Gotcha, thank you!
Thank you, this is all really helpful!
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Retirement-Era |OT| How to Invest For Retirement
- Thread starter TheTrinity
- Start date
- OT
In tax at a manager position. I went to industry and took senior manager role (was up for promotion anyways).
Hello all! I've skimmed this thread a few times and I finally have a savings built up that'll let me go full throttle on the retirement/investment train.
My employer doesn't offer a 401k match so I'm planning on contributing to the company one up until I hit the limit of 17500. What do I do with the excess savings I have beyond that? Should I start a Roth IRA and max that out for the year? There's nothing stopping me from contributing to the max of both a 401k and a Roth IRA right? And there's no reason why I shouldn't invest in the Roth IRA first vs. putting funds into a general investment account right?
Correct me if I'm wrong, but the capital gains from the Roth IRA will not get taxed when I eventually take it out whereas capital gains from general investing which will. The downside of the Roth is that only the principal investment can be taken out without penalty. The rest has to wait until I hit retirement age.
If I have all that right, after I do the Roth IRA it's onto general investment right? Could I get any pointers in that direction as well? I know there's an investment OT but the OP isn't as detailed as this thread's. Thanks!
My employer doesn't offer a 401k match so I'm planning on contributing to the company one up until I hit the limit of 17500. What do I do with the excess savings I have beyond that? Should I start a Roth IRA and max that out for the year? There's nothing stopping me from contributing to the max of both a 401k and a Roth IRA right? And there's no reason why I shouldn't invest in the Roth IRA first vs. putting funds into a general investment account right?
Correct me if I'm wrong, but the capital gains from the Roth IRA will not get taxed when I eventually take it out whereas capital gains from general investing which will. The downside of the Roth is that only the principal investment can be taken out without penalty. The rest has to wait until I hit retirement age.
If I have all that right, after I do the Roth IRA it's onto general investment right? Could I get any pointers in that direction as well? I know there's an investment OT but the OP isn't as detailed as this thread's. Thanks!
You're on the right track. For retirement, you want to take advantage of your tax-advantaged options as much as possible. General investment for retirement is a last resort solution if you've maxed out all your other available options.
Make sure you qualify for IRA contributions, otherwise you will need to plan on using a backdoor Roth. Also make sure a Roth is the right solution for you - there is definitely retirement investment theory that the more money you make, the better traditional is than Roth. And I'd assume you make a pretty good amount of money if you're able to comfortably put over 23k/year into retirement savings. But ultimately that's up to you, because there's guesswork involved since nobody knows what the future holds.
If you plan to invest further in a general investment account for retirement, the only advice I have is that you want something that will generate as little tax as possible. Look into funds rated for high tax-efficiency, that will generate fewer and lower taxable events, so you pay less in capital gains as it grows.
Thanks and Yeah my IRA is with Vanguard but I'll definitely check out those low risk funds.
I'm in public now and just had a kid. I'm overwhelmed and depressed about it. I need to get out.
I hope this is the appropriate place to ask, but would anyone here still recommend M1 Finance for partial stock-buying, or is there another app/site/company you prefer?
I have both TD Ameritrade and Vanguard.
I very much enjoy TDA. Vanguard is good for buying Vanguard funds and forgetting about them for 30 years though.
Can anyone explain to me how to invest through a Roth IRA ? I have a monthly income but it's not taxable so I'm not sure if I'm qualified to put money into a Roth IRA.
It sucks I have some money in my savings but I don't know what to do with it. Can't I just open up a vanguard account and transfer money over from my savings to the Roth IRA ?
It sucks I have some money in my savings but I don't know what to do with it. Can't I just open up a vanguard account and transfer money over from my savings to the Roth IRA ?
Roth IRA contributions can only be earned income.
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Roth IRA Contribution and Income Limits: A Comprehensive Rules Guide
In 2023, you can contribute up to $6,000, or $7,000 if you’re age 50 or older, to all of your Roth and traditional IRA accounts.
I never really knew this. I guess if I'm asked I don't say I contributed my birthday check from Nana, just that having that extra $100 from Nana allowed me to contribute more from my earned income? What kind of scenarios are there where people would actually get in trouble for contributing unearned income?Roth IRA contributions can only be earned income.
Roth IRA Contribution and Income Limits: A Comprehensive Rules Guide
In 2023, you can contribute up to $6,000, or $7,000 if you’re age 50 or older, to all of your Roth and traditional IRA accounts.www.investopedia.com
You just need to make sure that your Roth IRA contribution is not higher than your gross income for the year.
You don't need a paper trail directly from the source of the money to the contribution. As far as the IRS is concerned, your money is fungible.
Can we take a moment to recognize how insane the stonks market was last year. Absolutely wild how our retirement accounts have grown...
Makes me wish I had started investing earlier but I'm still happy that I did get in and start investing in more than just my 401k. Still did really well proportionally last year. I'm pretty happy.
To think at some time I was thinking surely this initial dip in April can only be the first and there must be a bigger dip around the corner....
Stay the course.
So true. I was thinking the same thing about the dip being the first. Did not expect things to be where they are right now.
My employer had 6% match in a 403b that was cut last June (half was restored this June, they say the other half will come later). Because that account is basically a side piece to my our real retirement fund, I have the risk cranked up pretty high. After the match was cut I decided to make the same contribution to my IRS until it was restored.
So I checked yesterday and with ZERO actual contributions the last 12 months the account has seen a 47% return …. Crazy.
If I have $30k and want to invest that into my wife and I's Roth IRA over the next couple of years, is what I'm suggesting even possible? Edward Jones said I couldn't do this and he recommended mutual funds.
I want to put $6k into each Roth IRA this year and put the remaining $18k in an index fund like VTI or VOO so it makes something compared to just sitting in a savings account. In, 2022 I would take another $6k into each Roth IRA. In 2023, just put the remaining balance into our Roths.
I want to put $6k into each Roth IRA this year and put the remaining $18k in an index fund like VTI or VOO so it makes something compared to just sitting in a savings account. In, 2022 I would take another $6k into each Roth IRA. In 2023, just put the remaining balance into our Roths.
I can't think of any likely reason why what you're saying wouldn't be possible. Do you jointly file your taxes with your wife? Are you within the income limits for being able to contribute to a Roth IRA?
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If decide to leave my old employers ROTH 401K account alone (I'm good with the investment choices), can I just roll it into a ROTH IRA account 10+ years down the road in the event that I would the money there for early retirement purposes? I have at least 1 ROTH account that's 5 years ago so this would be what I roll it into.
Ugh I mean to edit my post above and not create a new one.
I think I've confirmed that the answer to my question above is yes. I was contributing to both a traditional and ROTH account. For just my traditional account only, I think I'm just going to roll it over to my new employer since the funds are close enough, have low fees, and because I'll have the option borrow against my 401K.
I think I've confirmed that the answer to my question above is yes. I was contributing to both a traditional and ROTH account. For just my traditional account only, I think I'm just going to roll it over to my new employer since the funds are close enough, have low fees, and because I'll have the option borrow against my 401K.
You might be better of rolling it to new employer anyway as some employers will start to charge fees for keeping it with them when you leave.
You'd have to check your previous employers plan to know for sure.
You'd have to check your previous employers plan to know for sure.
For early retirement plans, it's basically a requirement to put a chunk of retirement savings in non-tax advantaged brokerages so that you can withdraw before 59.5 without penalty, right? I'm assuming the tax benefits afforded by a 401k or IRA doesn't outweigh the 10% penalty of early withdrawal if one wants to retire at few years early?
I'm just realizing that if I wait until 65 or 67, I should have a considerable amount of $$$ built up but since almost everything is in a tax advantaged account, it wouldn't make sense to retire early if I'm losing 10% off the top. But then, I'd have to factor in healthcare costs for the interim (unless M4A happens in the next two decades) so maybe it isn't very feasible to plan for a mid-50s retirement...
I'm just realizing that if I wait until 65 or 67, I should have a considerable amount of $$$ built up but since almost everything is in a tax advantaged account, it wouldn't make sense to retire early if I'm losing 10% off the top. But then, I'd have to factor in healthcare costs for the interim (unless M4A happens in the next two decades) so maybe it isn't very feasible to plan for a mid-50s retirement...
You will probably want some money in non sheltered places. But you will also be able to leverage conversion ladders. Either way you cannot avoid taxes and fees in totality. But that is fine.
How to Access Retirement Funds Early
Find out how you can access retirement funds early (without paying any penalties) and learn the best withdrawal strategy for early retirees!
www.madfientist.com
Of course.
Hmm, interesting strategies. I'll have to look into each of these. Thanks for sharing!You will probably want some money in non sheltered places. But you will also be able to leverage conversion ladders. Either way you cannot avoid taxes and fees in totality. But that is fine.
How to Access Retirement Funds Early
Find out how you can access retirement funds early (without paying any penalties) and learn the best withdrawal strategy for early retirees!
OP
OP
Absolutely. But...do you actually want to live in Thailand? Moving strictly because of low-cost living is a pretty bad idea.
Yeah there are fees, but they are peanuts record keeping fees - same that would apply to any 401K. So that would basically not change if I leave it.
Any Washington State peeps decide on what they're doing concerning the new State LTC Tax they're implementing here come 2022 (must decide 11/1/2021)?
Long Term Care Tax Info
You can opt out if you have your own Perm insurance, or you have to pay a % of your income towards it with a payout of like ~$36 towards LTC.
I believe I've read that Perm Insurance is never really a good "investment" shelter, but in this instance that either we start paying a little into the state or pay into our own, I'm curious what other Pros and Cons other Washingtonians have come across.
For me I guess I'm semi-looking at it as, if we did a Perm Life Insurance, we could look at it as another Roth IRA that we can put money into to use have access in the later years.
Long Term Care Tax Info
You can opt out if you have your own Perm insurance, or you have to pay a % of your income towards it with a payout of like ~$36 towards LTC.
I believe I've read that Perm Insurance is never really a good "investment" shelter, but in this instance that either we start paying a little into the state or pay into our own, I'm curious what other Pros and Cons other Washingtonians have come across.
For me I guess I'm semi-looking at it as, if we did a Perm Life Insurance, we could look at it as another Roth IRA that we can put money into to use have access in the later years.
So I just got a promotion at work and its going to put me in "phase out" territory for Roth IRA contributions. Does anyone have any advice on how to handle calculating the phase out? Would I be better off waiting until the end of the year, find out from my accountant where I'm at in terms of MAGI for the year and then have them calculate an amount I can contribute to the Roth before I file? Calculating this ahead of time seems like a fool's errand, especially since I don't know what I would be getting in terms of bonuses for that year. The sucky thing is that I'd end up missing out on any market gains during that time. I don't know why the government puts the burden on me in trying to calculate a future value that is unknowable. And if you get it wrong there is a 6% penalty. This system is stupid.
Oh i actually do want to settle in southeast asia. Or at least be there for 10 years or so. I love the vibe, people, food and culture. There's enough western influence so i wont feel like im missing out on much ie the malls there outshine most of the malls in america.
I've supplemented my 401K and IRA with a taxable investment account controlled by a robo-investor. My optimistic plan at the moment is retiring at 50, and I'll draw from that account until 60.
My plan is similar to yours as well. Basically have enough in investments to live without a day job until retirement funds kick in.
- 2-3 investment properties to provide some recurring income for at least 4k per month
- liquidable stock investments around 500k
- other stocks with high dividends to give some recurring income
live in a cheaper part of the world ie asia = enjoy life
Went thought the OP. Very insightful. I have some doubts that were not made clear there, though
about the three-fund portfolio, when you talk about international stocks, would that be an ETF that tracks the global market as a whole? Or is there an international ETF that excludes the domestic market? Should I mix up European, chinese, etc ETFs?
also, I assume this OP was written from a north American perspective. Does the idea of investing in a domestic market still apply if one is in an emerging market (developing country), which could be more unstable? Or should i read it as domestic market = American market tracking ETF ?
about the three-fund portfolio, when you talk about international stocks, would that be an ETF that tracks the global market as a whole? Or is there an international ETF that excludes the domestic market? Should I mix up European, chinese, etc ETFs?
also, I assume this OP was written from a north American perspective. Does the idea of investing in a domestic market still apply if one is in an emerging market (developing country), which could be more unstable? Or should i read it as domestic market = American market tracking ETF ?
Yes, the specific fund advice in the OP is basically for the US. I believe US-focused investment firms like Vanguard define International as anything outside the US, so Total International is actually the global market excluding the US. This allows for easy balancing with Total Market (domestic/US). Total World is also an option that combines the two, but it doesn't get discussed much.
A local investment firm might offer similar options, but more specific to that region. I would think if you're living in a volatile emerging market, it might make more sense to invest heavily in Developed markets with Domestic being a smaller slice of the pie. But I'm not sure what the typical advice is for that situation is, I've never seen it discussed here or sought it out elsewhere.
What are everyone's thoughts about the 4% withdrawal rate in retirement? Reading articles saying we should be planning for 3% instead due to lower bond yields and fears of higher inflation.
OP
OP
Yeah, generally international would mean finding a fund that is categorized as something like "Global ex-[your country here]". Good question about living in a developing country though. Part of the reasoning for investing domestically is protecting yourself from currency exchange rates but I do know that depending on the area the currency situation is pretty volatile in general. So that reasoning may not hold up. It's not something that I have a very good idea about.
Now as for the withdrawal rate question, a very good point!
As I'm sure many people are aware, the 4% withdrawal rate came from the famous Trinity Study. However, its data is fairly out of date and maxed out at 30 years of retirement. I found what seems like a good source of extended analysis Updated Trinity Study For 2021 - More Withdrawal Rates! - The Poor Swiss
So as a summary, 4% is still plausible depending on your retirement duration but for anyone who is looking at 40+ years of retirement you may want to downgrade to 3.5% or slightly lower.
And they didn't go too much into depth about sequence of returns risk but there is a small mention of it. The best chances of success are in 100% stocks, but simultaneously it has the earliest time-to-failure on the times when it does fail. So you'll certainly want to pad out the years just before and after retirement with more bonds.
OP
OP
I want to additionally point out that the Trinity Study is not the best single data-point to look at. It is analyzing what is really a fairly simple goal (not running out of money) and has little relation to how a person might actually live using the rule.
One must also consider what their pre-retirement spending was and what their minimum level of desired spending in retirement is. It does no good to know that your money will 'last' at 4% withdrawal if that means there are 5 years in a row where you can only withdraw $20,000. The reality is that you must dynamically adjust your withdrawal rate by year to protect yourself against a sequence of bad returns as well as allowing yourself a minimum standard of living.
On the flipside you probably also don't want to reach the end of your life having 8 times as much wealth as you started with as stockpiled money isn't helping anyone.
So yeah, there's more to it than just a single safe withdrawal number.
One must also consider what their pre-retirement spending was and what their minimum level of desired spending in retirement is. It does no good to know that your money will 'last' at 4% withdrawal if that means there are 5 years in a row where you can only withdraw $20,000. The reality is that you must dynamically adjust your withdrawal rate by year to protect yourself against a sequence of bad returns as well as allowing yourself a minimum standard of living.
On the flipside you probably also don't want to reach the end of your life having 8 times as much wealth as you started with as stockpiled money isn't helping anyone.
So yeah, there's more to it than just a single safe withdrawal number.
I just use FDEWX (targeted fund with pre-allocations) & VOOG (for some extra-aggressiveness) and call it a day.
This assumes you don't want to leave any inheritance.
Setup a living trust and your wife, children, whoever won't have to do forced withdrawals of the retirement vehicles either.
Hey everyone! I had a T. Rowe Price $401k at a previous employer that rolled over into an IRA with some company called Milennium Trust Company, which now has my balance in a .9% interest accruing account with a $40 yearly fee. Blech.
Any recommendations on what to do with this? It's not much, just under $2k. I figure I'll move it to a Roth IRA if possible or something? Just not really sure how to go about it. Thanks so much!
Any recommendations on what to do with this? It's not much, just under $2k. I figure I'll move it to a Roth IRA if possible or something? Just not really sure how to go about it. Thanks so much!
I just got here and I'm already feeling like I don't belong. 😂