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

[Exflyboy]

Very nice @Dicey  and you have pensions as well! How on Earth will you spend it all? I assume Roth conversions will "kill you" too? Good problems to have..:)

[Dicey]

Very nice @Dicey  and you have pensions as well! How on Earth will you spend it all? I assume Roth conversions will "kill you" too? Good problems to have..:)

Lol, we looked at each other and said exactly that last night. Oh well, owing shitloads of taxes is possibly the best MPP ever, right Frank?

BTW, we don't do Roth Conversions, but maybe now, while we're "only" living on the pension income (oops, and rental income), we should consider it. Any advice is appreciated.

[Exflyboy]

Very nice @Dicey  and you have pensions as well! How on Earth will you spend it all? I assume Roth conversions will "kill you" too? Good problems to have..:)

Lol, we looked at each other and said exactly that last night. Oh well, owing shitloads of taxes is possibly the best MPP ever, right Frank?

BTW, we don't do Roth Conversions, but maybe now, while we're "only" living on the pension income (oops, and rental income), we should consider it. Any advice is appreciated.

Well this is a problem that has only recently come into focus for me, especially as Oregon income taxes are similarly awful as Kalifornia!

Roth conversions are a way to reduce/avoid the massive income spike from RMD's at 73 or (75 if you're "young" like me).

To get an idea, estimate your pretax savings at RMD age which is 12 years away for me. (I assume an 8% growth rate, so today's PREtax total value *1.08^12).

Then divide that by 24.6 (from the IRS table) and that will be the first year's increase to your income... In my case that number alone is in "shit-ton" territory!

Why is this bad?.. Fed tax, state income taxes and IRMAA penalties.. in other words your Part B cost will double and probably more than that!

As to advice.. My tiny brain tells me to not take pensions or SS for as long as possible and ROTH convert as much as I can stand (probably up to the IRMAA limit.. i.e $206k) each year until age 70. Then take SS, then delay pensions as long as possible.

There is also the prospect that at some point our Fed taxes are going to HAVE to rise or we literally won't even be able to pay the interest on the National debt. So Roth converting at lower income tax rates today (with a smaller balance) is better than converting a larger balance later at higher tax rates.

All this "feels" awful, so I have to keep reminding myself this is a GOOD thing. I mean If we die with a huge stash, what difference does it make how much we spent in taxes? As long as we maximised enjoyment/fulfillment along the way.

[lhamo]

Our tax appointment is today. As we finalized our numbers last night, we did a quick NW tally. OMG, if we include real estate, we are so far into "...and Beyond" territory we're gobsmacked. How the hell did that happen? FWIW, we still have three fresh mortgages that we have no intention of paying off early.

After getting killed with a huge tax bill last year, it looks like we will owe nothing this year, and probably get all that was withheld from DH's pension checks back. Squee!

Markets have been on a tear since early November.  Kind of kicking myself for cashing in some LTCG back then, but it kept the IBL quiet and I still have a decent amount riding the market waves, so I'm resigned to it.

Oh, and low inventory surprisingly means real estate prices are still going up in spite of the high mortgage rates.  We probably could have gotten 1.5 mill for our house if we had waited to sell now, but then I wouldn't have gotten my relatively cheap fixer (teardowns on worse lots are going for 600-800k in my zip right now)....

[Exflyboy]

Yes @lhamo that IBL/M is real! Despite what my numbers say, the memory of my Parents faces when they realised they might not make it to the end of the month still scares me to this day!

[blueberrybushes]

Exflyboy,

Definitely delay SS as long as possible since you other sources to cover living expenses. 

Sometimes pensions, unlike SS, max out at 62 or 65, so waiting after their mx out year is leaving money on the table.

If you do Roth conversions, will you have to sell other funds to cover living expenses?  And, pay tax on the LTCG?  Maybe better to take IRA distributions to cover living expenses and let the other funds stay in the market?

Obviously, have to run the numbers to see which is better.

[Simpli-Fi]

Roth conversions are a way to reduce/avoid the massive income spike from RMD's at 73 or (75 if you're "young" like me).

To get an idea, estimate your pretax savings at RMD age which is 12 years away for me. (I assume an 8% growth rate, so today's PREtax total value *1.08^12).

Then divide that by 24.6 (from the IRS table) and that will be the first year's increase to your income... In my case that number alone is in "shit-ton" territory![\quote]

Holy smokes!  Just did this calculation…need to start evacuating this account; always planned the back door ladder…once I figured out what I wanted to do (downshift wise) when I grew up.

[TempusFugit]

I think the question of when to take SS or pension income is more nuanced than just trying to maximize what you will get in your lifetime from those sources.  You have to consider the time value of the money you will otherwise be spending from your portfolio.  If the markets perform well, you might be much better off to take SS or pension income so that you can leave more of your money invested.  It's a gamble like most other things in that you won't know the right decision until you have the benefit of hindsight.

[Exflyboy]

Exflyboy,

Definitely delay SS as long as possible since you other sources to cover living expenses. 

Sometimes pensions, unlike SS, max out at 62 or 65, so waiting after their mx out year is leaving money on the table.

If you do Roth conversions, will you have to sell other funds to cover living expenses?  And, pay tax on the LTCG?  Maybe better to take IRA distributions to cover living expenses and let the other funds stay in the market?

Obviously, have to run the numbers to see which is better.

Yeah I got projections from each of our pensions out to 75 (me) and 71 (DW) and they were both still growing at those ages. I do know that they level off at some point but its clear this point is beyond effective RMD age. Of course at some point one of us will die and then the pension+SS payouts will plummet so if someone could tell me how long each of us will live that would be most helpful..:)

Maybe I'm missing something but I don't see what you live on makes much difference?.. Lets say you want $206k income, as soon as you do the conversion (about $186k as we get about $20k in after tax dividends/interest) then you have 186k (minus taxes) added to your Roth account so you can use that to live on. I certainly wouldn't want to sell any other investments because that will trigger an even higher income and bump us into the IRMAA penalty territory.

Our other "problem" is DW is 3.5 years younger than me. So if I started Roth conversions at 65 (medicare age) we would lose DW's ACA subsidy.. Roughly $1000/month!.. Free money so not doing that! Which means I will have to wait till both of us are on Medicare.. i.e 68 for me which leaves only 7 years till RMD age.

At $186K/year *7 = $1.3M. which I estimate to be roughly half of the total pretax sum when I start at 68.

Clearly I need another airplane!

[Exflyboy]

Roth conversions are a way to reduce/avoid the massive income spike from RMD's at 73 or (75 if you're "young" like me).

To get an idea, estimate your pretax savings at RMD age which is 12 years away for me. (I assume an 8% growth rate, so today's PREtax total value *1.08^12).

Then divide that by 24.6 (from the IRS table) and that will be the first year's increase to your income... In my case that number alone is in "shit-ton" territory![\quote]

Holy smokes!  Just did this calculation…need to start evacuating this account; always planned the back door ladder…once I figured out what I wanted to do (downshift wise) when I grew up.

At Medicare age or better.. YES!

Prior to that if you like scamming your ACA subsidies, then doing Roth conversions will reduce or eliminate the subsidy. Currently our subsidy is $1900/month (plus I get to contribute the HSA). So unless the political winds shift in Washington then I'm leaving the Pretax accounts alone.

[Exflyboy]

I think the question of when to take SS or pension income is more nuanced than just trying to maximize what you will get in your lifetime from those sources.  You have to consider the time value of the money you will otherwise be spending from your portfolio.  If the markets perform well, you might be much better off to take SS or pension income so that you can leave more of your money invested.  It's a gamble like most other things in that you won't know the right decision until you have the benefit of hindsight.

Absolutely. However I would suggest that for a lot of people in the group (i.e big stash/low expenditures) the question almost comes down to "How much do you want to die with?"

I would argue that those around "Beyond territory" with say 30 years to live could have 40 million to their name by the time they kick the bucket (assuming 8% and living off pensions).

In this case as Freddie Mercury once sang "Nothing really matters".. Especially considering he died at 44 with over $100m to his name.

[pecunia]

I think the question of when to take SS or pension income is more nuanced than just trying to maximize what you will get in your lifetime from those sources.  You have to consider the time value of the money you will otherwise be spending from your portfolio.  If the markets perform well, you might be much better off to take SS or pension income so that you can leave more of your money invested.  It's a gamble like most other things in that you won't know the right decision until you have the benefit of hindsight.

There's the tax thing to consider too.  If you wait you get about 7-8 percent a year bump.  You may figure that if you take the money now you can invest that and make an equivalent yield.  However, taxes will reduce that yield somewhat.  Besides, some years are good and some years are bad.

[2sk22]

Exflyboy,

Definitely delay SS as long as possible since you other sources to cover living expenses. 

Sometimes pensions, unlike SS, max out at 62 or 65, so waiting after their mx out year is leaving money on the table.

If you do Roth conversions, will you have to sell other funds to cover living expenses?  And, pay tax on the LTCG?  Maybe better to take IRA distributions to cover living expenses and let the other funds stay in the market?

Obviously, have to run the numbers to see which is better.

Yeah I got projections from each of our pensions out to 75 (me) and 71 (DW) and they were both still growing at those ages. I do know that they level off at some point but its clear this point is beyond effective RMD age. Of course at some point one of us will die and then the pension+SS payouts will plummet so if someone could tell me how long each of us will live that would be most helpful..:)

Maybe I'm missing something but I don't see what you live on makes much difference?.. Lets say you want $206k income, as soon as you do the conversion (about $186k as we get about $20k in after tax dividends/interest) then you have 186k (minus taxes) added to your Roth account so you can use that to live on. I certainly wouldn't want to sell any other investments because that will trigger an even higher income and bump us into the IRMAA penalty territory.

Our other "problem" is DW is 3.5 years younger than me. So if I started Roth conversions at 65 (medicare age) we would lose DW's ACA subsidy.. Roughly $1000/month!.. Free money so not doing that! Which means I will have to wait till both of us are on Medicare.. i.e 68 for me which leaves only 7 years till RMD age.

At $186K/year *7 = $1.3M. which I estimate to be roughly half of the total pretax sum when I start at 68.

Clearly I need another airplane!

My wife and I are both entitled to pensions at age 65 - we both started working in the 1990s when companies still had such plans. The lumpsum amounts have really grown a lot but neither of us is confident about the long-term stability of these pension plans. So rather than getting the pensions in the form of annuities, we will be taking lumpsums and immediately rolling them into our IRAs. So that will necessitate really aggressive Roth conversions since we already have substantial amounts in our tax deferred accounts.

In fact, once we start Roth conversions, we will have to blow past both the ACA and the IRMAA limits. So we will be paying a lot for health insurance in the years to come. A good problem to have 😀

[Dicey]

Lol, we're in a similar position re: Healthcare. For the first time in our married life, our medical expenses far exceeded 7.5% of our AGI. As far as DH's pension, delaying it was not an option, and the lump-sum offer was pitiful. Happily between the pension and rental income, we don't need SS, so we're going to let it ride until we hit 70. Now, to start researching Roth conversions...

[Exflyboy]

 Its kinda fun to be working on problems that 90% of the population could not even fathom having! Looking back 10 years I was wondering if we would have enough to survive in retirement. Now I wonder how much charitable giving I can do direct from my pretax accounts (at 70.5) to avoid giving it to the fed and state governments!

And to think a lot of people coming up on retirement don't even realise that Medicare is NOT free!

[pecunia]

Its kinda fun to be working on problems that 90% of the population could not even fathom having! Looking back 10 years I was wondering if we would have enough to survive in retirement. Now I wonder how much charitable giving I can do direct from my pretax accounts (at 70.5) to avoid giving it to the fed and state governments!

And to think a lot of people coming up on retirement don't even realise that Medicare is NOT free!

You are right.  We've lived in the right time.  You are a mechanical engineer.  Just today, I read some news that Stellantis (Chrysler) is laying off about 400 engineers near Detroit and offshoring their jobs to India and other places.  Not being able to work sure gives problems to folk's retirement plans.  However, you don't need to worry so much about income tax when your income has been taken away.

[Simpli-Fi]

Now, to start researching Roth conversions...

For those interested in a discussion about Roth conversions

https://forum.mrmoneymustache.com/post-fire/trad-to-roth-conversion-more-or-less/

[farmecologist]

Its kinda fun to be working on problems that 90% of the population could not even fathom having! Looking back 10 years I was wondering if we would have enough to survive in retirement. Now I wonder how much charitable giving I can do direct from my pretax accounts (at 70.5) to avoid giving it to the fed and state governments!

And to think a lot of people coming up on retirement don't even realise that Medicare is NOT free!

You are right.  We've lived in the right time.  You are a mechanical engineer.  Just today, I read some news that Stellantis (Chrysler) is laying off about 400 engineers near Detroit and offshoring their jobs to India and other places.  Not being able to work sure gives problems to folk's retirement plans.  However, you don't need to worry so much about income tax when your income has been taken away.

My large tech company has been doing the "India shuffle"...for a long time.  And before that is was the "China shuffle".   It is picking up again now post-pandemic.  A TON of layoffs this year so far.  Thank god I'm very near the end of my 30+ year career as I've survived almost yearly layoffs since I started in 1992! 

As for the social security discussion, I wish we could delay until 70 ( or whatever ).  However, I know far too many coworkers and acquaintances that have passed away without collecting a dime.  My spouse also has a chronic health condition, and I just had a health scare that I thankfully am just about recovered from.  Also add to the fact that SS benefits may very well be cut a few years after we retire.  Because of these things, we want to collect as early as possible, but have not made any definitive decisions.  I certainly do get the math as far as ACA subsidies go, etc... 

It will be interesting to see how "the math" works out for us as we approach 62.  However, right now I am concentrating on holding out at work until I reach 55 ( next year ), so the "rule of 55" applies to my 401k.  We likely won't use the "rule of 55", but it is nice to have options.

[Turtle]

Also tech here.  Was hit by layoffs in 2013, which ultimately turned out to be a good thing since they were severely underpaying me.  I make 3 times that now, and if I were hit with a layoff again I would just retire.

I've done a bit of Roth converting in the past, and my current 401k contributions are going in as Roth.  Even so, the bulk of the 401k is traditional for various reasons, including former employers who didn't have Roth as an option.  The way the market is going, it is growing faster than I can afford to convert it.  I don't expect to have much headroom to do a lot of converting while on ACA for 5-6 years, but maybe more after I hit 65.  Depending on how math works out, I may do a bit more converting between 65-75, but I'll cross that bridge when I come to it.

With 5 kids getting equal shares, I'm not particularly worried that they will have crazy high tax issues from it either, once it's split and stretched out over time.

[TempusFugit]

…the "rule of 55" applies to my 401k.  We likely won't use the "rule of 55", but it is nice to have options.

Yeah, the reason I want to have that option is because my bond allocation is mostly in my 401k and I want to have the ability to use those funds if the market is down rather than sell equities from my post-tax portfolio. 

I heard an interesting take on bond allocations recently.  One strategy to determine how much you should keep in bonds is to subtract from your yearly spend requirement any other income (pension, SS) but also dividend income from your equities (so 1.6% of your equity holdings if VTSAX) and then multiple that by some number of years that you want to be able to cover, say 5 years of down market.  That’s a good target for bond holdings, which is a dollar amount not a percentage.  The goal being to give you enough cushion that you can spend from the bonds (and dividends) and not sell any stock holdings at the down market prices. 

These seems reasonable to me, and as it happens it pretty much aligns with what I have in bonds but most of those are in my 401k, and the first 5 years of my (planned) retirement is also before my pension starts and before I would reach normal retirement age to access those funds without penalty.   If I hold on until 2025, that obstacle is removed by the Rule of 55. 

[Exflyboy]

…the "rule of 55" applies to my 401k.  We likely won't use the "rule of 55", but it is nice to have options.

Yeah, the reason I want to have that option is because my bond allocation is mostly in my 401k and I want to have the ability to use those funds if the market is down rather than sell equities from my post-tax portfolio.

It doesn't matter! So the stock market is down.. so you sell some of the stocks in your Post tax stash and pump those $$ into your checking account.

Then on the same day you simply sell the same $$ value of bonds and buy Stocks all inside your pretax stash.

The effect is you sold some bonds.

[ATtiny85]

…the "rule of 55" applies to my 401k.  We likely won't use the "rule of 55", but it is nice to have options.

Yeah, the reason I want to have that option is because my bond allocation is mostly in my 401k and I want to have the ability to use those funds if the market is down rather than sell equities from my post-tax portfolio. 

You can simply sell the down equities in your post-tax account, then buy equites in your tax-advantaged account using your bond allocation. You end up in the same place. It's as if you directly sold bonds to spend.

Small nuances around taxes of course, but you might even be able to harvest losses depending on the situation.


yeah, what he said....I really thought I read to the bottom...

It doesn't matter! So the stock market is down.. so you sell some of the stocks in your Post tax stash and pump those $$ into your checking account.

Then on the same day you simply sell the same $$ value of bonds and buy Stocks all inside your pretax stash.

The effect is you sold some bonds.

[tooqk4u22]

I think the question of when to take SS or pension income is more nuanced than just trying to maximize what you will get in your lifetime from those sources.  You have to consider the time value of the money you will otherwise be spending from your portfolio.  If the markets perform well, you might be much better off to take SS or pension income so that you can leave more of your money invested.  It's a gamble like most other things in that you won't know the right decision until you have the benefit of hindsight.

There's the tax thing to consider too.  If you wait you get about 7-8 percent a year bump.  You may figure that if you take the money now you can invest that and make an equivalent yield.  However, taxes will reduce that yield somewhat.  Besides, some years are good and some years are bad.

GCC had a post about this where they will take SS at 62 with the logic being (1) likely similar or greater returns on assets that would otherwise get spent and (2) SS ends when you die where as the investments can be passed on to heirs (regardless of growth).

Before I read the post I always assumed I delay as long as possible, we will see.

[TempusFugit]

…the "rule of 55" applies to my 401k.  We likely won't use the "rule of 55", but it is nice to have options.

Yeah, the reason I want to have that option is because my bond allocation is mostly in my 401k and I want to have the ability to use those funds if the market is down rather than sell equities from my post-tax portfolio.

It doesn't matter! So the stock market is down.. so you sell some of the stocks in your Post tax stash and pump those $$ into your checking account.

Then on the same day you simply sell the same $$ value of bonds and buy Stocks all inside your pretax stash.

The effect is you sold some bonds.

I hadn’t thought of it that way. Good point.   

Updated —> Ok having thought about it for a little bit longer, something was still not sitting quite right on this. Your point is entirely correct, however,  part of my concern is that the accessible part of my portfolio - the post tax stuff -  is heavily allocated in equities.  What that could mean in the scenario of a multi-year bear market is that I could deplete those funds, because the dollar value of the equities keeps dropping even as I am selling to support my spending.  While my portfolio as a whole might be weathering things ok due to being able to exchange bonds for stocks inside my 401k, my ‘spendable’ funds might be running out. 

I have, in dollar terms, enough in my post tax accounts to fund my first 5 years of retirement assuming no particularly bad market conditions.  But… you know.  Bad markets happen to good people. 

Is this a show-stopper?  No.  I am aware that I could use the equal periodic  payments thingamabob to have access to 401k funds if I needed it.   I’m just saying that if I’m covered by the Rule of 55, I don’t have to think about it. 

[Dicey]

Now, to start researching Roth conversions...

For those interested in a discussion about Roth conversions

https://forum.mrmoneymustache.com/post-fire/trad-to-roth-conversion-more-or-less/

OMG, a thread started by Boarder42! I miss him! Thanks for this link, @Simpli-Fi, I'll start digging into it. I'm pretty sure at the time that thread began, our CPA told us it didn't make sense. Since then, DH has retired, we're now living on a "fixed income" (lol), and we've inherited an IRA, which is a whole other unexpected wrinkle. Time to head down that rabbit hole.

[Exflyboy]

@TempusFugit Remember the rule of 55 is a legit way to get a hold of your 401k funds (assuming you retire from that job). You can also roll older 401ks into your current 401k too.. Thus get access to all of your 401k money.

The potential downside is you 401k plan can impose more restrictive distribution rules than the IRS allows. For example in my last 401k, the age 55 rule meant I would have had to withdraw ALL of my 401k amount in a single distribution, which would have had a huge tax consequence.

Because I am now an old fart its no longer relevant..:)

[Exflyboy]

Now, to start researching Roth conversions...

For those interested in a discussion about Roth conversions

https://forum.mrmoneymustache.com/post-fire/trad-to-roth-conversion-more-or-less/

OMG, a thread started by Boarder42! I miss him! Thanks for this link, @Simpli-Fi, I'll start digging into it. I'm pretty sure at the time that thread began, our CPA told us it didn't make sense. Since then, DH has retired, we're now living on a "fixed income" (lol), and we've inherited an IRA, which is a whole other unexpected wrinkle. Time to head down that rabbit hole.

Funny how "fixed income" has come to mean.. "poor senior".

I mean there is fixed income and then there is "fixed Dicey income"..:)

[Lake]

@farmecologist congratulations on dodging so many bullets and getting close to 55.  I was going to try and use the rule of 55 as well but fortunately got laid off at 53. Using a 72t ended up working just fine for me.  Like @Exflyboy mentioned rule of 55 can have some wonky rules depending on your plan. A 72t obviously is a bit inflexible but I just set it up to take the max which gives me $20,000 more/year than my spending and started it when I turned 55.  I just Roth convert the extra to help reduce RMD’s later. I have retiree medical though so I don’t have to manage income to keep those costs low. If you don’t make it until 55 you’ll be fine. Especially if they give you a nice fat severance:). Since your kids are about to be off the payroll and doing so well it’s a great time to retire!

[weebs]

I was going to try and use the rule of 55 as well but fortunately got laid off at 53. Using a 72t ended up working just fine for me.

Good to hear it's working out.  I'll probably go that route if I stick with my plan and retire next year at 52.  The selection of funds in my current employers retirement plan is lackluster, so I'm probably going to roll the money into an IRA with an allocation that mirrors my brokerage account.  The 72t distributions will get reinvested in my brokerage account, which will be used to replenish the cash buffer I use to fund my various adventures.

[farmecologist]

@farmecologist congratulations on dodging so many bullets and getting close to 55.  I was going to try and use the rule of 55 as well but fortunately got laid off at 53. Using a 72t ended up working just fine for me.  Like @Exflyboy mentioned rule of 55 can have some wonky rules depending on your plan. A 72t obviously is a bit inflexible but I just set it up to take the max which gives me $20,000 more/year than my spending and started it when I turned 55.  I just Roth convert the extra to help reduce RMD’s later. I have retiree medical though so I don’t have to manage income to keep those costs low. If you don’t make it until 55 you’ll be fine. Especially if they give you a nice fat severance:). Since your kids are about to be off the payroll and doing so well it’s a great time to retire!

Haha thanks!  Many bullets have been dodged, and I'm only 54...so wo knows if I will make it to 55.  Holding out until 55 for the "rule of 55" to take effect is a goal to help preserve what little motivation I have left for this job...and it ain't much right now!  The rule also takes effect the year you turn 55, not on your actual birthday, so I only need to hold out until Jan 1st, 2025!   BTW - the 72t option is definitely in the playbook as well.

Kids are not quite off payroll yet.  I suspect they will need some help here and there...but having them off the college payroll is a huge step!

And on Social security debate, I am firmly in the camp of "take it early"..IF the math works out for ACA subsidies and such.  However, I still don't feel great about waiting on SS due to the mortality issue ( the "rich, broke or dead" calculator is a good eye opener on that), a likely cut in benefits ( i.e. - collect early before the cut ), etc... I have went over crossover points and all that, and I just don't see the point in taking the gamble waiting.  Nearly everyone and their mother seems to advocate for waiting, including many "gurus" over at Bogleheads and such.  However, I noticed the vast majority over there are already "old farts" who have waited.  We never hear from those that passed early before collecting a dime to prove their point. 

[Turtle]

@TempusFugit Remember the rule of 55 is a legit way to get a hold of your 401k funds (assuming you retire from that job). You can also roll older 401ks into your current 401k too.. Thus get access to all of your 401k money.

The potential downside is you 401k plan can impose more restrictive distribution rules than the IRS allows. For example in my last 401k, the age 55 rule meant I would have had to withdraw ALL of my 401k amount in a single distribution, which would have had a huge tax consequence.

Because I am now an old fart its no longer relevant..:)

My company's 401k plan is like this.  Whether leaving or retiring from the company, they force you to roll it out to IRA.  So if you're 55+, you can do a single distribution under Rule of 55, but because your money isn't still in the 401k afterwards, it can only be the once.

[Dicey]

Now, to start researching Roth conversions...

For those interested in a discussion about Roth conversions

https://forum.mrmoneymustache.com/post-fire/trad-to-roth-conversion-more-or-less/

OMG, a thread started by Boarder42! I miss him! Thanks for this link, @Simpli-Fi, I'll start digging into it. I'm pretty sure at the time that thread began, our CPA told us it didn't make sense. Since then, DH has retired, we're now living on a "fixed income" (lol), and we've inherited an IRA, which is a whole other unexpected wrinkle. Time to head down that rabbit hole.

Funny how "fixed income" has come to mean.. "poor senior".

I mean there is fixed income and then there is "fixed Dicey income"..:)

Exactly.

Actual convo at our house:
Dicey: Do we have any money?
Mr. Dicey: No, we're broke.
Dicey: That's okay, I have a rich husband.
Mr. Dicey: Good thing I have a rich wife.

[secondcor521]

And on Social security debate, I am firmly in the camp of "take it early"..IF the math works out for ACA subsidies and such.  However, I still don't feel great about waiting on SS due to the mortality issue ( the "rich, broke or dead" calculator is a good eye opener on that), a likely cut in benefits ( i.e. - collect early before the cut ), etc... I have went over crossover points and all that, and I just don't see the point in taking the gamble waiting.  Nearly everyone and their mother seems to advocate for waiting, including many "gurus" over at Bogleheads and such.  However, I noticed the vast majority over there are already "old farts" who have waited.  We never hear from those that passed early before collecting a dime to prove their point.

It's a complicated topic for sure.

If you're going to look at take it early vs late in the context of die early or die late, it would seem reasonable to look at all four combinations and the risk/reward of each.  As an anecdote, my father took it early because he thought he would die early like his male ancestors.  He is now 88 and in retrospect he would have been further ahead had he waited.

Another factor is how much you "need" SS for your plan to work.  Although my Dad's SS filing decision turned out to be suboptimal, he had other assets and income streams that resulted in his finances working out for him.  There are many folks, myself included, who look at taking SS early as a possible antidote to SORR in the SS claiming age range.

[Exflyboy]

@Dicey Haha, right? This is why I let DW pay for dinner when we go out.. It feels like I am a "kept man"..:)

[Dicey]

@Dicey Haha, right? This is why I let DW pay for dinner when we go out.. It feels like I am a "kept man"..:)

Ha! I pay, too. I want the miles on my card. OTOH, we rarely go out...

[Much Fishing to Do]

And on Social security debate, I am firmly in the camp of "take it early"..IF the math works out for ACA subsidies and such.  However, I still don't feel great about waiting on SS due to the mortality issue ( the "rich, broke or dead" calculator is a good eye opener on that), a likely cut in benefits ( i.e. - collect early before the cut ), etc... I have went over crossover points and all that, and I just don't see the point in taking the gamble waiting.  Nearly everyone and their mother seems to advocate for waiting, including many "gurus" over at Bogleheads and such.  However, I noticed the vast majority over there are already "old farts" who have waited.  We never hear from those that passed early before collecting a dime to prove their point.

It's a complicated topic for sure.

If you're going to look at take it early vs late in the context of die early or die late, it would seem reasonable to look at all four combinations and the risk/reward of each.  As an anecdote, my father took it early because he thought he would die early like his male ancestors.  He is now 88 and in retrospect he would have been further ahead had he waited.

Another factor is how much you "need" SS for your plan to work.  Although my Dad's SS filing decision turned out to be suboptimal, he had other assets and income streams that resulted in his finances working out for him.  There are many folks, myself included, who look at taking SS early as a possible antidote to SORR in the SS claiming age range.

It definitely is complicated.  I start with just assuming its a wash, that someone smarter than me has figured out how to make it a wash no matter what age I start at.  Then, if I feel my health is poor at that point maybe I'll factor that in.  If the stock market tanks maybe I'll consider taking earlier to let that recover.  Maybe I'll just look at taking it at 70 as a kind of longevity insurance.  In the end I think its likely close enough to a wash to not fret over it.

[farmecologist]

And on Social security debate, I am firmly in the camp of "take it early"..IF the math works out for ACA subsidies and such.  However, I still don't feel great about waiting on SS due to the mortality issue ( the "rich, broke or dead" calculator is a good eye opener on that), a likely cut in benefits ( i.e. - collect early before the cut ), etc... I have went over crossover points and all that, and I just don't see the point in taking the gamble waiting.  Nearly everyone and their mother seems to advocate for waiting, including many "gurus" over at Bogleheads and such.  However, I noticed the vast majority over there are already "old farts" who have waited.  We never hear from those that passed early before collecting a dime to prove their point.

It's a complicated topic for sure.

If you're going to look at take it early vs late in the context of die early or die late, it would seem reasonable to look at all four combinations and the risk/reward of each.  As an anecdote, my father took it early because he thought he would die early like his male ancestors.  He is now 88 and in retrospect he would have been further ahead had he waited.

Another factor is how much you "need" SS for your plan to work.  Although my Dad's SS filing decision turned out to be suboptimal, he had other assets and income streams that resulted in his finances working out for him.  There are many folks, myself included, who look at taking SS early as a possible antidote to SORR in the SS claiming age range.

It definitely is complicated.  I start with just assuming its a wash, that someone smarter than me has figured out how to make it a wash no matter what age I start at.  Then, if I feel my health is poor at that point maybe I'll factor that in.  If the stock market tanks maybe I'll consider taking earlier to let that recover.  Maybe I'll just look at taking it at 70 as a kind of longevity insurance.  In the end I think its likely close enough to a wash to not fret over it.

Yeah..doing the math on crossover points, etc...it really is close to a wash.  However, the not-so-small issue of passing away before collecting a dime really is the discussion people tend to avoid...human nature, I guess.  Like I said, the "rich, broke, or dead" calendar has been an eye opener for many.  Everyone has to make the decision on the gamble to delay.  Personally, I'm not willing to take that gamble, and my spouse already has a chronic health issue...so the decision is an easy one for us.

But enough about social security...that horse has been beaten to death more times than I can count...haha.  It is kind of like arguing about politics, religion, and what brand of motor oil to use!

[ATtiny85]

Just dropped a sell order on one of the original purchases of individual stocks in our taxable accounts. My old friend MO. The original shares were purchased sometime in 2001. Dividend reinvestment was turned on for about 12 years or so I think. PM and Kraft and Mondelez shares showed up over the years. I don't keep very good records of performance, but I suspect it was not a bad investment compared to a lot of things I bought back then (C, HOG, and GE come to mind as being purchased around that time).

This is just one more step in working towards simplification. Will eat into our 2022 TLH carryforwards basket a bit (probably $1500 or something in gains), but there's another old mutual fund holding from TRP that will likely devour the rest of it this year anyway.

This will take us to nine individual stock holdings. Down from maybe 17, depending on how one counts. Most of the others have larger gains and are likely destined for donation unless there is a major downturn.

[2sk22]

Just dropped a sell order on one of the original purchases of individual stocks in our taxable accounts. My old friend MO. The original shares were purchased sometime in 2001. Dividend reinvestment was turned on for about 12 years or so I think. PM and Kraft and Mondelez shares showed up over the years. I don't keep very good records of performance, but I suspect it was not a bad investment compared to a lot of things I bought back then (C, HOG, and GE come to mind as being purchased around that time).

This is just one more step in working towards simplification. Will eat into our 2022 TLH carryforwards basket a bit (probably $1500 or something in gains), but there's another old mutual fund holding from TRP that will likely devour the rest of it this year anyway.

This will take us to nine individual stock holdings. Down from maybe 17, depending on how one counts. Most of the others have larger gains and are likely destined for donation unless there is a major downturn.

This is fascinating - we also have some individual stocks that we bought back in the late 1990s that we are still holding. We started regular automated purchase of an S&P 500 index fund in the mid 1990s but I got briefly caught up in the frenzy and bought a few individual stocks. There were some duds like GE in the bunch but to make up for that, I bought $1000 worth of Apple and $2000 of Microsoft in 1998 that we still own!

These individual stocks are a small part of our overall portfolio so I doing really need to do anything about them. But I did look into direct indexing as a way of diluting the impact of concentrated positions. You can exclude the concentrated stock that you own from the direct index. Fascinating idea but not worth the complexity in our case.

[ATtiny85]

Just dropped a sell order on one of the original purchases of individual stocks in our taxable accounts. My old friend MO. The original shares were purchased sometime in 2001. Dividend reinvestment was turned on for about 12 years or so I think. PM and Kraft and Mondelez shares showed up over the years. I don't keep very good records of performance, but I suspect it was not a bad investment compared to a lot of things I bought back then (C, HOG, and GE come to mind as being purchased around that time).

This is just one more step in working towards simplification. Will eat into our 2022 TLH carryforwards basket a bit (probably $1500 or something in gains), but there's another old mutual fund holding from TRP that will likely devour the rest of it this year anyway.

This will take us to nine individual stock holdings. Down from maybe 17, depending on how one counts. Most of the others have larger gains and are likely destined for donation unless there is a major downturn.

This is fascinating - we also have some individual stocks that we bought back in the late 1990s that we are still holding. We started regular automated purchase of an S&P 500 index fund in the mid 1990s but I got briefly caught up in the frenzy and bought a few individual stocks. There were some duds like GE in the bunch but to make up for that, I bought $1000 worth of Apple and $2000 of Microsoft in 1998 that we still own!

These individual stocks are a small part of our overall portfolio so I doing really need to do anything about them. But I did look into direct indexing as a way of diluting the impact of concentrated positions. You can exclude the concentrated stock that you own from the direct index. Fascinating idea but not worth the complexity in our case.

Yeah, feel essentially the same. Just trimming a few things for no real reason except housekeeping. Helps a little bit on tax efficiency, but the driving reason is just to simplify, though not like a spreadsheet cares about a couple extra rows.

Also bought around $2000 in Microsoft back in 2002, and of course it has been quite the little workhorse. That amount, even with growth, is less than what we have in MSFT in VTSAX though.

I do think if I had some shares that went back into the 90s, I would have some nostalgia (admitting freely that the 1999-2000 rollover is just an arbitrary thing) and enjoy knowing I "bought and still hold shares from last century".  I started investing in 1994, but was not aware enough to understand much. Did buy some decent US Growth and International sort-of-OK mutual funds back then. Then proceeded to cash out a few thousand a couple times, likely to buy a snowmobile if I recall correctly. But did manage to max out IRA back then ($2000 per year yay!) and found my way quickly towards education and buy and hold around 1999.

I have read about direct indexing a bit, but never gave it more than a passing thought. I am a fully committed believer in owning the proverbial haystack without worry.

[MoneyTree]

Reminds me of my dividend stock investing days. I held between 30-50 dividend growth stocks and religiously tracked them. After I came around to indexing, i went through the long process of selling all of them off, trying to do so with the least impactful tax implications.

Just out of curiosity, what are the reasons to continue carrying forward long term capital losses? My strategy once I am no longer earning an earned income is to start recognizing as much capital gains as i can each year to step up my basis while remaining within the 0% capital gains tax bracket. Those carried over losses would just get eaten up anyways. I'm sure there are all sorts of complicating considerations, but just wanted to see if I'm missing anything.

[Fomerly known as something]

On the other hand, I’ve just started buying individual stocks in the last year.  At the rate of adding $25/week to my individual stocks account.  It’s more about setting up something to play with so I’ll feel like I’m still accumulating when I start to withdraw next year at FIRE.

[Bateaux]

I've been completely retired a little over 2 weeks now. What have I done so far? Not much.  I went hiking on the Florida Trail for three days. I only hiked 36 miles and developed some blisters. They are healed up now. I've been doing some landscaping removal at the Florida house. I'm trying to make yard maintenance a little easier. I've eaten two restaurant meals since retirement. Both the day I stopped hiking. I've been to Lowe's once for some concrete crack repair mix. I've been to the grocery store twice and I've bought gasoline once. Exciting!!!
I haven't called Schwab about a 401K draw yet. I'm not sure if I will or not. I'll receive a little over 40K from pension the remainder of the year. I'm sure eventually I'll feel like spending money. Right now however, I'm thinking of getting back on the AT and hiking. Hopefully with no blisters.
I was tempting the wife with a 54 day cruise out of California to the Pacific. Hits Hawaiian Islands, Tahiti, Samoa, Australia, New Zealand, back to Hawaii, then back to California. The cost? $22,000 for a balcony room. She's like OMG!!! That's so much money!  Y'all know that ain't no money. Our accounts go up and down that much in a day at times. So she needs attitude adjustment as well. We've got a pension and 7 figures in multiple. We need help!

[Exflyboy]

@Bateaux Ahh I remember this phase well. It takes at LEAST 6 months to learn how to be retired.. You're still in "retirement diapers". Relax, enjoy, and don't feel the guilt of having "Nothing" to do.

Yes the big spend can be a challenge, it still is for us. DW and I were talking about a cruise to Antarctica to see all the wildlife.. $20k each.. OMFG!... Like you say one good day on the markets and you've made it.

I think for us we are so used to spending say $50k in a whole year that somehow blowing a years' spend on a fancy trip is just too much.. For most of us in this group it just isn't though.. i.e 4% of say $2.5M is $100k.

Add into that some current/future pension and SS income then you start to wonder how much money you die with and monsterous the tax bills will be come RMD time!

We dropped $37k 3 years back on a fancy new SUV.. Yes NEW!.. What were we thinking?.. Pulled the money out of our brokerage accounts and took the cashiers check to the dealer.. didn't even notice it! It was rather amusing though, watching the sales manager tell his junior workers several times that "No we DON'T need to run their credit!"...:)

[pecunia]

I've been completely retired a little over 2 weeks now. What have I done so far? Not much.  I went hiking on the Florida Trail for three days. I only hiked 36 miles and developed some blisters. They are healed up now. I've been doing some landscaping removal at the Florida house. I'm trying to make yard maintenance a little easier. I've eaten two restaurant meals since retirement. Both the day I stopped hiking. I've been to Lowe's once for some concrete crack repair mix. I've been to the grocery store twice and I've bought gasoline once. Exciting!!!
I haven't called Schwab about a 401K draw yet. I'm not sure if I will or not. I'll receive a little over 40K from pension the remainder of the year. I'm sure eventually I'll feel like spending money. Right now however, I'm thinking of getting back on the AT and hiking. Hopefully with no blisters.
I was tempting the wife with a 54 day cruise out of California to the Pacific. Hits Hawaiian Islands, Tahiti, Samoa, Australia, New Zealand, back to Hawaii, then back to California. The cost? $22,000 for a balcony room. She's like OMG!!! That's so much money!  Y'all know that ain't no money. Our accounts go up and down that much in a day at times. So she needs attitude adjustment as well. We've got a pension and 7 figures in multiple. We need help!

From your previous posts, I think you will find time in your retirement to do a lot of good.  You need to get some of this other stuff out of your system first.

[Fomerly known as something]

I've been completely retired a little over 2 weeks now. What have I done so far? Not much.  I went hiking on the Florida Trail for three days. I only hiked 36 miles and developed some blisters. They are healed up now. I've been doing some landscaping removal at the Florida house. I'm trying to make yard maintenance a little easier. I've eaten two restaurant meals since retirement. Both the day I stopped hiking. I've been to Lowe's once for some concrete crack repair mix. I've been to the grocery store twice and I've bought gasoline once. Exciting!!!
I haven't called Schwab about a 401K draw yet. I'm not sure if I will or not. I'll receive a little over 40K from pension the remainder of the year. I'm sure eventually I'll feel like spending money. Right now however, I'm thinking of getting back on the AT and hiking. Hopefully with no blisters.
I was tempting the wife with a 54 day cruise out of California to the Pacific. Hits Hawaiian Islands, Tahiti, Samoa, Australia, New Zealand, back to Hawaii, then back to California. The cost? $22,000 for a balcony room. She's like OMG!!! That's so much money!  Y'all know that ain't no money. Our accounts go up and down that much in a day at times. So she needs attitude adjustment as well. We've got a pension and 7 figures in multiple. We need help!

Tell her to subtract eating out, groceries and gas from that number.  Actually subtract your normal vacation costs from that as well.  Yup it’s a big number but it’s basically 2 months, yes I’m sure there will be excursions buts it’s going to be insignificant to the whole.  To me $5,500 a person a month isn’t “that bad”.

[Bateaux]

Thanks for the encouragement guys. The wife was in basketball mode till today. The girls championship was won by South Carolina today. I'm probably going hike a month or so and then we're spending 2 weeks late May early June here in Florida. After that I may hike more. Sleeping without a clock has been amazing.

[Fomerly known as something]

Clocks aren’t the only things that wake one up.  I didn’t turn my alarm on today.  Mr. Greystone still woke me up at 6AM for his fancy feast breakfast.

[Simpli-Fi]

I've been completely retired a little over 2 weeks now.
I was tempting the wife with a 54 day cruise out of California to the Pacific. Hits Hawaiian Islands, Tahiti, Samoa, Australia, New Zealand, back to Hawaii, then back to California. The cost? $22,000 for a balcony room.

That’s a steal…I’m paying half that for an Alaskan Disney cruise for 7 days (family of 4)

Two birds…as I don’t ever want to go to a Disney park and DW and I want to go to Alaska; paid for with a withdrawal at all time highs a month or so ago.

Oh and DW is uneasy about the funds too

[Bateaux]

I've been completely retired a little over 2 weeks now.
I was tempting the wife with a 54 day cruise out of California to the Pacific. Hits Hawaiian Islands, Tahiti, Samoa, Australia, New Zealand, back to Hawaii, then back to California. The cost? $22,000 for a balcony room.

That’s a steal…I’m paying half that for an Alaskan Disney cruise for 7 days (family of 4)

Two birds…as I don’t ever want to go to a Disney park and DW and I want to go to Alaska; paid for with a withdrawal at all time highs a month or so ago.

Oh and DW is uneasy about the funds too

This would be more a seniors cruise than a Disney. I don't mind the theme parks. Our Florida home is north of the Florida theme parks about an hour and a half away. Hopefully gives incentive for our kids and grandkids to visit. We haven't been to Alaska yet and my wife really wants to go. I definitely would rather cruising there. There is little more relaxing to me than being on a big ship with every detail taken care of. We avoid the short booze cruises. The longer ones are with older people.