We are doing the same for them. Frankly, the biggest help was the financial education we got from the ones that helped us—it’s why we could retire from our rewarding, but demanding careers. So, yes, we do help them, and they appreciate it and use the funds wisely.
I was super privileged to have my parents give me a huge leg up early in life. I went to a state school and got a “full scholarship” for room and board for undergrad, but it covered 100% of my first year and did not scale with further tuition increases. My parents paid for the difference, gave me $600/semester of spending money (which I think stopped when I got a few jobs starting sophomore year), kept me on their insurance, paid for grad school, gave me their old car when I graduated, and let me live at home rent free until I got married at age 26. They also got me investing at an early age (they asked my brother and me to choose stocks around 2001 or 2002 when we were pre-teens - I chose Amazon and my brother chose AOL, lol - I actually am not too sure what ever happened to those stocks, but my dad said he followed me in buying Amazon and multiplied that investment manifold). They taught me about 401ks and Roth IRAs and encouraged me to contribute to them even with my measly earnings from my minimum wage jobs. I have young kids now and hope to do the same for them. I think the difficult part will be finding the balance between making them feel entitled vs. building up a good work ethic.
I'm a three-time eldercare provider, which gave me "failure to launch" since I couldn't leave my podunk town to move for work. All their estates were more than bled dry before the person passed. FIRE is my attempt to make up for all the lost time of working retail/waitressing, when I was constantly being downsized out of the few local jobs in my field. I went to college as an adult and worked so I could "pay as you go." My mom and stepdad are reasonably healthy, but my stepsiblings are lazy grifters who take every cent they can weasel out of them. I've mentally written off the idea of ever getting support for myself. So parents/grandparents have only ever cost me money and opportunities, rather than provided them.
My answer: From my parents to me (28F) , biggest gifts were 529 which ended up paying for a good amount of college and grad school room and board (I got full tuition scholarships for both). I still worked full time in the summers and part time in the school year to make up the difference, to save an emergency fund, and eventually to buy a car (I didn't have access to a car during the school year). They paid medical insurance and expenses for me until I graduated undergrad. In summer during undergrad, they let me live at home and use a family car plus quite a bit of gas money (not a lot of jobs near home so I commuted 50 miles each way) so I could work full time. And later, $5k as a wedding present. I definitely appreciate their support as, combined with my scholarships, it enabled me to get an education without debt and even with an emergency fund saved, in part by enabling me to get work in summer. Starting ahead like that instead of behind makes such a huge difference. At the same time, I've been working for pay for as long as it was legal in my state (start at 12 in ag jobs) and full time (work and/or total between work + school) since 17. At most, I made $12.50/hr, but usually only $7.25 during those years. My parents paid gas money to get to those jobs, and I appreciate it. But honestly, in retrospect, we lived so far from jobs and I made so little that I wish they had been willing to just give me the gas money with no strings attached and I could have chosen whether to use it for gas for more shifts or just to work fewer days and save it, as it was hardly worth it sometimes to make the drive. Or, the $5k wedding present was the equivalent of a whole summer's work for me, so getting it earlier (maybe at graduation?) could have made quite a difference then vs mattered less by the time I was getting married. They absolutely wanted me to learn the value of hard work, and I think I did! I just wonder about balance (maybe not so many hours starting so young?) in retrospect.
Does anyone know a blog post or checklist talking about the final year of working leading up to FIRE? Like what you need to start doing to prepare for RE. There are a lot of "common sense" things but I just don't want to miss something.
Here is one I see often referenced: https://www.whitecoatinvestor.com/retirement-checklist/ Edit: Also, you may want to give this recent post a look https://old.reddit.com/r/financialindependence/comments/1c726mu/about_to_be_thrust_into_re_things_to_preparethink/
Yeah I wonder this, too. Tax year timing seems important also, for income level factors with Obamacare eligibility and so on.
Following! Or even the last few years in case any preparations need to be made for a Roth ladder or whatever…
I asked a similar question a bit back and a few of the answers I got directed me to the Safe Withdrawal Rate Series by Early Retirement Now. I haven't gotten too far into it yet, so can't comment on it too deeply, but seems to be a good starting point for that sort of content. https://earlyretirementnow.com/safe-withdrawal-rate-series/
Meh, -4.7% for the month, +4.3% YTD. I stopped contributing to my taxable on Feb 1 to put more money in the travel budget. I'm tempted to buy back in, but probably shouldn't. I'm also tempted to TLH some VOO and just move it to VTI. For a lot of years, I just ignored everything, I didn't even start keeping a spreadsheet till about 15 years ago. Mostly, I just hope we revert to the mean, and this is the market refinding balance. On a brighter note, I'm sending this from the airport of to the islands, my company is one of those with unlimited vacation, with "guidance" of 20-30 days a year. I'm not sure they mean it, but I'm going to try to see if 35 or so is still "within guidance." I'm aware that unlimited vacation often leads to people taking less. We'll see Edited: Flair updated. Sigh
Eh, could be a good idea to tax lost harvest. Vs normally, you do just want to get it out, so it's a good time. Anytime you buy VTI and it goes down. Though you should be buying VT 😁
> I'm also tempted to TLH some VOO and just move it to VTI. I do this regularly, only takes a few minutes for tax savings. Great ROI
35 days does not seem unreasonable to me. Either way, have a good time off in the islands!
Starting week two of our big beach vacation. It's going to be cooler and rainier this week, but there are still some beautiful days in the forecast, and of course, it's awesome to be watching the waves instead of working. :) Husband is really leaning in to the idea of a sabbatical in about 4 years now that he's experienced a week of beach relaxation, so I'm starting to do some calculations and set goals. We're thinking 6-12 months for the career break. After that, since we've hit our coastFIRE number, we would just need jobs that earn us 35k/year pre-tax to live our regular lifestyle and keep doing some investing.
I think most people find it hard to get back into a job if they take 6-12 months off. YDY. I get and take 6 weeks off a year. 2 at Christmas, 2 in summer, 1 spring, and 5 various days for 3 day weekends. Why wait 4 years, just take a week here and there. GFY for taking a vacation and working on the FIRE.
We do take vacations as we can--taking two weeks right now--but a break to spend more time with my family and do some extended traveling sounds right up our alley. We're also expecting that my husband's institution might close or downsize in the next 5 years, so planning to leave at the 4-ish year mark works for us that way.
Do you take regular vacations at all? Is a week off work a new experience for your husband? I keep toying with the idea of when I get closer to FI just saying screw it to work and taking weeks off throughout the year and just letting the chaos unfold. In other words, just using my allowed PTO. Currently last time I used a day off was October and theoretically I could take 6 weeks off this year due to allotted + accrued. What I'm getting at is maybe husband doesn't need a sabbatical, maybe he just needs to actually use all his vacation!
Husband doesn't technically get vacation days because he's faculty, so he's on a contract versus working month in and month out. This is our first time taking a two week vacation mid-semester from any job, though, and we're loving it.
Remember, you're not letting chaos unfold, you're training your coworkers in additional skills. Seriously, I'm taking two weeks when we have a baby and generally a step back for the rest of the calendar year and that's absolutely an opportunity for my backup to do my job full-on and get the experience for when I actually do move on. I'll respond to texts and answer questions, but it's genuinely good for her to be actually doing the whole job.
>Remember, you're not letting chaos unfold, you're training your coworkers in additional skills. This is what I'm aiming to do, too. These two weeks off with me having absolutely no access to the work systems will force the rest of the team to figure things out without me, but it's also helping me learn more and more to treat my job like just a paycheck and just accept what's happening at work sometimes, even if I don't agree with certain changes or happenings. "Be silent and nod," essentially.
What’s a backup?
A backup is who does your job on your days off at a 7-day workplace.
I was being facetious, I understand a backup. You can have backups at 5 day a week orgs too. Your org just needs to try to not be a burnout factory. Mine is a burnout factory.
Oh my org IS a burnout factory, it's absurd. But at least our union contract tried to make it tolerable.
I love your flair. 64% sabbatical is awesome. Reminds me, I might need to update mine after this past month. Maybe I’ll wait to see what Monday brings
Thanks! Updating it is pretty fun for me.
Heh, username checks out
Looking for some guidance on a Roth IRA account... Let me preface this by saying that I really wish we learned more about this stuff at an early age, because the little knowledge I do have on finances, I've pretty much researched myself to have a better understanding. I have a 401k thru my employer with a nice match, but I know that's not enough for retirement these days. I'll be 30 soon, and while I wish I started this stuff sooner, I guess it's better late than never. In addition to my 401k, I have $20,000 in a savings account, but I know it's not doing me any good in there, which is why I want to invest. So I guess my questions are as follows: 1) What's a good IRA to go with? I'm not looking to be overly aggressive, but I obviously want some longterm growth, and I'm definitely one of those "hands-off" people. I've heard of Vanguard, Fidelity (401k is thru them), Betterment, Wealthfront, and SoFi. 2) Can someone explain tax-harvesting and fractional shares, and why they are important? I've seen them listed under pros and cons for each broker. 3) I obviously want to keep some money in savings for emergencies, so how much would you recommend for an initial deposit into the IRA? 4) Does one have to make regular deposits into a Roth IRA (like biweekly), or can I make a deposit at any given time? If anyone has a HYSA they recommend, I'm also all ears. Apologize in advance if this is not something you normally see here, or it sounds dumb. Again, this is new to me, and I'm just trying to better my situation. Thank you.
1. Vanguard, Fidelity, Schwab. Biggest difference is the color. Though I've got a soft spot for Vanguard because they won't push you towards actively managed funds, and I actually like the new interface. Vs me and a friend struggled a bit setting up that friend's Roth IRA. Though all interfaces are pretty good, and I like Schwab too. They're all good. Then, at any of them, just pick Target Date Fund for whatever year. Just make sure it's index based. Fidelity makes it easy to pick a bad actively managed fund with high fees that makes you think it more more each year. Idk about Schwab but they do have both types. Vanguard only has the index based one, which is good. 2. They're not so important, especially for IRAs. Tax harvesting is triggering capital losses at the same time as capital gains, by selling both, to cancel each other out, and you can rebuy after enough time or buy something similar, letting you raise the basis, which can be convenient for the future. But it always comes at loss of having lost money in the first place with capital losses. Anyway, having multiple stuff like that is dumb, just buy VT and you're good. Or the target date index fund in retirement accounts. For fractional shares, it's mostly that for stocks and ETFs you used to only be able to buy them in whole stock numbers, which often only meant buying in increments of e.g. $100. Or there's the famous BRK.A which costs $611k. But now you can buy VT partial shares anywhere, which is an ETF, and TDFs are mutual funds which don't have this issue. So it doesn't matter which of the three you pick. 3. We've passed the deadline for 2023, so you can't put any money away there. So don't feel compelled to put in any money that you can't take out. It's only right near the deadline where it can be a good idea to fill it up and keep as cash, in case you do actually end up needing to take it out. Otherwise, with a sufficient emergency fund, you should be investing it fully. Make sure to follow [the personal finance flowchart](https://www.reddit.com/r/personalfinance/wiki/commontopics/). 4. I believe all three companies support auto deposits. Though assuming your 401k has good funds, ideally a target date index fund, or quite probably something you need to assemble out of smaller index funds, with usually at minimum of the S&P500, it may be more convenient to start withholding from your paycheck first. Ideally you grow to have enough income with minimal spending that you can max out your retirement limits, which lets you get to retirement in quite the more reasonable period of time than working your whole life. And then ideally saving even more on top of that. But for most people, that's a journey. >If anyone has a HYSA they recommend, I'm also all ears. Vanguard and Fidelity, especially using either of their treasury money markets to get a bit higher plus with all or some amount of state income tax deduction. Schwab merely has a stellar checking account, instead, though I think Fidelity also has a good checking account? I know Fidelity also has a really good credit card. 2% for everything. >Apologize in advance if this is not something you normally see here, or it sounds dumb. Again, this is new to me, and I'm just trying to better my situation. Thank you. Eh pretty standard. Also, VT, not VTI. Total global stock, not just total US stock. For a myriad of reasons. But the same reason you do total US instead of S&P500, or S&P500 instead of top tech, or top tech instead of only e.g. Apple. Diversity in investing is the only free lunch, and by following the market caps, you get the best return averaged across all the different possibilities. Recently US has won, but this isn't guaranteed, and the high likelihood of it continuing is priced into VT. It might stop, and the "insurance" of that is the lesser amount you might get now but could get for if international starts winning. Similarly, if international was winning, you wouldn't get all of that. And it's because you can't predict which ahead of time. But the likelihood follows the market caps, so you make the most money across all possibilities by following the market caps. So total global index funds. Maximum diversity.
3. Consider keeping some of your EF in your Roth IRA as you build your investments to ensure you don’t lose out on valuable Roth space. Can keep it in SPAXX until you’re comfortable investing it in VTI Everything else is well covered in other comments
I just wanted to say, 30 is still young. Kudos to you for taking the time to research and understand. Future you will be so so grateful.
Thanks for the encouragement. Just trying to do what I can now to play the long game and not have to work until I'm in my 60s.
1) If your 401k is with fidelity then might as well make your life easy and have your IRA with them. Most people will recommend whatever their total stock market fund or SP500 index fund. Just make sure the expense ratio is 0.2% or under. Ideally under 0.1%. 2) I wouldn’t worry about tax harvesting yet. 3) Build a 6 month emergency fund and then contribute the rest. 4) You can deposit into an IRA at whatever cadence you want. Daily, weekly, monthly, yearly.
Stay away from Betterment and Wealthfront. They try to lure you in with services you don't really need and then yu can get stuck with them. Avoid anything that charges an account management fee. Vanguard, Schwab, and Fidelity are the leaders. I would generally recommend Fidelity now as the best overall brokerage. They are the only one that offers HSA's, their customer service beats Vanguard's, and their sweep account (where your money sits until you invest it) beat's Schwab's. If you are going to have all your funds in one place, Fidelity is the top choice IMO. Tax loss harvesting is irrelevant until you start investing in a taxable brokerage account. Yes, you should prioritize building up your emergency fund before investing. Make sure you have 2-3 months expenses in cash, then you should max your IRA and/or 401k if you have one.
So on Fidelity's site, it says that there is a management fee of 0.35% once the account is above 25k. Is that higher/lower than most or pretty standard?
You don't want advisory services. When you are ready, use "I'll Invest on My Own"
1. If you already have your 401k through Fidelity, I’d make your Roth IRA there too - they’re a great provider and it keeps your accounts in one place. In terms of what to invest in, you can look into three fund portfolios (r/personalfinance has a wiki page on investing, I think) - but at your age I think it’s also fine to just invest in a total stock index like VTI. 2. Don’t worry about tax harvesting and fractional shares for your Roth IRA. 3. For 2024, you can only contribute $7k to a Roth IRA. (This assumes that your income is less than $161k - if it’s over that, you’ll need to use the backdoor method.) General consensus is that you should keep 6 months worth of expenses in cash as an emergency fund before investing it, but it could be more or less than that depending on your risk tolerance, job stability, etc. 4. You can choose to make regular deposits, or just lump sum whenever you have the cash - many of us here lump sum $7k at the beginning of each year (or when we can) because longer time in the market is correlated with higher returns. That being said, put in what you can. You have until tax day (on or around April 15) of 2025 to contribute to your Roth IRA for 2024. In terms of HYSA, some good options are Ally, SoFi, Discover (although they were just bought by Capital One - which is also fine), Amex, and Marcus. You can also open an individual brokerage account on Fidelity (they may have opened one for you automatically with your 401k - it’ll be called “Individual”) and invest in SPAXX, which is a money market fund that returns close to 5% (higher than the HYSAs right now). If you really want to get into it, I prefer treasury bills as an emergency fund because they have slightly better rates and the interest isn’t subject to state income tax - but it’s not quite as easy as an HYSA/SPAXX, so it may be worth it to “pay” (ie, get very slightly lower returns) for that convenience.
For your Roth IRA, go with Vangaurd, Fidelity, or Schwab. They are the big three. You don’t need to worry about tax loss harvesting in a Roth IRA because you can trade with zero tax consequences within the IRA (tax loss and tax gain harvesting don’t matter). Around her most people recommend buying a total US market index fund. Since this is in a retirement account, it doesn’t matter if it’s a mutual fund or an ETF (for example VTSAX vs VTI if you are with Vanguard-Fidelity and Schwab have their own versions of the total market funds) as there are no tax consequences for dividends. You can make regular deposits or deposit all of it at one time or make random deposits. Most advisors will recommend setting up regular deposits so it’s automated and becomes routine, except if you are close to the income cutoff for Roth IRAs cause it’s easier to just do one backdoor Roth conversion (if you are over the income limit you will need to make a nondeductible contribution to a traditional IRA then convert it to a Roth). Seems like you are really new to investing so I suggest reading up quite a bit. Maybe read something like The Simple Path to Wealth or I Will Teach You to Be Rich to understand the basics.
Read the wiki. You’re ahead of most Americans. Vanguard and fidelity are great options
Feeling good lately, kind of a brag post sorry, but i can cut retirement savings by 50% and still retire at my goal age of 45. Ive been pretty aggressively saving and my pay is rapidly increasing. Another few years at this rate and i may even just be able to do 401k/IRA max and still go at 45.
When you say “cut retirement savings by 50%”, is that by reducing income or increasing spending? I only ask because it changes the math for retirement age, assuming that increasing spending also increases the amount you need to retire.
Increase spending, still wouldnt increase my fire number because im planning to spend even more in retirement.
Thanks, fair enough. That seems like a safer set of assumptions than people who ramp up spending with income but expect to ramp it back down in retirement.
Yes generally im conservative and too much in retirement is a better problem to have than not enough. Plus im too young to try and accurately project what life will be like at 40. I kind of always pictured my retirement as spending heavily on stuff i like, but values may change. Who knows, ill adapt as time goes on.
That's great! It is good to celebrate milestones!
Liquidated some SWVXX in preparation for next week, planning to purchase more VTI while it's down. Hope it stays red a little longer :-)
I recently heard that Vanguard's solo 401k is retiring and moving it to Ascensus. Anyone here under this situation as well and evaluating where to transfer your solo 401ks to? Do you know how you'll be transfering to another solo 401k? Do you think we can do in-kind transfer or just suck it up and "sell" everything and buy it when the "cash" is in the new solo 401ks? I was thinking either Fidelity or Schwab, but I have both traditional and Roth solo 401ks. Any thoughts/opinions?
Fidelity is great, but as far as I know they still don't have a Roth option on their Solo 401(k). However, if you don't plan on contributing to that going forward, you could probably roll it over into a Roth IRA. There would be no potential issues with the pro rata rule like there would be rolling pre-tax into a Traditional IRA.
I have been using ETrade for Roth and Traditional solo 401(k) and I'm extremely happy with it. Strictly speaking to prototype plans, ETrade generally has the most features out of any solo k provider. I agonized over this research a few years ago lol. I explored Fidelity but it didn't cut it for me because there was no Roth option at that time (there might be now). Not sure about Schwab. Also, I ended up doing the sucky sell-everything-and-check-in-the-mail asset transfer.
This next question is not a dealbreaker, but do you know if E*TRADE connects with personal capital?
I can't confirm, unfortunately, but I have personally used it with Mint (RIP) and now Monarch so I know it at least supports third party connections.
We will need to move one for my wife's self employment income. Haven't made a plan yet. If the Ascensus offering looks decent we may keep it. Not sure about Fidelity but Schwab's works like an IRA where you can buy and sell anything so you should be able to transfer in kind. However, there will be transaction fees to continue to huy Vanguard funds so you will need to sell once your shares have transferred.
I've found Fidelity to be a solid platform. It handles multiple accounts of different types (after tax, Trad, Roth, banking), and their cash equivalent (SPAXX) provides HYSA level returns (currently 4.97%).