Race from $2M to $4M...and Beyond!

[dividendman]

For those buying I-bonds (I just sold mine that had a 0% fixed rate), why are you deciding to do that now instead of waiting until may for a higher fixed rate?

Short Term Treasuries seem to yield about the same at this point so it waiting for the later I-bond fixed rates might be worth it?

Of course, I guess the fixed rate could go down.

[LoanShark]

I just started my annual $10k I-bond purchase. 

In other news, I've decided to un-retire / put out my FIRE and get a j*b!
I'm now employed as a hedge fund manager.
I'm one of those 'elite' hedge fund managers, though - '2 and 20' isn't good enough for me.
Apparently there are some (like D.E. Shaw - https://www.institutionalinvestor.com/article/2bswhgrmp6rwew5bkgxz4/portfolio/3-and-30-is-back-for-d-e-shaw that actually charge their clients '3 and 30' : 3% annual fee plus 30% of all generated returns.

As hedge fund manager of my own portfolio, I will 'pay' myself 3 and 30.  So if the market is flat or down this year I will withdraw 3%, if it's up 8% I will withdraw 5.4%, etc.
(well not really... but I do plan to pull out about 3% this year, and I will treat myself to a new cheap sports car (well, cheap for a new sports car - a Mazda Miata) if the market goes up 8% this year, which would correspond to about '3 and 15.' Am I undercharging myself?)

Haha...yep, when I FIRE in a year or so, my "job" title will be "financial planner" ( when people ask ).   

It fits well too as managing our portfolio, stock trading, etc... has actually become a "side gig" of mine, and I enjoy it.  And the brokerage account is proof that it has been successful as well!

Ha! I like that. Great job "title".

[Fomerly known as something]

For those buying I-bonds (I just sold mine that had a 0% fixed rate), why are you deciding to do that now instead of waiting until may for a higher fixed rate?

Short Term Treasuries seem to yield about the same at this point so it waiting for the later I-bond fixed rates might be worth it?

Of course, I guess the fixed rate could go down.

I’m playing around with TBills but mostly I’m back in the flexible HYSA.

[arcturus]

My path could become much clearer in the next few months.  A policy change at my BigCo is likely to mean that I will be having a discussion with my boss about my future.  It is good to feel like I have options entering this discussion.   Options to include (1) relocating and/or long distance commuting to work; (2) taking a demotion and moving into a transitional role for a year, with some incentives to keep me around for another year (an invented option); (3) getting a (small) severance package.

As I'm not quite where I want to be financially yet, I am presently leaning to Option 2 (which is an option I made up, by the way - the "official" options are (1) and (3)).   I am finding that going through this thought process over the past few weeks is also starting to change my perspective at work, where I am starting to see myself outside of the situation and as being on the way out, rather than just being "in the ring" and churning away, if that makes any sense at all.

Anyways, it certainly appears to have clarified for me that I'll be out by either June 30 of this year or June 30, 2025, worst case.  I'm just debating the pros and cons (financial and otherwise) of taking Option 3 vs 2 at this point. 

[Turtle]

My path could become much clearer in the next few months.  A policy change at my BigCo is likely to mean that I will be having a discussion with my boss about my future.  It is good to feel like I have options entering this discussion.   Options to include (1) relocating and/or long distance commuting to work; (2) taking a demotion and moving into a transitional role for a year, with some incentives to keep me around for another year (an invented option); (3) getting a (small) severance package.

As I'm not quite where I want to be financially yet, I am presently leaning to Option 2 (which is an option I made up, by the way - the "official" options are (1) and (3)).   I am finding that going through this thought process over the past few weeks is also starting to change my perspective at work, where I am starting to see myself outside of the situation and as being on the way out, rather than just being "in the ring" and churning away, if that makes any sense at all.

Anyways, it certainly appears to have clarified for me that I'll be out by either June 30 of this year or June 30, 2025, worst case.  I'm just debating the pros and cons (financial and otherwise) of taking Option 3 vs 2 at this point.

Is option 2 effectively a lateral move for you, pay wise?  At most companies I'm familiar with, option 3 is usually tied to base pay, so option 2 could potentially effect option 3 in the future if the demotion includes pay cut.  That's the first thing that came to mind when reading your post.

Either way, congrats on putting yourself into position to make your own choices at this point!

My company doesn't know it, but I'm unofficially option 2.  Could have left several times over for more money/more stress, but I'm more interested in coasting it out until I vanish into the sunset.

[arcturus]

My path could become much clearer in the next few months.  A policy change at my BigCo is likely to mean that I will be having a discussion with my boss about my future.  It is good to feel like I have options entering this discussion.   Options to include (1) relocating and/or long distance commuting to work; (2) taking a demotion and moving into a transitional role for a year, with some incentives to keep me around for another year (an invented option); (3) getting a (small) severance package.

As I'm not quite where I want to be financially yet, I am presently leaning to Option 2 (which is an option I made up, by the way - the "official" options are (1) and (3)).   I am finding that going through this thought process over the past few weeks is also starting to change my perspective at work, where I am starting to see myself outside of the situation and as being on the way out, rather than just being "in the ring" and churning away, if that makes any sense at all.

Anyways, it certainly appears to have clarified for me that I'll be out by either June 30 of this year or June 30, 2025, worst case.  I'm just debating the pros and cons (financial and otherwise) of taking Option 3 vs 2 at this point.

Is option 2 effectively a lateral move for you, pay wise?  At most companies I'm familiar with, option 3 is usually tied to base pay, so option 2 could potentially effect option 3 in the future if the demotion includes pay cut.  That's the first thing that came to mind when reading your post.

Either way, congrats on putting yourself into position to make your own choices at this point!

My company doesn't know it, but I'm unofficially option 2.  Could have left several times over for more money/more stress, but I'm more interested in coasting it out until I vanish into the sunset.

Thanks @Turtle , no Option 2 would not be lateral from a base pay perspective, would definitely be a step down.  My thought would be to see if I could negotiate a supplemental bonus (like a retention bonus) to help get me back to my base salary, while removing me from a managerial position.   But, even if I don't accomplish that, Option 2 would also accomplish some things for me -- allowing me to avoid touching the savings for another year, taking me through a vesting cycle on some equity / RSUs, etc.

And good for you on being in a "unofficial" option 2 situation!!  That may be where I end up, but mine will have an expiration date attaching to it I would suspect.

[Dicey]

This topic came up elsewhere on the forum, but I didn't feel comfortable sharing it there. DH retired last year, and gets a DB Pension. We haven't started taking SS, which is kind of a technicality, because neither of us is at full retirement age just yet, and we're disinclined to file early.

DH did the math anyway recently. Between his (COLA adjusted) pension and with each of us filing for SS at FRA, we will gross $160k per year. Not counting rental income, not counting taxable investments, not counting 401ks, Roths, IRAs or the value of our primary (paid for) home. There's also 457b money in there somewhere, too.

I FIRE'd right after we got married in 2012, and DH never earned as much as $100k from his primary job (not counting side gigs). Neither did I, for that matter. These numbers are beyond our wildest imagination. Who can't live an insanely lavish life on $160+k per year?

Holy cow. How is this even possible?

[MaybeBabyMustache]

Wow, @Dicey ! That's incredible. I hope you guys are coming up with fun plans for that - whatever that looks like for you all (charity, travel, spending on family, etc)

[Exflyboy]

Very nice @Dicey , we have a similar situation, i.e roughly $125k doing the same calculation. In fact when saving and doing projections I had not even considered what our pensions and SS would be worth.

The problem is RMDs (at age 75 for us) are going to be an absolute killer because like it or not we are going to be drawing incomes considerably larger than our $125/160k dollars..:)

I think our highest spend year in retirement so far has been around $80k, but that included buying that new SUV.. Must spend mo money!

[2sk22]

This topic came up elsewhere on the forum, but I didn't feel comfortable sharing it there. DH retired last year, and gets a DB Pension. We haven't started taking SS, which is kind of a technicality, because neither of us is at full retirement age just yet, and we're disinclined to file early.

DH did the math anyway recently. Between his (COLA adjusted) pension and with each of us filing for SS at FRA, we will gross $160k per year. Not counting rental income, not counting taxable investments, not counting 401ks, Roths, IRAs or the value of our primary (paid for) home. There's also 457b money in there somewhere, too.

I FIRE'd right after we got married in 2012, and DH never earned as much as $100k from his primary job (not counting side gigs). Neither did I, for that matter. These numbers are beyond our wildest imagination. Who can't live an insanely lavish life on $160+k per year?

Holy cow. How is this even possible?

Damn, that's a goodly amount :-)

As it happens, both my wife and I are entitled to pensions (both without COLA). I will get a relatively modest one since the company I worked for in the 1990s terminated their pension plan relatively early but my wife will get a pretty substantial one. I don't include these in our net worth since I only count money actually in hand. My current plan is to roll over pension lump sums into our respective IRAs and then do Roth conversions - upto the 24% bracket!

[Louise]

This topic came up elsewhere on the forum, but I didn't feel comfortable sharing it there. DH retired last year, and gets a DB Pension. We haven't started taking SS, which is kind of a technicality, because neither of us is at full retirement age just yet, and we're disinclined to file early.

DH did the math anyway recently. Between his (COLA adjusted) pension and with each of us filing for SS at FRA, we will gross $160k per year. Not counting rental income, not counting taxable investments, not counting 401ks, Roths, IRAs or the value of our primary (paid for) home. There's also 457b money in there somewhere, too.

I FIRE'd right after we got married in 2012, and DH never earned as much as $100k from his primary job (not counting side gigs). Neither did I, for that matter. These numbers are beyond our wildest imagination. Who can't live an insanely lavish life on $160+k per year?

Holy cow. How is this even possible?

Wow that's great! I wouldn't know what to do with that much. It's way more than we've ever made together. I often look at our NW and think the same thing though. How is this possible?? We never made big salaries.

[EscapeVelocity2020]

I guess that’s the MPP of not factoring in SS to FIRE…. Since you don’t need it, you can put it off until it maxes out and then you have an even larger surplus! 

[lhamo]

If anybody trying to figure out what to do with all their excess cash would be interested in giving me a 0% loan for my house renovations I would very happily discuss!  I've got plenty of money, it is just a pain to tap it now....

[Turtle]

Very nice @Dicey , we have a similar situation, i.e roughly $125k doing the same calculation. In fact when saving and doing projections I had not even considered what our pensions and SS would be worth.

The problem is RMDs (at age 75 for us) are going to be an absolute killer because like it or not we are going to be drawing incomes considerably larger than our $125/160k dollars..:)

I think our highest spend year in retirement so far has been around $80k, but that included buying that new SUV.. Must spend mo money!

My "must spend" plans between age 65-75 are to use Traditional up to just under the Medicare penalty every year, but that will only do so much in addressing RMDs.  If the markets are going so well that I have giant RMDs, it sure sounds like an MPP to me. 

[jeroly]

This topic came up elsewhere on the forum, but I didn't feel comfortable sharing it there. DH retired last year, and gets a DB Pension. We haven't started taking SS, which is kind of a technicality, because neither of us is at full retirement age just yet, and we're disinclined to file early.

DH did the math anyway recently. Between his (COLA adjusted) pension and with each of us filing for SS at FRA, we will gross $160k per year. Not counting rental income, not counting taxable investments, not counting 401ks, Roths, IRAs or the value of our primary (paid for) home. There's also 457b money in there somewhere, too.

I FIRE'd right after we got married in 2012, and DH never earned as much as $100k from his primary job (not counting side gigs). Neither did I, for that matter. These numbers are beyond our wildest imagination. Who can't live an insanely lavish life on $160+k per year?

Holy cow. How is this even possible?

1. This is a "Mustachian People's Problem" https://forum.mrmoneymustache.com/welcome-to-the-forum/mustachian-people-problems-(just-for-fun)   if there ever was one.

2. Don't forget those upcoming RMDs!  That lavish $160k+ lifestyle will just have to creep higher!

[Exflyboy]

Very nice @Dicey , we have a similar situation, i.e roughly $125k doing the same calculation. In fact when saving and doing projections I had not even considered what our pensions and SS would be worth.

The problem is RMDs (at age 75 for us) are going to be an absolute killer because like it or not we are going to be drawing incomes considerably larger than our $125/160k dollars..:)

I think our highest spend year in retirement so far has been around $80k, but that included buying that new SUV.. Must spend mo money!

My "must spend" plans between age 65-75 are to use Traditional up to just under the Medicare penalty every year, but that will only do so much in addressing RMDs.  If the markets are going so well that I have giant RMDs, it sure sounds like an MPP to me.

I'm probably being a bit dense here but.. What is an MPP?

It sort of sounds like GPP.... Fot an explanation see here.. :)   https://www.google.com/search?q=hitchikers+guide+GPP+video&sca_esv=8add31af34f47e86&rlz=1CAPPDO_enUS887&ei=Kim5ZZynNoiJ0PEPr_Wb2A8&ved=0ahUKEwic5KqjyYWEAxWIBDQIHa_6BvsQ4dUDCBA&uact=5&oq=hitchikers+guide+GPP+video&gs_lp=Egxnd3Mtd2l6LXNlcnAiGmhpdGNoaWtlcnMgZ3VpZGUgR1BQIHZpZGVvMgcQIRgKGKABSPMtUIALWMwdcAF4AZABAJgBigKgAa8HqgEFMC41LjG4AQPIAQD4AQHCAgoQABhHGNYEGLADwgIIEAAYFhgeGA_CAgUQIRirAuIDBBgAIEGIBgGQBgQ&sclient=gws-wiz-serp#fpstate=ive&vld=cid:796b5be0,vid:Eh-W8QDVA9s,st:0

[SwordGuy]

What is an MPP?

Mustachian Person Problem.   The kind of problem people on this forum have that regular folks never have.

[Exflyboy]

What is an MPP?

Mustachian Person Problem.   The kind of problem people on this forum have that regular folks never have.

Oh duh.. Thanks!

Yeah RMD's will hurt. I always assumed I would be in a much lower tax bracket when retired.. Umm.. not so much and only true until one has finished milking the Affordable Care Act for all its worth.

Unless you live in any other Country except the USA of course.

[ixtap]

Very nice @Dicey , we have a similar situation, i.e roughly $125k doing the same calculation. In fact when saving and doing projections I had not even considered what our pensions and SS would be worth.

The problem is RMDs (at age 75 for us) are going to be an absolute killer because like it or not we are going to be drawing incomes considerably larger than our $125/160k dollars..:)

I think our highest spend year in retirement so far has been around $80k, but that included buying that new SUV.. Must spend mo money!

My "must spend" plans between age 65-75 are to use Traditional up to just under the Medicare penalty every year, but that will only do so much in addressing RMDs.  If the markets are going so well that I have giant RMDs, it sure sounds like an MPP to me.

I'm probably being a bit dense here but.. What is an MPP?

It sort of sounds like GPP.... Fot an explanation see here.. :)   https://www.google.com/search?q=hitchikers+guide+GPP+video&sca_esv=8add31af34f47e86&rlz=1CAPPDO_enUS887&ei=Kim5ZZynNoiJ0PEPr_Wb2A8&ved=0ahUKEwic5KqjyYWEAxWIBDQIHa_6BvsQ4dUDCBA&uact=5&oq=hitchikers+guide+GPP+video&gs_lp=Egxnd3Mtd2l6LXNlcnAiGmhpdGNoaWtlcnMgZ3VpZGUgR1BQIHZpZGVvMgcQIRgKGKABSPMtUIALWMwdcAF4AZABAJgBigKgAa8HqgEFMC41LjG4AQPIAQD4AQHCAgoQABhHGNYEGLADwgIIEAAYFhgeGA_CAgUQIRirAuIDBBgAIEGIBgGQBgQ&sclient=gws-wiz-serp#fpstate=ive&vld=cid:796b5be0,vid:Eh-W8QDVA9s,st:0

Mustachian People Problems. We have a whole thread on the issue.

We have exceeded the amount we once thought "I wouldn't even know how to spend that much!" Problem is, we learned how to spend it. Our current spending hasn't gone up by much more than inflation, but when we decide our current boat doesn't meet our needs, we will probably make a significant upgrade rather than just getting back to where we were when this boat was new to us.

Meanwhile, as was mentioned around Christmas, we struggle around gifting and philanthropy. We don't know what to do for nieces and nephews because anything would be multiplied by 20. Even for other folks, one minute we are gung ho, the next we are questioning. We would never nag an individual for their choices after we have given funds, but we might not offer anything more. So much easier to give to established charities and let them deal with the individual successes and failures!

Whether or not RMDs turn out to be problematic will depend on how long DH maintains his semi retired status. I expected to be doing conversions by now and instead we are still making traditional 401k contributions.

[secondcor521]

QCDs could help an RMD MPP.  HTH.

[weebs]

QCDs could help an RMD MPP.  HTH.

LOL

[Dicey]

QCDs could help an RMD MPP.  HTH.

IMO, CPA's are second only to the Military  in their love of acronyms.

[Dicey]

Lest I sound like a total idiot, I never knew exactly how to calculate the value of DH's pension, and I always suspected that pulling the plug at 54 would adversely effect my SS., so I kind of ignored them both. We hit FIRE based on everything else, so this discovery is freaking crazy!

We already have a DAF, we've already helped DH's kids get into/fix up homes as much as we're willing to, what our house needs is already budgeted for...it's insanity!

We think this also means that we should do some big RMDs IRA Withdrawals before we start SS. Otherwise, the taxes will give us a heart attack.

Our CPA was never big on Roth Conversions. He felt they wouldn't help us that much. I'd love for some smart mustachian to prove him wrong.

[secondcor521]

Lest I sound like a total idiot, I never knew exactly how to calculate the value of DH's pension, and I always suspected that pulling the plug at 54 would adversely effect my SS., so I kind of ignored them both. We hit FIRE based on everything else, so this discovery is freaking crazy!

We already have a DAF, we've already helped DH's kids get into/fix up homes as much as we're willing to, what our house needs is already budgeted for...it's insanity!

We think this also means that we should do some big RMDs before we start SS. Otherwise, the taxes will give us a heart attack.

Our CPA was never big on Roth Conversions. He felt they wouldn't help us that much. I'd love for some smart mustachian to prove him wrong.

He's probably wrong, but it is probably water under the bridge now.

Although you could look at Roth conversions going forward; they might still help a bit depending on your whole situation.

QCDs are probably better for you than a DAF when you get to 70.5.  Or maybe you wait until RMD age depending on the size of your IRAs and your whole tax situation.

Not a CPA, BTW.  Also not military, FYI. ;-)

[Fomerly known as something]

Lest I sound like a total idiot, I never knew exactly how to calculate the value of DH's pension, and I always suspected that pulling the plug at 54 would adversely effect my SS., so I kind of ignored them both. We hit FIRE based on everything else, so this discovery is freaking crazy!

We already have a DAF, we've already helped DH's kids get into/fix up homes as much as we're willing to, what our house needs is already budgeted for...it's insanity!

We think this also means that we should do some big RMDs before we start SS. Otherwise, the taxes will give us a heart attack.

Our CPA was never big on Roth Conversions. He felt they wouldn't help us that much. I'd love for some smart mustachian to prove him wrong.

I’m in the same boat due to my pension, conversions don’t “make sense”. Unless I were to be using them to pass money on to others.  (Aka if I had kids)

[jeroly]

For those buying I-bonds (I just sold mine that had a 0% fixed rate), why are you deciding to do that now instead of waiting until may for a higher fixed rate?

Short Term Treasuries seem to yield about the same at this point so it waiting for the later I-bond fixed rates might be worth it?

Of course, I guess the fixed rate could go down.

@dividendman , on re-reading your post I'm a little confused. Are you saying that it's been announced that the fixed rate is going up in May? If so, do you have any link to a source for that assertion?

If it hasn't been announced then my best guess is that the fixed rate may drop from the current rate as real rates have been dropping lately, so I'll go ahead with my purchase now.

[Exflyboy]

Lest I sound like a total idiot, I never knew exactly how to calculate the value of DH's pension, and I always suspected that pulling the plug at 54 would adversely effect my SS., so I kind of ignored them both. We hit FIRE based on everything else, so this discovery is freaking crazy!

We already have a DAF, we've already helped DH's kids get into/fix up homes as much as we're willing to, what our house needs is already budgeted for...it's insanity!

We think this also means that we should do some big RMDs before we start SS. Otherwise, the taxes will give us a heart attack.

Our CPA was never big on Roth Conversions. He felt they wouldn't help us that much. I'd love for some smart mustachian to prove him wrong.

Last time I looked at it I could PERHAPS reduce my 401k by about $0.5M with relatively little pain as long I had got out of the rental business, waited till I was 68 (and DW hit 65, aka Medicare/ slash my wrists age) and didn't draw any SS or pensions.

Trouble is my 401k balance is currently about $1.6M and I'm a mere 62.. In 6 years this "problem" could be a whole lot bigger.

I think I'm innevitably gonna be paying a shit-ton of taxes!

[Josiecat22222]

RMD's are going to be a pain.  We are planning to use our tIRA's to fund our lives exclusively during the ages of 59.5 and 75 (just let the brokerage roll) so as to minimize a "forced" tax.  We will likely still end up with too much in our accounts as we live a fairly frugal life, but that appears to be the theme in these parts.

[Turtle]

QCDs could help an RMD MPP.  HTH.

Already planning on it for the first year or two to kick the "problem" down the curb as long as possible.

[lhamo]

Lest I sound like a total idiot, I never knew exactly how to calculate the value of DH's pension, and I always suspected that pulling the plug at 54 would adversely effect my SS., so I kind of ignored them both. We hit FIRE based on everything else, so this discovery is freaking crazy!

We already have a DAF, we've already helped DH's kids get into/fix up homes as much as we're willing to, what our house needs is already budgeted for...it's insanity!

We think this also means that we should do some big RMDs before we start SS. Otherwise, the taxes will give us a heart attack.

Our CPA was never big on Roth Conversions. He felt they wouldn't help us that much. I'd love for some smart mustachian to prove him wrong.

I don't quite understand your thinking here.

If you take out a huge lump sum from your Trad accounts prior to taking SS, you are going to pay your marginal tax rate on that money anyway.  Why not just do a Roth conversion and then at least it grows tax free for the rest of eternity?  Versus being money in yet another taxable account that you have to continue to think about/manage in order to limit your annual tax burden.

[jeroly]

[...] We think this also means that we should do some big RMDs before we start SS. Otherwise, the taxes will give us a heart attack. [...]

I'm guessing you meant to write 'some big Roth conversions' ? (RMDs start at 72, and their amount is fixed based on your remaining life expectancy (per the IRS table) and your beginning of year pretax account balance)

[dividendman]

For those buying I-bonds (I just sold mine that had a 0% fixed rate), why are you deciding to do that now instead of waiting until may for a higher fixed rate?

Short Term Treasuries seem to yield about the same at this point so it waiting for the later I-bond fixed rates might be worth it?

Of course, I guess the fixed rate could go down.

@dividendman , on re-reading your post I'm a little confused. Are you saying that it's been announced that the fixed rate is going up in May? If so, do you have any link to a source for that assertion?

If it hasn't been announced then my best guess is that the fixed rate may drop from the current rate as real rates have been dropping lately, so I'll go ahead with my purchase now.

No, I'm just speculating, hence my last line "of course, I guess the fixed rate could go down". But real rates (real rates = nominal rate - inflation) have actually been rising, not dropping.  So this leads me to speculate on a higher fixed rate when they set it in May.

[jeroly]

For those buying I-bonds (I just sold mine that had a 0% fixed rate), why are you deciding to do that now instead of waiting until may for a higher fixed rate?

Short Term Treasuries seem to yield about the same at this point so it waiting for the later I-bond fixed rates might be worth it?

Of course, I guess the fixed rate could go down.

@dividendman , on re-reading your post I'm a little confused. Are you saying that it's been announced that the fixed rate is going up in May? If so, do you have any link to a source for that assertion?

If it hasn't been announced then my best guess is that the fixed rate may drop from the current rate as real rates have been dropping lately, so I'll go ahead with my purchase now.

No, I'm just speculating, hence my last line "of course, I guess the fixed rate could go down". But real rates (real rates = nominal rate - inflation) have actually been rising, not dropping.  So this leads me to speculate on a higher fixed rate when they set it in May.

According to the Fed (https://fred.stlouisfed.org/series/REAINTRATREARAT10Y), the real 10-year rate has dropped from 2.09 in November to 1.8 or so today...similarly for 5-, 30-year rates as well...

[dividendman]

For those buying I-bonds (I just sold mine that had a 0% fixed rate), why are you deciding to do that now instead of waiting until may for a higher fixed rate?

Short Term Treasuries seem to yield about the same at this point so it waiting for the later I-bond fixed rates might be worth it?

Of course, I guess the fixed rate could go down.

@dividendman , on re-reading your post I'm a little confused. Are you saying that it's been announced that the fixed rate is going up in May? If so, do you have any link to a source for that assertion?

If it hasn't been announced then my best guess is that the fixed rate may drop from the current rate as real rates have been dropping lately, so I'll go ahead with my purchase now.

No, I'm just speculating, hence my last line "of course, I guess the fixed rate could go down". But real rates (real rates = nominal rate - inflation) have actually been rising, not dropping.  So this leads me to speculate on a higher fixed rate when they set it in May.

According to the Fed (https://fred.stlouisfed.org/series/REAINTRATREARAT10Y), the real 10-year rate has dropped from 2.09 in November to 1.8 or so today...similarly for 5-, 30-year rates as well...

Hrm, you're right! For some reason I was under the impression that inflation was going down but the FFR hasn't moved in a bit... but that's the short term rate. Thanks! Maybe I will buy now...

[Dicey]

Lest I sound like a total idiot, I never knew exactly how to calculate the value of DH's pension, and I always suspected that pulling the plug at 54 would adversely effect my SS., so I kind of ignored them both. We hit FIRE based on everything else, so this discovery is freaking crazy!

We already have a DAF, we've already helped DH's kids get into/fix up homes as much as we're willing to, what our house needs is already budgeted for...it's insanity!

We think this also means that we should do some big RMDs IRA Withdrawals before we start SS. Otherwise, the taxes will give us a heart attack.

Our CPA was never big on Roth Conversions. He felt they wouldn't help us that much. I'd love for some smart mustachian to prove him wrong.

[...] We think this also means that we should do some big RMDs before we start SS. Otherwise, the taxes will give us a heart attack. [...]

I'm guessing you meant to write 'some big Roth conversions' ? (RMDs start at 72, and their amount is fixed based on your remaining life expectancy (per the IRS table) and your beginning of year pretax account balance)

What I meant is withdrawals from our IRAs, not RMDs.

From the IRS website: "You can withdraw or use your traditional IRA assets at any time. However, a 10% additional tax generally applies if you withdraw or use IRA assets before you reach age 59½."

We are well over 59.5. I think it might make sense to withdraw the difference between our income and the Medicare limit of $206,000. OTOH, with rental income factored in, it might not be a big enough gap to make much difference. We're screwed. Such an MPP, lol.

[secondcor521]

We are well over 59.5. I think it might make sense to withdraw the difference between our income and the Medicare limit of $206,000. OTOH, with rental income factored in, it might not be a big enough gap to make much difference. We're screwed. Such an MPP, lol.

If so, Roth conversions instead of withdrawals are generally better.  That way any growth or income on the converted amount grows tax free inside the Roth rather than taxably outside it.  If you want to spend the money, you can always withdraw it from the Roth at that point.

The only negative I can think of is that you can't harvest tax losses inside the Roth.

[oldmannickels]

Lest I sound like a total idiot, I never knew exactly how to calculate the value of DH's pension, and I always suspected that pulling the plug at 54 would adversely effect my SS., so I kind of ignored them both. We hit FIRE based on everything else, so this discovery is freaking crazy!

We already have a DAF, we've already helped DH's kids get into/fix up homes as much as we're willing to, what our house needs is already budgeted for...it's insanity!

We think this also means that we should do some big RMDs IRA Withdrawals before we start SS. Otherwise, the taxes will give us a heart attack.

Our CPA was never big on Roth Conversions. He felt they wouldn't help us that much. I'd love for some smart mustachian to prove him wrong.

It's just going to depend on your situation in total. If you probably aren't going to touch the money it doesn't matter much to you and more to your heirs.

My parents are in a similar situation with 100k+ in pension + SS. Any Roth conversion gets both their marginal rate and pushes their capital gains out of the 0% range so ends up doubling their effective rate. We did some Roth conversions before their full SS kicked in. Their RMD's aren't so bad though and my plan is to deplete the IRAs when they get into the nursing home with those big medical expenses.

[Shuchong]

For those buying I-bonds (I just sold mine that had a 0% fixed rate), why are you deciding to do that now instead of waiting until may for a higher fixed rate?

Short Term Treasuries seem to yield about the same at this point so it waiting for the later I-bond fixed rates might be worth it?

Of course, I guess the fixed rate could go down.

@dividendman , on re-reading your post I'm a little confused. Are you saying that it's been announced that the fixed rate is going up in May? If so, do you have any link to a source for that assertion?

If it hasn't been announced then my best guess is that the fixed rate may drop from the current rate as real rates have been dropping lately, so I'll go ahead with my purchase now.

No, I'm just speculating, hence my last line "of course, I guess the fixed rate could go down". But real rates (real rates = nominal rate - inflation) have actually been rising, not dropping.  So this leads me to speculate on a higher fixed rate when they set it in May.

According to the Fed (https://fred.stlouisfed.org/series/REAINTRATREARAT10Y), the real 10-year rate has dropped from 2.09 in November to 1.8 or so today...similarly for 5-, 30-year rates as well...

Hrm, you're right! For some reason I was under the impression that inflation was going down but the FFR hasn't moved in a bit... but that's the short term rate. Thanks! Maybe I will buy now...

For iBond predictions, I assume that whatever TipsWatch (https://tipswatch.com/) says is the best guess I'm going to get.  They think the fixed rate is likely to go down at the May 1 reset, and so advocate buying before then.  They also advocate waiting until April to see if the tea leaves get any clearer.  (https://tipswatch.com/2024/01/07/i-bond-buying-guide-for-2024-be-patient/). 

The "wait until April" advice, I didn't follow.  I bought all mine a few days ago.  I now have over $180k in ibonds (started buying them back in 2011), which is crazy to me.  That's over three years of living expenses, just sort of quietly sitting there tax deferred.

I'm using them to make me feel better about my 5.375% mortgage (3.25% after tax deductions), since Dicey convinced me holding is better than pre-paying.  If I think of the ibonds as tax free, which they probably will be for me if I FIRE, most of them are handily beating my post-tax mortgage rate, with no market risk. 

[Louise]

I'm using them to make me feel better about my 5.375% mortgage (3.25% after tax deductions), since Dicey convinced me holding is better than pre-paying.  If I think of the ibonds as tax free, which they probably will be for me if I FIRE, most of them are handily beating my post-tax mortgage rate, with no market risk.

We are using them for our fixed asset part of college savings, while our 529 is only in stocks. So they will be tax free for us if used for that purpose. I haven't decided if I'm going to buy more. I think I'll decide in a month or two.

[ATtiny85]

Did 2023 taxes this morning. I use TurboTax and don't worry much about the cost of Fed and State, it just is what it is. Took about a half hour or so (already had 1099s and W-2s in hand). Process was decent, one 1099 had to be manually entered for whatever reason, but the general import was super smooth. Didn't have to do anything for the W-2s, the values just appeared. Normally I am squinting at the control number trying to count zeroes in the number.

We are getting a decent refund because a legacy mutual fund that often kicks out $10k - $20k distributions most years kicked out $0.00 in 2023. Anyway, I am on a gentle path towards simplification of all our accounts. I hovered over the "Receive Savings Bonds as part of your refund" button, but ultimately just said to send it all to our checking account so I can buy VTSAX with it. At this stage of our game, I just can't justify Series I bonds. While they are a nice product, it would just be annoying to start building a position in a new 'place' (Treasury Direct) when I am working to whittle things down to just bank, Vanguard (taxable, Rollover IRAs), and Fidelity (401k and HSA). Additionally, I am trying to make those accounts as simple as possible as time goes along.

If I wasn't at zero I bonds, likely would feel differently.

[Fomerly known as something]

I have everything except my consolidated 1099 from Vanguard.  So all the forms are in a file waiting for the last one so they can be off to my CPA.

[TempusFugit]

I stopped using TurboTax years ago when they were caught installing sneaky crap on your PC.  I don’t recall the details but I remember it made the news some years back.  They also are a major lobbyist for preventing the government from making tax filing easier.  I know they’re probably all doing the same crap, but I remember TurboTax in particular so I blacklisted them ever since.  I’ve been using TaxAct. 

[EscapeVelocity2020]

I'm 'jealous' of everyone getting their taxes done early and not owing.  Just taking a quick look at my 1099's (interest, dividends) is giving me chills on what I'll owe.  I know it is just giving Uncle Sam a cut of my windfall that I should've planned better for, but since I re-invest all of this (instead of going out and spending it), it does feel like punishment...  just another MPP I guess.  I'll get an extension and coverage of penalties and interest through work, but will probably need to shell out ~$40-50k at some point.  I guess stopping the W-2 income would solve most if not all of this problem...

[MaybeBabyMustache]

I got you, @EscapeVelocity2020 . We owe... a lot. Every year. We adjust our withholdings, but our stock vests throw us off, as we never know how much they will be worth monthly.

My only consolation is that we owe substantially less than last year. We dialed our withholdings wayyyyyy up. So, I guess that's my win.

[dividendman]

I wish I could do my taxes, but Chase, Citi and Wells Fargo brokerages take forever to get their forms out. I don't understand, all trades settle in 3 days, just make the damn forms! They should be available by Jan 10!

[EscapeVelocity2020]

I got you, @EscapeVelocity2020 . We owe... a lot. Every year. We adjust our withholdings, but our stock vests throw us off, as we never know how much they will be worth monthly.

My only consolation is that we owe substantially less than last year. We dialed our withholdings wayyyyyy up. So, I guess that's my win.

Thanks for commiserating!  I'm chipping away at taxes but keep finding so many other things I'd much rather do...

[MaybeBabyMustache]

I procrastinated by filing taxes for my teens, who both earned under $4k this summer. It was just a little easier than our taxes. :-)

[Taran Wanderer]

2023 is the first year one of my kids had W-2 income.  It was only a few hundred dollars.  Does that mean we need to file a return for her this year?  Do they still have a 1040-EZ?

[secondcor521]

2023 is the first year one of my kids had W-2 income.  It was only a few hundred dollars.  Does that mean we need to file a return for her this year?  Do they still have a 1040-EZ?

1040-EZ no longer exists.

Assuming they are a dependent and the W-2 income is their only income (i.e., no investment income or interest income), and they have no special situations (listed in Charts C or D in the "Who Must File?" part of the Form 1040 instructions), then they would not have to file.

Even though they don't have to file, you can still elect to file a return for them.  This would be useful if, for example, any federal or state taxes were withheld that they want refunded to them.

[Much Fishing to Do]

When I send in my taxes each year I at the same time pay Fed and State Q1 estimated taxes around the right amount to cover eventual taxes on my investment income/distributions.  Some years I make less than others, and most of the distributions come at the end of the year, so I'm sure I usually don't need to do this but I've always just done it anyway.

For 2023 I received a large bonus in Feb of my previous job and then moved to my new one and worked it most of the year, so the one thing I didnt consider until plugging in my forms into Turbotax last week was I basically maxed out SS withholding twice, so due to that I should get around a $10k refund which means other than that I guessed about right this year, thogh will not be sure until the VG forms come in.

For 2024 I'll be in my now half-time job so am having to refigure everything for the lower tax brackets.  I'm trying to get my employer to withhold about the right amount per paycheck to cover my investment taxes this year and not make the estimated.  This is the first year ever I've been on employer Health insurance and its cool to see in addition to it being a lot cheaper than my commercial insurance (a lot) that the premiums withheld from my check is also considered pre-tax, so adding that to my maxed out catch up 401k it occurred to me I  might actually qualify to make Roth contributions again, first time in 10 years so I had completely forgotten about them other they are an old retirement account I carry.  I'm trying to get it all streamlined this year because the next few will likely be the exact same if I continue in this job.