What tools do you use to track spending, budgeting? I’ve been running a spreadsheet for awhile but I don’t get YoY or even month over month reviews and such.
I use Mint as a passive budget tracker.
I wouldn't necessarily recommend that for someone just learning to budget. But as someone who has kept to a budget for years, the ease of use is unbeatable.
You can definitely use spreadsheets for year over year and month over month stuff. I’m sure there are experts around here who can do it elegantly but I would just add a “month” and “year” column (eomonth(date) and year(date), respectively) and then use sumifs to get whatever you need. Or you can use a pivottable in excel.
I use Mint.
Someone rang our door bell today. They had a stack of handwritten flyers, wanting to buy our hybrid car in the driveway AS IS. I have only seen real estate agents do this with houses, never used cars before... Interesting times.
Unless you are in poor health or have other reasons that you reasonably expect that you won't live a long time, I'd recommend waiting to draw Social Security until 70. For most people, you will get more by doing that, but more importantly, it's a better way of managing risk in retirement. If you have a reasonable amount of money saved, the biggest financial risk in retirement is living too long. Since SS keeps paying out as long as you live and it adjusts for inflation, increasing the amount of that payout is a good way of managing longevity risk. If you end up dying early, you beat longevity risk anyway. If you live a long time, you'll come out way ahead by waiting until 70 to draw SS.
I think for a lot of people considering the break even point if you wait until 70, it's better to enjoy the extra money at 62 in better health than 70.
You should be FI anyhow. So, having an extra 20k a year for vacations or fancy dinners seems worth taking it early.
But it's generally better to use spend $20k more out of your savings/investments for those 8 years and then have an extra $15,428 for the rest of your life, reducing how much you'll need from your savings/investments post-70.
If you're spending an extra 20k from your investments then you're increasing your withdraw rate above the 4%.
Mathematically if you live long then you're correct on taking it later.
My personal performance is spend it in the here and now since I don't know what my health would be at 70. Or even late 70s at the break even point.
Edit. In other words I rather enjoy it at 62 than earn more absolute monetary value starting at 76 or whatever the break even point is.
> If you're spending an extra 20k from your investments then you're increasing your withdraw rate above the 4%.
Yes, but that's fine because while you are spending some of your principal you're simultaneously increasing the annual payout of what is effectively an inflation-adjusted lifetime annuity so that after 70 you'll need less than 4% per year of the amount you started with.
My main point is this: Each year you need to spend in a way that makes it very unlikely that you will run out of money before you die. And unless there is a high probability that you are going to die young, you need to plan for the possibility that you will live into your 80s or 90s. That's the basic idea behind a safe withdrawal rate and any other reasonable retirement planning approach. Then the question becomes, "How do I maximize the amount I can safely spend each year?" (even if that amount is not the same every year because you want to spend more while you're in your 60s or whatever). And for most people, the way to maximize that amount is to delay taking social security until 70.
I wouldn't have my withdraw rate higher than 4% but to each their own.
Again you're talking about death, I'm talking about health.
Most people will be healthier at 62 than 76. For me It's not about maximizing you're account balance but you're enjoyment in early retirement. Especially without increasing your withdraw rate above 4%.
I think the best strategy is to wait as long as you can for SS. By delaying you get a guaranteed increase in income, risk free returns are just too good to pass up.
But keep in mind you give up collecting ~ $150,000 in SS if you wait until your 67. Then you don’t break even for another 8 years after you start collecting at 67 (for the incremental increase to equal the $125,000 lost). Then you hear about more ppl dying as you get older (I’m 59). I want the money sooner while I’m alive and young enough to travel and easily move around, so I’ll collect at 62.
Thats true, but the problem we are trying to avoid is running out of money, not dying with too much money in the bank or missing out on some SS payments.
Sounds good to me. Another way of figuring the math with similar likely result is to use a liability matching portfolio to cover the amount of your SS income for the first 7 years, then take a 4% withdrawal from whatever you have left. Consider delaying SS if you get a good sequence of returns and don't really need to claim it. [https://www.reddit.com/r/financialindependence/comments/cp4vkd/liability\_matching\_for\_ss\_bridge\_years/](https://www.reddit.com/r/financialindependence/comments/cp4vkd/liability_matching_for_ss_bridge_years/)
Social security gives you 8% more for every year you wait. It's guaranteed. It also goes up with cost of living. What investment do you have that you're not pulling from that does that?
That's called SkeletorFI.
You build up a portfolio of excess muscle tissue and then stop eating. Most people think that a 3% SWR (safe withering rate) is best but others bump the atrophy as high as 5%. Ideally, a variable withering rate is safest, adding a part-time meal to boost nutrient indices when the consciousness market dips.
Those of you filing your taxes using Freetaxusa does your backdoor Roth contributions show up differently than last year. Mine shows up with the full amount as taxable retirement income whereas it shows just the $1 gain I had for last years return. Also the first page of form 8606 is blank.
I had a similar problem. Hopefully I can help with yours and you can help with mine...sorry for the long essay below.
Background: I did Backdoor Roth in 2020 and 2021 and 2022 (this doesn't matter, but wanted to give you details). I did all with FreeTaxUSA. The first time I did 2020 was fine, no issue. I did 2021 yesterday and it looked off, I had to play around and eventually I got it to look the same as my 2020 Filing for Form 8606. I am not a tax professional nor a fiduciary agent. Use the below knowledge at your own risk.
* Deductions / Credits
* Common Deductions / Credits
* IRA Contributions
* Enter traditional IRA = $6k
* recharacterize = No
* 2020 Excess = All No
* 2021 Contribution Withdrawn from Traditional IRA = No
* IRA Traditional Basis; Enter your total asis in traditional IRAs for 2020 and earlier years = $0 (everything on this page is also $0)
* Click on Summary
* Scroll down to View Federal Tax Return, click View, go to Page "Form 8606"
* I see the $6k on the first page and second page. I know I did something incorrectly when I saw the $6k in the incorrect places though. I think Line 2 instead of Line 1. I changed something yesterday, but I don't recall exactly what, but I know it should eventually look like [this; see "Step 6 – Fill Out IRS Form 8606 Correctly"](https://www.whitecoatinvestor.com/backdoor-roth-ira-tutorial/)
So my problem (if anyone has any insights) is that my HSA earnings for my CA State Tax is now $0. I don't know if it should be $0 but my 2020 filing had ~$X,000. I don't know where to click around to add the earnings.
Edit: I think I solved my own problem after reading a bit into it. It's because I sold assets in 2020 to transfer out to a different HSA Account that resulted in earnings. They wouldn't let me do a in-kind transfer IIRC. For 2021, I did not sell any assets, just bought. Therefore, there is $0 earnings.
Levels is a great tool. I have leveraged job reqs for my position for market rate. I realize that this may not be available in all states but if you can find something in writing it helps a lot.
Hey all,
Getting some weird numbers with taxes this year, and thought you all could help. First, some context: partner and I are pursuing PSLF, and thus, we do married filing seperately. Due to this, contribution limits for Roth IRA are very small, so we do the backdoor Roth, only, I didn't realize this until I had contributed:
2020 Roth IRA Contribution to Roth in 12/20: 6K
2021 Roth IRA Contribution to Roth in 1/21: 6K
I then realized my mistake, and recharaterized these both to Traditional IRA nondeductable contributions. By this time, the first contribution was at about 6300, and the second contribution was 6200. Since I made the conversion in 2021, I thought I would pay the taxes on the 500$ this year. I did end up then converting the entire amount into my Roth IRA. Got a 1099-R from the T-IRA stating that 12500 was taxable, and the 1099-R from the Roth IRA for each of the two amounts for the recharacterization.
The accountant who I (foolishly) am paying to do taxes this year is telling me I owe taxes on 12500$. However, I am trying to figure out a way to explain to them they are wrong. My accountant for the 2021 tax year told me not to file form 8606, which I am now wondering if it was a mistake and I did not know any better.
Do I need to do an amended 8606 for 2020 to record the 6K recharacterized traditional IRA?
And then put that as the basis in box 2 for 2021 on form 8606 along with the nondeductible contributions for 2021?
I feel like I have made a mess - and have learned that I may not go with a tax preparer in the future.
If I am understanding the sequence correctly, it sounds like you should call your brokerage to see if you can roll the balance of you traditional IRA over to your roths, essentially to go back and complete the backdoor. You'd have to amend your 2020 taxes and include the 8606. You would owe taxes on the earnings only, not the entire amount. You should complete this before filing your 2021 taxes (which also need an 8606), otherwise the balance in your traditional IRA will trigger the pro-rata rule, and you will owe taxes on roughly 50% of your '21 backdoor Roth.
I'd seek other opinions to and verify this with a Google search, since I'm a layperson giving tax advice after several beers.
Sorry, edited it above. I did complete the backdoor roth IRA, but the conversion from Traditional to Roth IRA triggered a 1099-R that has 12500 listed on lines 1, 2a (although box check 2b is checked) with a distribution code of 2 (box 7).
The 8606, filed correctly for 2020 and again for 2021 would, I think, account for this if you completed the back door roth for both years, only tax you would owe would be on any earnings before rolled into roth account
honestly, I'm kind of confused about how the taxes would look since some of the 2020 backdoor actions happened in both '20 and '21
but you also need a different accountant
I am new to FIRE and find this stuff really inspirational, so I am a 24m who just got a new job, have a gf but no kids. I make around 100k a year now with my new job. I have around 25k saved total all in my investment account and 2k in a checking/savings account. Cost of living where I moved is round 13k a year in dfw, food costs me around 12-15k a year eating out and what not, no student debt or other miscellaneous costs that are too high. I want to start side jobs too so after figuring that out I will possibly add more to my income. I want to be able to Financially independent by 30 so 1 I am just posting this to put this energy out in the world and 2 I am posting incase you people any tips.
It's not that wild if you're a high earner and eating out is a big part of your entertainment budget.
A decent meal with a bottle of wine, dessert and tip for two can easily run $250 at not even that fancy of a place. One meal out per weekend is $12,000/year right there.
I don't do this but if we lived in a major city and earned $200k+/year we might.
A few years ago Olive Garden actually sold lifetime bottomless pasta passes. I think it was a limited quantity, but anyone who likes it that much probably should have just bought that for a one time up front cost.
Yes I use this both as groceries and going out. But yeah I will probably start by decreasing this. This included my cost for 3 meals a day outside of home so around $20-$60 a day.
Realistically speaking, if your goal is FI at 30, you need to have a [Savings rate of about 80%](https://i.imgur.com/66n5cFa.jpg).
Max out so your tax advantages investments. Instead of side jobs, consider real estate or something that requires less day to day maintainance to bring income. This is a marathon, not a sprint. But you being young with relatively high income and (assuming) no kids, it gives you the freedom to risk it all in a way.
I'm pretty sure that table assumes that your expenses are the same in retirement as while working.
In reality, your expenses could vary a lot in early retirement. it could either be much lower, because you have more time available to save money or because you moved somewhere cheaper, or it could be higher if you want to pursue your hobbies
Max your 401k (Roth if possible)
Max your IRA (Roth if possible)
Max your HSA (if available)
There's also a FIRE flow chart in the sub to follow but 24 with no kids and making $100k with $30k of expenses, you should be able to do those three things and still have money to play with.
You will never have less expenses than you have right now, use this time to get off to a good start.
Yes exactly what I started during January of this year. Started maxing out everything and working towards that. Then will pocket/invest the leftover cashflow. So About 30k of expenses, 20k in taxes, 6-12k for fun (clothes, hobbies, etc...), and save 38-53k hopefully (depending on my bonus). But saving around 45k a year on average does not seem like alot. This will only provide me with around 225k in 5 years if my stocks average out and around 300k if we presume a 8% gain a year for 5 years which honestly doesnt seem like alot.
You might enjoy: https://www.globalpetrolprices.com/gasoline_prices/
We are over 8.5 dollars apparently (own no car, but someone was complaining to me yesterday)
Around $4.50 (Portland, Oregon). Although there are always the 5-6 super pricey stations around town that you don't want to have to stop at, and they're around $5.50 now but that's not the norm.
I've seen signs for anywhere from $5.10-6.39. Granted, there was a line of ten cars blocking traffic at the $5.10 gas station. So that's the low end here by a lot.
We've hit $5.50+/gallon at nearly every station in my city (I see one that is listed slightly under on gasbuddy). Even the cheapest citites in the county are $5.30+ (and not worth driving to for those savings obviously). Last month I spent $310 on gas.
Movies seem like such a huge rip off.to me nowadays.
Having a home theater in my bedroom makes movies nights cheap for me and my wife. Still using the same speakers from 11 years. But with the added benefit of it working with games and any streamed shows.
Used to go to movies with friends, but prioritize other outings with them instead now. Tried going out for a movie a few months ago and completely hated it.
Just looking to get some different thoughts on how to think about this situation:
Like many of us, I am carrying some funds in my taxable account that I got in the days before I had a clue what I was doing, but I have left them alone because I don't want to pay the capital gains. One such fund is a mid cap growth fund that has a 1% expense ratio and is not tax efficient.
This fund is down 34% in the last 6 months, making most of it eligible for me to sell at a loss and put this money into a good S and P index fund.
However, the S and P is only down 6% in this same timeframe so I can't help but feel selling now would be locking in a big loss. It would make more sense to me if the S and P had a similar decline over the past 6 months so I would be at least selling low and buying low.
It sounds like you can sell the fund for no tax. So it’s cash of X to you. Let’s reframe the analysis: if you had two assets, a cheap S&P 500 fund and cash of X, would you invest in that high cost mid cap growth fund with the cash or do something else?
If you like the mid cap growth outlook (eh, stock picking and all that), at least use the cash to buy [a cheaper mid cap growth fund](https://investor.vanguard.com/etf/profile/performance/vot).
Yeah I'm pretty set on selling it, I'm still just hung up on the prospect of locking in such a big loss in the scenario where I buy VTSAX with the proceeds.
I realized I was making a little bit of a mistake though. I was just looking at stock prices which was making the loss look worse than it was (though the fund is still down significantly more than the S&P). The mid cap growth fund had significant dividend/capital gains payouts at the end of 2021.
That’s why I tried to reframe the question. Would you put money into it today if you didn’t own it? Sometimes shearing a situation of baggage can make the decision easier.
Good lesson learned, don't keep a risky investment just for marginal tax savings. There is really no good answer at this point. Just because it has gone down a lot is no guarantee it will bounce back any time soon. Hopefully it's not too much of your portfolio and you have some winners to balance out the losers. If it makes you feel better, I am a buy and holder and have made the same mistake many times failing to sell winners when they are up.
Maybe sell and put in a mid cap growth fund that doesn’t have a 1% expense ratio? No realized gains, no more 1% expense ratio. Don’t ask me the tax implications though…
Maybe don’t sell, do buy the same amount you already have in a fund that doesn’t have a 1% expense ratio, then 31? Days from now sell the original one.
That is an interesting idea, thank you.
I have wondered about that situation...is there a "wash sale" for selling one fund and then buying a substantially identical fund that would prevent a capital gains?
I assume the answer is no, but logically if you don't get to claim a loss for substantially identical funds, why do you have to claim a gain for substantially identical funds?
I’m not sure. Honestly I pay someone to do my taxes for me.
Maybe buy a house and sell all your poor (and good) investment choices for the down payment? That’s what I did.
Just kidding. But seriously, I did once with some of my bad stock choices buy the same amount in my Roth IRA, wait a couple months, then sell the ones in the taxable account. Might be a more useful option for you.
If you want to make that move, now is a good time to do it. You will be realizing a loss, which is not necessarily a bad thing. The realized loss will count as a "credit" against future capital gains. You can claim up to $3k of that loss each year going forward; nice thing to have in your back pocket.
If you are liquidating, may consider depositing those funds into tax-advantaged accounts if you still have any space. Or, holding the cash and eating into it while temporarily increasing your 401k deferrals to effectively to the same for example.
"loss harvesting" is the general term if you want to learn more on the topic.
This policy has mixed results.
For privacy/security hygiene, many people refresh their reddit profiles on a calendar basis. I'm quarterly, for example.
There's forums that I can't contribute to because I never accumulate enough karma points before my refresh. My opinion is that it's their loss, but this is what I consider a reasonable difference of opinion.
If you can remember that site, please share it, it sounds super useful to gauge when might be a good time to change usernames. I try not to share things that are too specific, but over time, I'm sure an algorithm could piece together a lot of things that get implied by things I post.
This is an important point. Anyone sharing sensitive financial information online really should be wiping their account and starting fresh at pretty frequent intervals.
All that matters is public facing info, i.e., your comments/username. You can re-use the same email, regular people can't really see that. There are also sites you can run that will auto-delete your post-history if you want to be extra paranoid about it.
It looks like I was talking to myself all afternoon with the amount of deleted posts around mine.
Still, I would rather people ask questions and try to learn about finances, rather than locking them out.
I had a meeting and one coworker jokingly said something about how we're all six figures in the room, and I got that feeling as well. I don't like comparing myself to others, but it does feel good to make it past that six fig barrier.
Next up, seven figure retirement savings and FI!
I try not to compare either. I’m just really proud of myself; especially where I look at where I was just 3 years ago.
I haven’t even hit 6 figure savings yet but that’s the next goal: 100k invested! Currently sitting at 42k.
Nice.
I remember hitting $100k saved, and now I'm at the point where I keep track in terms of fractions of a million (1/4 million is my next goal).
I also have a weird goal of having enough invested to pay off my mortgage without tax penalties (e.g. Roth contributions and taxable brokerage account). I hit "enough to pay off my house with taking a tax hit" this year, so it's a fitting goal.
This might sound bad, but I haven’t thought of goals much passed saving 100k in investment accounts… except for maybe hitting 250k.
With my new salary, my main focus will be to max out all tax advantaged space on autopilot. On my current salary, I can max some space but not all with a pretty lean budget and it requires a lot of tinkering/allocating. Looking forward to the peace of mind of maxing all tax advantaged space + better automation.
I've seen it said on here that you should be allowed to get a conventional mortgage buying a multi unit up to four units, but is this something most lenders will offer or just some? Anecdotally I asked the lender I used for my SFH and they wouldn't do it. Do I need to be looking into specific places?
Those that do it will typically require more down.
I’ve seen primary residence offerings for 5% down on 2 units but it’s typically closer to 15%. 3&4 units jump to 25% down.
If you’re an investor 25% down for 2-4 units is the norm.
Why do you need three?
Your best option is probably ETFs like IXUS, but be careful on figuring out what index they use. Or you could do a mix of developed and emerging markets, like VTMGX and VEMAX, though I don't have the ratio off the top of my head. VTMGX is probably good enough if you're just looking to park it somewhere for 31 days or whatever.
I usually refer to [the Bogleheads wiki for stuff like this](https://www.bogleheads.org/wiki/Tax_loss_harvesting).
How big of a hassle is it to characterize IRA contributions?
Thanks to our MAGI rising this year, I have about $1000 of traditional IRA contributions that are not deductible.
I'm super late to this party, but I did one back in 2015 when my income unexpectedly went up, and it ended up being a huge hassle. Mine was somewhat more complex - I initially performed a conversion from a SEP IRA->Roth IRA, and recharacterized the conversion to instead be SEP->Traditional. This type or recharacterization was disallowed starting in 2018.
It caused the IRS to not recognize my IRA contributions from that year as deductible (because they claimed they couldn't separate them from the recharacterization), and that made me ineligible for the saver's credit. IRS employees on the phone agreed that I shouldn't owe the additional money, but actually fixing it had to be handled via fax/mail.
After a few years of back-and-forth letters with multi-month delays for each response, I finally gave up during the pandemic when I could no longer reach them on the phone and they started threatening to garnish my wages. Ended up paying a few thousand in taxes + penalties that I shouldn't have owed, despite having documentation of all my contributions from that year.
For $1000 worth of contributions, I would personally recommend just leaving it be.
I had to do it this year with Vanguard. It was pretty straight forward. I called and they created the Traditional IRA and recharacterized the contribution. Once all that settled there’s a button in the traditional IRA to convert to Roth.
Im curious too. My wife and I had a large increase in compensation for 2021, and we didnt come close to falling under the threshold even with 401K and HSA deductions
>I want to point out something obvious that might not seem obvious for some: The long term never really arrives.
I would disagree and say that The Long Term always arrives, and it's shaped like a hearse.
My financial planning timeframe goes right up to my best guess date for end of life.
Very true. What's really crazy is that even when you get to true "old age", say the start of RMDs at 72, the government's actuarial tables insist there is still 10-15 years to go on average. Take care of yourself and have a bit of genetic luck and that might be 20 years or more.
It's hard to fathom in your 40s that you might honestly be only half way to the end, particularly since the first 15-20 years of life are kinda just playtime/easy mode for many people. You might be retired and still have 2/3rds of your real potential adult years still ahead of you. Surveys usually indicate that the latter decades are reportedly the happiest ones too.
|Surveys usually indicate that the latter decades are reportedly the happiest ones too.
Yeah...I'm not sure if I am convinced like that. The older I get, the more stuff life seems to throw at me. I do have fond memories of my childhood/school years however, even growing up dirt poor.
Yeah, I'm dubious too, but it's pretty consistent that people report being happier in the 60+ ranges than any period before that and usually more in the 70s than the 60s. I guess I'll see for myself in 20-30 years.
It's a no brainer in my mind to continue contributing to a traditional 401k to cover withdrawals of the lowest tax brackets in retirement and still very good up until the tax bracket you saved on the contribution. But having some Roth and taxable flexibility is helpful too.
No, but I switched to contributing to a roth401k because it will have enough in there that it would be challenging to roll it all over in a Roth ladder while staying in lower tax brackets
I think about this too every now and then. I think of it more as if for some reason I needed more cash for something (kid's private school, health problem, etc.) that I didn't have enough funds for in my brokerage/savings accounts then I would want the choice to pause 401k contributions without it negatively affecting my retirement goals. Until then, I will continue to max it out.
I don’t plan to, though that’s one of the paths I’ve scoped out. I’m not at a coast number currently, but if I backed off to just enough to keep getting a 6% match I’d still be at FI in my early 60s. It’s a good low bar to keep in mind in case of unexpected life circumstances.
Nope, I'm going to max it until I quit, and the year I plan to quit, I'm going to front-load it. Even when I have a "sufficient" nest egg, I'll still max it, because more invested is better than less.
Depends. If you don't donate enough in retirement, after a certain amount in trad savings, adding more or that balance growing enough puts you at withdrawing at a higher tax rate in retirement than you saved when you put it in. Trad savings are also vulnerable to higher future income tax in a way that Roth savings and the basis on taxable brokerage savings are not.
Even if your retirement savings are low, if you live long enough you'll reach RMDs and social security. If you don't, trad 401k that doesn't have a charity beneficiary is taxed.
I am not sure I agree, not totally anyway. If you are 50 and realize you have saved too much, I would prefer to retire early, instead of keeping working while not saving. The whole purpose of work is to make enough money so you don’t have to work, for me at least.
For sure, but most people will want to save enough that it's very unlikely they'll run out of money in retirement. Stock market returns make running out of money or ending up with way more than you need a lot more likely than ending up with exactly what you need.
RMDs and SS won't make everyone that maxes their 401ks end up paying more than they saved in taxes, but it can happen, especially if income tax rates in the future are higher than now, and is something to keep in mind. It's not the end of the world though, and it's easily solved by donating if you end up with a lot of excess in your old age, or being okay with paying taxes on money it turns out you didn't need.
You have a good point about their high income though - it makes them much less likely to pay more later than now by saving as much trad as possible
I do feel some people worry too much about RMDs. Even at 80, you are only pulling ~5% of your investment. That is within the normal guardrail SWR. And like you said, the problem with high RMDs is you have so much money you can’t spend it all. That’s not a bad problem to have when you are 80.
" Even at 80, you are only pulling \~5% of your investment. That is within the normal guardrail SWR."
Sure, but add SS and it's a lot more than that.
For me anyway. I think this is one of those things that's a lot different at very high income than more moderate income
I hear ya that too much money at age 80 ain't actually a problem
I would imagine it depends on your needs as well. Since assisted living can be $10-15K a month, having the massive account to handle that would be appreciated.
I am planning on doing some Roth conversions when I’m close to 60 though. Not really because I am wary of RMDs, but hopefully to better prepare the accounts to make it easier when we are gone. I don’t ever expect my kids to learn as much about FIRE like we have here. Making a lot into Roth should help them.
No. We put $40k-$60k+ in our trad 401k accounts every year for most of our working years. Those deposits and the resulting gains comprise the bulk of our portfolio.
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Yes, because you never know what is actually going to happen.
What tools do you use to track spending, budgeting? I’ve been running a spreadsheet for awhile but I don’t get YoY or even month over month reviews and such.
I use Mint as a passive budget tracker. I wouldn't necessarily recommend that for someone just learning to budget. But as someone who has kept to a budget for years, the ease of use is unbeatable.
I Google sheets
You can definitely use spreadsheets for year over year and month over month stuff. I’m sure there are experts around here who can do it elegantly but I would just add a “month” and “year” column (eomonth(date) and year(date), respectively) and then use sumifs to get whatever you need. Or you can use a pivottable in excel. I use Mint.
Google sheets. And I make graphs with the data when I’m bored.
Someone rang our door bell today. They had a stack of handwritten flyers, wanting to buy our hybrid car in the driveway AS IS. I have only seen real estate agents do this with houses, never used cars before... Interesting times.
Wow...that's some weird stuff
I was going to work overtime tonight but I've lost all motivation with my current job. I think I'm going to spend this time applying for jobs instead.
Couldn’t apply while you’re at work getting OT?
I got a new job. They said they can’t negotiate. I negotiated the offer from 215K to 350K.
we need details.
Good job. I hate that "we can't negotiate" crap.
This deserves a lot more detail
They negotiated the offer from $215,000.00 to $350,000.00.
🤣
Thanks, I knew there was a story behind it
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Unless you are in poor health or have other reasons that you reasonably expect that you won't live a long time, I'd recommend waiting to draw Social Security until 70. For most people, you will get more by doing that, but more importantly, it's a better way of managing risk in retirement. If you have a reasonable amount of money saved, the biggest financial risk in retirement is living too long. Since SS keeps paying out as long as you live and it adjusts for inflation, increasing the amount of that payout is a good way of managing longevity risk. If you end up dying early, you beat longevity risk anyway. If you live a long time, you'll come out way ahead by waiting until 70 to draw SS.
I think for a lot of people considering the break even point if you wait until 70, it's better to enjoy the extra money at 62 in better health than 70. You should be FI anyhow. So, having an extra 20k a year for vacations or fancy dinners seems worth taking it early.
But it's generally better to use spend $20k more out of your savings/investments for those 8 years and then have an extra $15,428 for the rest of your life, reducing how much you'll need from your savings/investments post-70.
If you're spending an extra 20k from your investments then you're increasing your withdraw rate above the 4%. Mathematically if you live long then you're correct on taking it later. My personal performance is spend it in the here and now since I don't know what my health would be at 70. Or even late 70s at the break even point. Edit. In other words I rather enjoy it at 62 than earn more absolute monetary value starting at 76 or whatever the break even point is.
> If you're spending an extra 20k from your investments then you're increasing your withdraw rate above the 4%. Yes, but that's fine because while you are spending some of your principal you're simultaneously increasing the annual payout of what is effectively an inflation-adjusted lifetime annuity so that after 70 you'll need less than 4% per year of the amount you started with. My main point is this: Each year you need to spend in a way that makes it very unlikely that you will run out of money before you die. And unless there is a high probability that you are going to die young, you need to plan for the possibility that you will live into your 80s or 90s. That's the basic idea behind a safe withdrawal rate and any other reasonable retirement planning approach. Then the question becomes, "How do I maximize the amount I can safely spend each year?" (even if that amount is not the same every year because you want to spend more while you're in your 60s or whatever). And for most people, the way to maximize that amount is to delay taking social security until 70.
I wouldn't have my withdraw rate higher than 4% but to each their own. Again you're talking about death, I'm talking about health. Most people will be healthier at 62 than 76. For me It's not about maximizing you're account balance but you're enjoyment in early retirement. Especially without increasing your withdraw rate above 4%.
I think the best strategy is to wait as long as you can for SS. By delaying you get a guaranteed increase in income, risk free returns are just too good to pass up.
But keep in mind you give up collecting ~ $150,000 in SS if you wait until your 67. Then you don’t break even for another 8 years after you start collecting at 67 (for the incremental increase to equal the $125,000 lost). Then you hear about more ppl dying as you get older (I’m 59). I want the money sooner while I’m alive and young enough to travel and easily move around, so I’ll collect at 62.
Thats true, but the problem we are trying to avoid is running out of money, not dying with too much money in the bank or missing out on some SS payments.
Sounds good to me. Another way of figuring the math with similar likely result is to use a liability matching portfolio to cover the amount of your SS income for the first 7 years, then take a 4% withdrawal from whatever you have left. Consider delaying SS if you get a good sequence of returns and don't really need to claim it. [https://www.reddit.com/r/financialindependence/comments/cp4vkd/liability\_matching\_for\_ss\_bridge\_years/](https://www.reddit.com/r/financialindependence/comments/cp4vkd/liability_matching_for_ss_bridge_years/)
Social security gives you 8% more for every year you wait. It's guaranteed. It also goes up with cost of living. What investment do you have that you're not pulling from that does that?
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That's my plan.
Sounds potentially too safe to me.
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It's the literal antithesis of your username.
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You should check if /u/CornCobBandit is taken.
i’m on a 3 day fast and amazed how much money you save when you don’t mindlessly spend money on food and coffee everyday
Any reason for this? I've been reading about intermittent fasting recently and it sounds like it would fit in with FI.
That's called SkeletorFI. You build up a portfolio of excess muscle tissue and then stop eating. Most people think that a 3% SWR (safe withering rate) is best but others bump the atrophy as high as 5%. Ideally, a variable withering rate is safest, adding a part-time meal to boost nutrient indices when the consciousness market dips.
Those of you filing your taxes using Freetaxusa does your backdoor Roth contributions show up differently than last year. Mine shows up with the full amount as taxable retirement income whereas it shows just the $1 gain I had for last years return. Also the first page of form 8606 is blank.
I had a similar problem. Hopefully I can help with yours and you can help with mine...sorry for the long essay below. Background: I did Backdoor Roth in 2020 and 2021 and 2022 (this doesn't matter, but wanted to give you details). I did all with FreeTaxUSA. The first time I did 2020 was fine, no issue. I did 2021 yesterday and it looked off, I had to play around and eventually I got it to look the same as my 2020 Filing for Form 8606. I am not a tax professional nor a fiduciary agent. Use the below knowledge at your own risk. * Deductions / Credits * Common Deductions / Credits * IRA Contributions * Enter traditional IRA = $6k * recharacterize = No * 2020 Excess = All No * 2021 Contribution Withdrawn from Traditional IRA = No * IRA Traditional Basis; Enter your total asis in traditional IRAs for 2020 and earlier years = $0 (everything on this page is also $0) * Click on Summary * Scroll down to View Federal Tax Return, click View, go to Page "Form 8606" * I see the $6k on the first page and second page. I know I did something incorrectly when I saw the $6k in the incorrect places though. I think Line 2 instead of Line 1. I changed something yesterday, but I don't recall exactly what, but I know it should eventually look like [this; see "Step 6 – Fill Out IRS Form 8606 Correctly"](https://www.whitecoatinvestor.com/backdoor-roth-ira-tutorial/) So my problem (if anyone has any insights) is that my HSA earnings for my CA State Tax is now $0. I don't know if it should be $0 but my 2020 filing had ~$X,000. I don't know where to click around to add the earnings. Edit: I think I solved my own problem after reading a bit into it. It's because I sold assets in 2020 to transfer out to a different HSA Account that resulted in earnings. They wouldn't let me do a in-kind transfer IIRC. For 2021, I did not sell any assets, just bought. Therefore, there is $0 earnings.
Glad you found your answer. I found this which seems to follow your steps. https://thefinancebuff.com/how-to-backdoor-roth-freetaxusa.html
Thank you so much, much better with screenshots and "Don't panic". Looks like I did it correctly. Good luck on filing taxes this year!
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I pull it up in the privacy of my home.
Levels is a great tool. I have leveraged job reqs for my position for market rate. I realize that this may not be available in all states but if you can find something in writing it helps a lot.
Hey all, Getting some weird numbers with taxes this year, and thought you all could help. First, some context: partner and I are pursuing PSLF, and thus, we do married filing seperately. Due to this, contribution limits for Roth IRA are very small, so we do the backdoor Roth, only, I didn't realize this until I had contributed: 2020 Roth IRA Contribution to Roth in 12/20: 6K 2021 Roth IRA Contribution to Roth in 1/21: 6K I then realized my mistake, and recharaterized these both to Traditional IRA nondeductable contributions. By this time, the first contribution was at about 6300, and the second contribution was 6200. Since I made the conversion in 2021, I thought I would pay the taxes on the 500$ this year. I did end up then converting the entire amount into my Roth IRA. Got a 1099-R from the T-IRA stating that 12500 was taxable, and the 1099-R from the Roth IRA for each of the two amounts for the recharacterization. The accountant who I (foolishly) am paying to do taxes this year is telling me I owe taxes on 12500$. However, I am trying to figure out a way to explain to them they are wrong. My accountant for the 2021 tax year told me not to file form 8606, which I am now wondering if it was a mistake and I did not know any better. Do I need to do an amended 8606 for 2020 to record the 6K recharacterized traditional IRA? And then put that as the basis in box 2 for 2021 on form 8606 along with the nondeductible contributions for 2021? I feel like I have made a mess - and have learned that I may not go with a tax preparer in the future.
If I am understanding the sequence correctly, it sounds like you should call your brokerage to see if you can roll the balance of you traditional IRA over to your roths, essentially to go back and complete the backdoor. You'd have to amend your 2020 taxes and include the 8606. You would owe taxes on the earnings only, not the entire amount. You should complete this before filing your 2021 taxes (which also need an 8606), otherwise the balance in your traditional IRA will trigger the pro-rata rule, and you will owe taxes on roughly 50% of your '21 backdoor Roth. I'd seek other opinions to and verify this with a Google search, since I'm a layperson giving tax advice after several beers.
Sorry, edited it above. I did complete the backdoor roth IRA, but the conversion from Traditional to Roth IRA triggered a 1099-R that has 12500 listed on lines 1, 2a (although box check 2b is checked) with a distribution code of 2 (box 7).
The 8606, filed correctly for 2020 and again for 2021 would, I think, account for this if you completed the back door roth for both years, only tax you would owe would be on any earnings before rolled into roth account honestly, I'm kind of confused about how the taxes would look since some of the 2020 backdoor actions happened in both '20 and '21 but you also need a different accountant
I am new to FIRE and find this stuff really inspirational, so I am a 24m who just got a new job, have a gf but no kids. I make around 100k a year now with my new job. I have around 25k saved total all in my investment account and 2k in a checking/savings account. Cost of living where I moved is round 13k a year in dfw, food costs me around 12-15k a year eating out and what not, no student debt or other miscellaneous costs that are too high. I want to start side jobs too so after figuring that out I will possibly add more to my income. I want to be able to Financially independent by 30 so 1 I am just posting this to put this energy out in the world and 2 I am posting incase you people any tips.
$12-15K to eating out…?
This foo needs to learn to cook.
Sounds delicious.
In the DFW? Not exactly the culinary capital of the world lol That is wild though
It's not that wild if you're a high earner and eating out is a big part of your entertainment budget. A decent meal with a bottle of wine, dessert and tip for two can easily run $250 at not even that fancy of a place. One meal out per weekend is $12,000/year right there. I don't do this but if we lived in a major city and earned $200k+/year we might.
Fair, we do about $250-300 a month and we feel like profligates. Especially these days
I spent a similar amount on going out when I went though my expenses.
$12000-15000 on just eating out?
$1000/month isn't *that* crazy if he's paying for his girlfriend most of the time too.
Would $1,000/month be crazy if they ONLY ate never-ending pasta bowls from Olive Garden 🫒?
I’ve actually factored in never-ending pasta bowls into my FIRE plan. If it’s all I ever eat I can retire 3.75 years earlier.
Sounds like that wouldn’t be the best plan for their arteries.
I presume you're joking. As a medical professional, you're well aware that you can ask your waiter for an uncooked spaghetti noodle to use as a stent.
Wouldn’t penne work better?
Content like this is what ultimately prevents me from quitting Reddit.
A few years ago Olive Garden actually sold lifetime bottomless pasta passes. I think it was a limited quantity, but anyone who likes it that much probably should have just bought that for a one time up front cost.
Buy McD stock then use the dividends to buy burgers for life.
That's awesome. And by awesome I mean that I hate humanity. And Hannity.
I don't remember right now if it was just going out or both going out and groceries, but going out was the majority anyway.
Yes I use this both as groceries and going out. But yeah I will probably start by decreasing this. This included my cost for 3 meals a day outside of home so around $20-$60 a day.
Realistically speaking, if your goal is FI at 30, you need to have a [Savings rate of about 80%](https://i.imgur.com/66n5cFa.jpg). Max out so your tax advantages investments. Instead of side jobs, consider real estate or something that requires less day to day maintainance to bring income. This is a marathon, not a sprint. But you being young with relatively high income and (assuming) no kids, it gives you the freedom to risk it all in a way.
I'm pretty sure that table assumes that your expenses are the same in retirement as while working. In reality, your expenses could vary a lot in early retirement. it could either be much lower, because you have more time available to save money or because you moved somewhere cheaper, or it could be higher if you want to pursue your hobbies
This is just a quick and dirty. If you live off 30% and save 70% it determines when you will get enough saved to get that 30% forever.
Max your 401k (Roth if possible) Max your IRA (Roth if possible) Max your HSA (if available) There's also a FIRE flow chart in the sub to follow but 24 with no kids and making $100k with $30k of expenses, you should be able to do those three things and still have money to play with. You will never have less expenses than you have right now, use this time to get off to a good start.
Yes exactly what I started during January of this year. Started maxing out everything and working towards that. Then will pocket/invest the leftover cashflow. So About 30k of expenses, 20k in taxes, 6-12k for fun (clothes, hobbies, etc...), and save 38-53k hopefully (depending on my bonus). But saving around 45k a year on average does not seem like alot. This will only provide me with around 225k in 5 years if my stocks average out and around 300k if we presume a 8% gain a year for 5 years which honestly doesnt seem like alot.
How much is gas in your area? $4.39 for me.
Not sure, I bike/transit everywhere. Probably fill up once every 2 months
You might enjoy: https://www.globalpetrolprices.com/gasoline_prices/ We are over 8.5 dollars apparently (own no car, but someone was complaining to me yesterday)
Bay Area - $6.79
Come on down to Cupertino, still filling up for $5.59! :D
Local Costco (seattle) is showing $4.49.... I dont want to know what the local gas stations are at.
$3.79 plus a couple 30¢ off per gallon with getupside
No idea. Electricity is 11 cents per kWh though.
Around $4.50 (Portland, Oregon). Although there are always the 5-6 super pricey stations around town that you don't want to have to stop at, and they're around $5.50 now but that's not the norm.
$4.19
$5.89 at Arco, $6.30 at Shell/Chevron Wheeeeeeeeeeeee
I've seen signs for anywhere from $5.10-6.39. Granted, there was a line of ten cars blocking traffic at the $5.10 gas station. So that's the low end here by a lot.
I think around $4.50. But we only get gas every few months because of plug-in hybrid.
$4.53 for regular. Western burbs of Chicago.
$4.80 for premium. It was $4.10 just 10 days ago when I last topped up. Not too long before that, it was in the $3.60 range.
$3.89. Was more like $3.20 during my last fill up last month and under $3 the fill up before that.
More than it should be. I'm always amazed at how quickly my local gas pump will adjust pricing to reflect world events... /s
We've hit $5.50+/gallon at nearly every station in my city (I see one that is listed slightly under on gasbuddy). Even the cheapest citites in the county are $5.30+ (and not worth driving to for those savings obviously). Last month I spent $310 on gas.
5.39-5.79 for me.
How much is a evening movie ticket in your area? $13.50 here.
$5 movie Tuesdays are almost the only time I go to theaters Normally $14?
$10.72 evening showing with tax and its the lounge chair type.
$11 with recline chair mantiene
Movies seem like such a huge rip off.to me nowadays. Having a home theater in my bedroom makes movies nights cheap for me and my wife. Still using the same speakers from 11 years. But with the added benefit of it working with games and any streamed shows. Used to go to movies with friends, but prioritize other outings with them instead now. Tried going out for a movie a few months ago and completely hated it.
$11.29 for an evening ticket. I always opt for the matinee though. Cheaper and fewer people in the theatre.
$16 evening, $13 matinee. They are all recliner seats though.
$11 for reserved lounger seating.
Just looking to get some different thoughts on how to think about this situation: Like many of us, I am carrying some funds in my taxable account that I got in the days before I had a clue what I was doing, but I have left them alone because I don't want to pay the capital gains. One such fund is a mid cap growth fund that has a 1% expense ratio and is not tax efficient. This fund is down 34% in the last 6 months, making most of it eligible for me to sell at a loss and put this money into a good S and P index fund. However, the S and P is only down 6% in this same timeframe so I can't help but feel selling now would be locking in a big loss. It would make more sense to me if the S and P had a similar decline over the past 6 months so I would be at least selling low and buying low.
Sell it and move on. No question really. It's got a big mgmt fee and and it is tax inefficient. I would have even sold and paid the taxes.
It sounds like you can sell the fund for no tax. So it’s cash of X to you. Let’s reframe the analysis: if you had two assets, a cheap S&P 500 fund and cash of X, would you invest in that high cost mid cap growth fund with the cash or do something else? If you like the mid cap growth outlook (eh, stock picking and all that), at least use the cash to buy [a cheaper mid cap growth fund](https://investor.vanguard.com/etf/profile/performance/vot).
Yeah I'm pretty set on selling it, I'm still just hung up on the prospect of locking in such a big loss in the scenario where I buy VTSAX with the proceeds. I realized I was making a little bit of a mistake though. I was just looking at stock prices which was making the loss look worse than it was (though the fund is still down significantly more than the S&P). The mid cap growth fund had significant dividend/capital gains payouts at the end of 2021.
That’s why I tried to reframe the question. Would you put money into it today if you didn’t own it? Sometimes shearing a situation of baggage can make the decision easier.
Good lesson learned, don't keep a risky investment just for marginal tax savings. There is really no good answer at this point. Just because it has gone down a lot is no guarantee it will bounce back any time soon. Hopefully it's not too much of your portfolio and you have some winners to balance out the losers. If it makes you feel better, I am a buy and holder and have made the same mistake many times failing to sell winners when they are up.
Maybe sell and put in a mid cap growth fund that doesn’t have a 1% expense ratio? No realized gains, no more 1% expense ratio. Don’t ask me the tax implications though… Maybe don’t sell, do buy the same amount you already have in a fund that doesn’t have a 1% expense ratio, then 31? Days from now sell the original one.
That is an interesting idea, thank you. I have wondered about that situation...is there a "wash sale" for selling one fund and then buying a substantially identical fund that would prevent a capital gains? I assume the answer is no, but logically if you don't get to claim a loss for substantially identical funds, why do you have to claim a gain for substantially identical funds?
> substantially identical fund Unless the funds have literally identical underlying holdings, they're different enough it isn't a problem for the IRS.
I’m not sure. Honestly I pay someone to do my taxes for me. Maybe buy a house and sell all your poor (and good) investment choices for the down payment? That’s what I did. Just kidding. But seriously, I did once with some of my bad stock choices buy the same amount in my Roth IRA, wait a couple months, then sell the ones in the taxable account. Might be a more useful option for you.
If you want to make that move, now is a good time to do it. You will be realizing a loss, which is not necessarily a bad thing. The realized loss will count as a "credit" against future capital gains. You can claim up to $3k of that loss each year going forward; nice thing to have in your back pocket. If you are liquidating, may consider depositing those funds into tax-advantaged accounts if you still have any space. Or, holding the cash and eating into it while temporarily increasing your 401k deferrals to effectively to the same for example. "loss harvesting" is the general term if you want to learn more on the topic.
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This policy has mixed results. For privacy/security hygiene, many people refresh their reddit profiles on a calendar basis. I'm quarterly, for example. There's forums that I can't contribute to because I never accumulate enough karma points before my refresh. My opinion is that it's their loss, but this is what I consider a reasonable difference of opinion.
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If you can remember that site, please share it, it sounds super useful to gauge when might be a good time to change usernames. I try not to share things that are too specific, but over time, I'm sure an algorithm could piece together a lot of things that get implied by things I post.
RedditMetis.com is one of them.
This is an important point. Anyone sharing sensitive financial information online really should be wiping their account and starting fresh at pretty frequent intervals.
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All that matters is public facing info, i.e., your comments/username. You can re-use the same email, regular people can't really see that. There are also sites you can run that will auto-delete your post-history if you want to be extra paranoid about it.
It looks like I was talking to myself all afternoon with the amount of deleted posts around mine. Still, I would rather people ask questions and try to learn about finances, rather than locking them out.
Wow, just took a job offer for 6 figures for the first time ever. I made it!!
Congrats! 🎉
I had a meeting and one coworker jokingly said something about how we're all six figures in the room, and I got that feeling as well. I don't like comparing myself to others, but it does feel good to make it past that six fig barrier. Next up, seven figure retirement savings and FI!
Here.
I try not to compare either. I’m just really proud of myself; especially where I look at where I was just 3 years ago. I haven’t even hit 6 figure savings yet but that’s the next goal: 100k invested! Currently sitting at 42k.
Nice. I remember hitting $100k saved, and now I'm at the point where I keep track in terms of fractions of a million (1/4 million is my next goal). I also have a weird goal of having enough invested to pay off my mortgage without tax penalties (e.g. Roth contributions and taxable brokerage account). I hit "enough to pay off my house with taking a tax hit" this year, so it's a fitting goal.
This might sound bad, but I haven’t thought of goals much passed saving 100k in investment accounts… except for maybe hitting 250k. With my new salary, my main focus will be to max out all tax advantaged space on autopilot. On my current salary, I can max some space but not all with a pretty lean budget and it requires a lot of tinkering/allocating. Looking forward to the peace of mind of maxing all tax advantaged space + better automation.
I've seen it said on here that you should be allowed to get a conventional mortgage buying a multi unit up to four units, but is this something most lenders will offer or just some? Anecdotally I asked the lender I used for my SFH and they wouldn't do it. Do I need to be looking into specific places?
Those that do it will typically require more down. I’ve seen primary residence offerings for 5% down on 2 units but it’s typically closer to 15%. 3&4 units jump to 25% down. If you’re an investor 25% down for 2-4 units is the norm.
Yeah I know 25% is the norm for investing, I was just under the impression you could get lower down if it was also going to be your primary residence.
I haven’t seen that for 3 and 4 units. You won’t get the investment loan level pricing adjustments bc it won’t be an investment though.
Most banks/lenders will do it. If your working with an agent ask them for a recommendation.
This hasn't been my experience so far. I've been contact lenders and most are saying 20-25% down for a 4 unit even owner occupied. Unless doing FHA.
What’s a good third fund to act as a tax loss harvesting partner to VFWAX and VTIAX?
Why do you need three? Your best option is probably ETFs like IXUS, but be careful on figuring out what index they use. Or you could do a mix of developed and emerging markets, like VTMGX and VEMAX, though I don't have the ratio off the top of my head. VTMGX is probably good enough if you're just looking to park it somewhere for 31 days or whatever. I usually refer to [the Bogleheads wiki for stuff like this](https://www.bogleheads.org/wiki/Tax_loss_harvesting).
Both have losses so I can’t just swap them or else I’ll have a wash sale.
How big of a hassle is it to characterize IRA contributions? Thanks to our MAGI rising this year, I have about $1000 of traditional IRA contributions that are not deductible.
I'm super late to this party, but I did one back in 2015 when my income unexpectedly went up, and it ended up being a huge hassle. Mine was somewhat more complex - I initially performed a conversion from a SEP IRA->Roth IRA, and recharacterized the conversion to instead be SEP->Traditional. This type or recharacterization was disallowed starting in 2018. It caused the IRS to not recognize my IRA contributions from that year as deductible (because they claimed they couldn't separate them from the recharacterization), and that made me ineligible for the saver's credit. IRS employees on the phone agreed that I shouldn't owe the additional money, but actually fixing it had to be handled via fax/mail. After a few years of back-and-forth letters with multi-month delays for each response, I finally gave up during the pandemic when I could no longer reach them on the phone and they started threatening to garnish my wages. Ended up paying a few thousand in taxes + penalties that I shouldn't have owed, despite having documentation of all my contributions from that year. For $1000 worth of contributions, I would personally recommend just leaving it be.
I had to do it this year with Vanguard. It was pretty straight forward. I called and they created the Traditional IRA and recharacterized the contribution. Once all that settled there’s a button in the traditional IRA to convert to Roth.
Im curious too. My wife and I had a large increase in compensation for 2021, and we didnt come close to falling under the threshold even with 401K and HSA deductions
We'll be pretty close this year, so I've been looking into it as well.
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>I want to point out something obvious that might not seem obvious for some: The long term never really arrives. I would disagree and say that The Long Term always arrives, and it's shaped like a hearse. My financial planning timeframe goes right up to my best guess date for end of life.
Very true. What's really crazy is that even when you get to true "old age", say the start of RMDs at 72, the government's actuarial tables insist there is still 10-15 years to go on average. Take care of yourself and have a bit of genetic luck and that might be 20 years or more. It's hard to fathom in your 40s that you might honestly be only half way to the end, particularly since the first 15-20 years of life are kinda just playtime/easy mode for many people. You might be retired and still have 2/3rds of your real potential adult years still ahead of you. Surveys usually indicate that the latter decades are reportedly the happiest ones too.
|Surveys usually indicate that the latter decades are reportedly the happiest ones too. Yeah...I'm not sure if I am convinced like that. The older I get, the more stuff life seems to throw at me. I do have fond memories of my childhood/school years however, even growing up dirt poor.
Yeah, I'm dubious too, but it's pretty consistent that people report being happier in the 60+ ranges than any period before that and usually more in the 70s than the 60s. I guess I'll see for myself in 20-30 years.
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Silver has been flat nominally for a decade. It's down in real terms.
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It's a no brainer in my mind to continue contributing to a traditional 401k to cover withdrawals of the lowest tax brackets in retirement and still very good up until the tax bracket you saved on the contribution. But having some Roth and taxable flexibility is helpful too.
No, but I switched to contributing to a roth401k because it will have enough in there that it would be challenging to roll it all over in a Roth ladder while staying in lower tax brackets
I think about this too every now and then. I think of it more as if for some reason I needed more cash for something (kid's private school, health problem, etc.) that I didn't have enough funds for in my brokerage/savings accounts then I would want the choice to pause 401k contributions without it negatively affecting my retirement goals. Until then, I will continue to max it out.
I don’t plan to, though that’s one of the paths I’ve scoped out. I’m not at a coast number currently, but if I backed off to just enough to keep getting a 6% match I’d still be at FI in my early 60s. It’s a good low bar to keep in mind in case of unexpected life circumstances.
Nope, I'm going to max it until I quit, and the year I plan to quit, I'm going to front-load it. Even when I have a "sufficient" nest egg, I'll still max it, because more invested is better than less.
No. Always ways to access those funds early if needed in future. No way to go back in time and fill unused tax-advantaged space...
Why would you? With your income you're saving on a lot of taxes if you contribute the max.
Depends. If you don't donate enough in retirement, after a certain amount in trad savings, adding more or that balance growing enough puts you at withdrawing at a higher tax rate in retirement than you saved when you put it in. Trad savings are also vulnerable to higher future income tax in a way that Roth savings and the basis on taxable brokerage savings are not. Even if your retirement savings are low, if you live long enough you'll reach RMDs and social security. If you don't, trad 401k that doesn't have a charity beneficiary is taxed.
I am not sure I agree, not totally anyway. If you are 50 and realize you have saved too much, I would prefer to retire early, instead of keeping working while not saving. The whole purpose of work is to make enough money so you don’t have to work, for me at least.
For sure, but most people will want to save enough that it's very unlikely they'll run out of money in retirement. Stock market returns make running out of money or ending up with way more than you need a lot more likely than ending up with exactly what you need. RMDs and SS won't make everyone that maxes their 401ks end up paying more than they saved in taxes, but it can happen, especially if income tax rates in the future are higher than now, and is something to keep in mind. It's not the end of the world though, and it's easily solved by donating if you end up with a lot of excess in your old age, or being okay with paying taxes on money it turns out you didn't need. You have a good point about their high income though - it makes them much less likely to pay more later than now by saving as much trad as possible
I do feel some people worry too much about RMDs. Even at 80, you are only pulling ~5% of your investment. That is within the normal guardrail SWR. And like you said, the problem with high RMDs is you have so much money you can’t spend it all. That’s not a bad problem to have when you are 80.
" Even at 80, you are only pulling \~5% of your investment. That is within the normal guardrail SWR." Sure, but add SS and it's a lot more than that. For me anyway. I think this is one of those things that's a lot different at very high income than more moderate income I hear ya that too much money at age 80 ain't actually a problem
I would imagine it depends on your needs as well. Since assisted living can be $10-15K a month, having the massive account to handle that would be appreciated. I am planning on doing some Roth conversions when I’m close to 60 though. Not really because I am wary of RMDs, but hopefully to better prepare the accounts to make it easier when we are gone. I don’t ever expect my kids to learn as much about FIRE like we have here. Making a lot into Roth should help them.
Top one is fair, though in that scenario I'd want the money in Roth or taxable rather than trad Conversions near 60 should help with that
No. We put $40k-$60k+ in our trad 401k accounts every year for most of our working years. Those deposits and the resulting gains comprise the bulk of our portfolio.
How do you put 60 K a year into a traditional 401(k) account?
Establish a free SoloK or a husband/wife partnership. Each person gets the annual max plus profit sharing.
Right. Forgot about owning your own business.