Retirement-Era |OT| How to Invest For Retirement

[Smiley90]

I'll admit the fidelity "retirement score" tracker is doing most of the heavy lifting on my negativity.

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Let's assume you have no other savings each year aside from 6k Roth + 20k 401k, so 26k/year

That gets you, after 30 years, to 2.2 Million dollars with an average 6% return on your investment per year.

Then you can switch to, say, a 5% dividends portfolio, and with a 2.2 million dollar fund you can live off 110'000/year just on dividends, without touching your main fund.

That's more than reasonable.

Again, assuming ZERO other savings except for your 401k+roth each year over the next 30 years. And no government pension income added. And no housing added.

 

[FliX]

Well I'm 29 so in general my mortgage is 1300 but I put away 1800 on it because I intend to sell this and move into a proper house in the next ~3-5 years so it's as good as saving in a low yield savings account.

And then ~1-1.5k in monthly credit card bills (paid in full)

That's really all I've got.

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So let's say 3k a moth. or 36k a year.
x20
=720k
is what you would need to live off based on the 4% rule, so even if you want to to be super conservative and double that you should easily reach that by age 57. And probably much earlier.

 

[Deleted member 5876]

I know I'm pretty dumb on all of this, but I'm the opposite. To me, it doesn't make much sense to min-max Traditional vs Roth tax considerations since:

1. Taxes in the US now are ridiculously low relative to other developed countries and history
2. The government is going to have massive bills (infrastructure, health care, climate change mitigation, etc...) coming up that it's going to need to fund somehow
3. If you're doing things right today, you'll be one of the richy riches targeted for higher taxes when it comes time to withdraw (and probably rightfully)

The only thing keeping me from going all in on Roth would be if I felt the political sentiment was against them so much that there would be a risk that politicians would retroactively kill the tax benefits. The certainty of no taxes on that money in the future beats modest tax benefits today and an almost certain higher tax rate in the future.

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Here is an old article about this: https://www.gocurrycracker.com/roth-sucks/
The reality is that unless you are able to save millions (10+ million) for retirement you likely will have the same if not lower tax in retirement. Most people will not be able to save $10 million+ for retirement.

EDIT: got the millions figure wrong.

 

[Squirrel Killer]

The more I think about it the more I feel like a traditional IRA is probably better overall, even for lower income people like me who will certainly have higher taxes in the future. The primary value in a traditional IRA over a Roth comes from the ability to invest your tax savings.

The tax savings come off the top. For simplicity, say all your IRA funds come out of your highest bracket which is 25%. You max out your Roth investment with $6000. That's $1500 in tax savings, which you can put in your 401K and still be tax advantaged. That amounts to $7500 invested in tax sheltered retirement accounts, instead of $6000 invested and $1500 paid in taxes with a Roth. You come out with the same after tax/after investment dollars either way.

I say this as somebody who invests in a Roth every year, lol.

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Growth is taxed in a traditional account but not in a Roth, right?

Quick and dirty Excel shows over 20 years that $7,500 grows to a bit under $19k (assuming 5% average growth.) At your 25% tax rate, you'll pull out $14.2k. $6k in a Roth only grows to a bit over $15k, but it's free and clear.

Obviously, the actual tax and growth rates will affect that calculation, but what I like about Roth accounts is that they take a variable (especially one that is likely to trend against traditional accounts) out of the equation.

 

[Smiley90]

Here is an old article about this: https://www.gocurrycracker.com/roth-sucks/
The reality is that unless you are able to save millions (10+ million) for retirement you likely will have the same if not lower tax in retirement. Most people will not be able to save $10 million+ for retirement.

EDIT: got the millions figure wrong.

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The author never mentions this, but a Roth also lets you withdraw any contributions after 5 years holding tax-free. So if you have a significant expense coming up and not enough cash at hand (e.g. house/medical emergency) you can just take your contributions out without increasing your marginal tax rate with a huge chunk of income.

 

[Deleted member 5876]

The author never mentions this, but a Roth also lets you withdraw any contributions after 5 years holding tax-free. So if you have a significant expense coming up and not enough cash at hand (e.g. house/medical emergency) you can just take your contributions out without increasing your marginal tax rate with a huge chunk of income.

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The author does mentioned it in the conclusion section.

While full access to contributions is often cited as an advantage of a Roth, those contributions lose to inflation with each year. While we can access our $72k in contributions, those funds are only worth about $53k in Jan 2015 dollars.

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Basically it is an advantage if you plan on taking it out relatively soon after you deposit it. Otherwise the contribution value is eroded away due to inflation. You'd be better off leaving it so it can continue to compound in the stock market. Otherwise you are destroying your growth.

 

[Smiley90]

The author does mentioned it in the conclusion section.

Basically it is an advantage if you plan on taking it out relatively soon after you deposit it. Otherwise the contribution value is eroded away due to inflation.

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I'm talking specifically about unplanned expenses, too. If you have them in a traditional IRA, at BEST you get them taxed at your marginal tax rate (AFTER inflation), at worst you also pay the extra early withdrawal penalty. So your 72k at a high marginal tax rate + inflation will shrink much more. Just an additional consideration.

I'm still very much on the fence. I've been doing Roth both since moving to the US, but... not sure. Might switch to traditional once I move up a tax bracket...

 

[nitewulf]

I have received a stock bonus from my company, which has been sitting there in my portfolio. I already purchase company share separately, so I would rather sell off the bonus to purchase ETF shares. The manager is Fidelity, my question is this - how do I "swap"? IE, not sell, pay taxes and then buy, rather swap for equal value of another investment vehicle and defer the taxes?

Secondly...I invest in Vanguard S&P 500 and Vanguard total World Stock Index - what are some other high gain stock etfs I should be looking at? I am pretty aggressive in my investments and invest in stocks only, I am OK with the risk.

 

[Smiley90]

I have received a stock bonus from my company, which has been sitting there in my portfolio. I already purchase company share separately, so I would rather sell off the bonus to purchase ETF shares. The manager is Fidelity, my question is this - how do I "swap"? IE, not sell, pay taxes and then buy, rather swap for equal value of another investment vehicle and defer the taxes?

Secondly...I invest in Vanguard S&P 500 and Vanguard total World Stock Index - what are some other high gain stock etfs I should be looking at? I am pretty aggressive in my investments and invest in stocks only, I am OK with the risk.

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I don't think "swapping" exists? That'd be something completely new to me. Make sure you check if the shares have a vesting period and also make sure you have them for at least a year before selling to cut taxes in half.

If the stocks are in a retirement account, then you don't pay taxes until you withdraw, no matter how many trades you make in the meantime.

For your second question, I'm a big fan of VOOG.

 

[Chaosblade]

I'm pretty sure it's not possible to "swap" stocks like that, because if there were it would be a huge tax evasion loophole.

 

[Squirrel Killer]

Here is an old article about this: https://www.gocurrycracker.com/roth-sucks/
The reality is that unless you are able to save millions (10+ million) for retirement you likely will have the same if not lower tax in retirement. Most people will not be able to save $10 million+ for retirement.

EDIT: got the millions figure wrong.

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So I recognize that I'm not a very sophisticated investor, so while I did read the whole article and skimmed some of the links articles off of that, please feel free to correct me if I'm misunderstanding something.

The writer's audience seems to be mainly FIRE adherents/aspirants (they're talking about people for who 50% savings rate is no big deal.) I have no issue with FIRE, wish I could've done it myself, but it does impact their analysis. People who can FIRE have very high incomes now and plan on very low incomes in retirement, the exact situation where Roth doesn't make sense.

Since so little of their income will be taxed in retirement, their Last Dollar/First Dollar calculation is good to illustrate a typical FIRE situation, but I don't think it's really applicable to people who want a more comfortable retirement (say >$100k/yr which a working couple should be able to get to with "only" ~1.8m w/ SS) since once your income in retirement gets high enough, traditional accounts won't fit in to that "first dollar" bucket that they can put it in by only making <$50k.

Also, the article assumes roughly static tax brackets and rates, which I think is an entirely unrealistic assumption.

Basically, I think they're making the mistake of thinking their situation is more widely applicable.

EDIT: Reading more of that couple's recent posts, I'm much more comfortable ignoring their advice. Mortgaging their fully paid for house to dump the funds in to the market might work for them, but it's not something that should be encouraged.

 

[Deleted member 5876]

You don't seem to be accounting for inflation at all.
$100k in buying power today is going to be less than half that in buying power in 20 years.
The tax brackets adjust for inflation, as well as by law.

If your target for yearly income in retirement is $100k you have to take into consideration that your tax bracket in retirement is going to be lower than your tax bracket would be today with that same $100k. I mean, it's not guaranteed since laws can change but it is a fact that $100k buying power will be significantly reduced in 20 years so it stands to reason that so will the tax bracket.

 

[tokkun]

Let me throw out a few benefits of Roth that tend to get overlooked in these discussions:

1. The contribution limits for Traditional and Roth are identical, despite Roth dollars having a higher future value since they have already been taxed. This means that if you can afford to max out the contribution limit, you can put more future value into a Roth account than a Traditional one.

2. The future value of Roth dollars is less exposed to risk from changes to tax law, since the tax has already been paid. That makes planning based on Roth dollars easier.

3. You do not need to worry about timing your withdrawals from a Roth account to control your tax bracket. For instance, you could withdraw a large amount from a Roth account if you decided you wanted to buy a rental property, and it would not impact your tax burden. In contrast, with a Traditional account you are penalized for making large withdrawals in one year and need to spread them out over many years if you want the tax efficiency. So there is a flexibility / efficiency tradeoff.

My recommendation would be to do a mix of both Roth and Traditional. For most people Traditional will be more tax efficient if rates do not change and you are careful to control your bracket in retirement. However, having some Roth funds make it much easier to control the bracket without restricting your choices. And having both type of funds acts as a hedge against changes in tax rates in either direction.

 

[Marz]

So basically traditional 401k and then have a Roth IRA on the side which is what everyone says to do.

 

[Smiley90]

Here's an extra caveat - what if I'm only in the US temporarily and plan to retire abroad? If I move back to Canada, the tax situation appears to be a real big mess. For both Roth IRAs and traditional IRA...

 

[Cilidra]

Here's an extra caveat - what if I'm only in the US temporarily and plan to retire abroad? If I move back to Canada, the tax situation appears to be a real big mess. For both Roth IRAs and traditional IRA...

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My understanding is ira or 401k are not too problematic if you cash them out at retirement age but ROTH are very messy.
I worked in US but I am back in Canada. Me and my wife have ira and 401k. M y accountant recommend I leave them be untl retirement but otherwise it's not a huge deal. Usually best to withdraw them all at once unless you have too much for a single year.
Your best to convert all 401k to ira BEFORE crossing the border because you won't be able afterwards.
Currently you cannot convert them to the Canadian equivalent but it only matters if you were planning to cash them out before retirement.

 

[hockeypuck]

So basically traditional 401k and then have a Roth IRA on the side which is what everyone says to do.

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If your work allows it, I believe you can even split the 401k between traditional and Roth, and have a more balanced hedge due to differences in the annual contribution maximums.

 

[FliX]

Here's an extra caveat - what if I'm only in the US temporarily and plan to retire abroad? If I move back to Canada, the tax situation appears to be a real big mess. For both Roth IRAs and traditional IRA...

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I recently spoke with an international tax expert in Germany, to clarify exactly these kind of problems.
And he said for the most part at least between the US and Germany it's not much of a problem because there are at least somewhat similar/equivalent financial vehicles in Germany that you can argue the German authorities to treat them as. The exception being an HSA, which is likely going to be treated as a regular taxable account. And because you don't get a 1099 for an HSA I will have to keep track of the comings and goings in that account manually... So before I move back to Europe I will definitely simplify my HSA holdings so it's not a couple different ETF but just a company or two.

 

[TheTrinity]

I have received a stock bonus from my company, which has been sitting there in my portfolio. I already purchase company share separately, so I would rather sell off the bonus to purchase ETF shares. The manager is Fidelity, my question is this - how do I "swap"? IE, not sell, pay taxes and then buy, rather swap for equal value of another investment vehicle and defer the taxes?

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There is no such thing as a swap like that. You have to route through cash and pay the appropriate taxes assuming it's not in a tax shelter.

I'm more curious about independently buying shares in the company you work for. The only reason I own my employer's shares is because of stock grants and discounted stock purchases twice a year. And I sell them immediately as soon as they vest.

This is for several reasons.

My employer is large enough that I have exposure to their stock through index funds (probably not a lot though).
I don't personally think my employer is a great investment and my money would probably do better elsewhere, it's also quite volatile.
I don't buy any other individual stocks so it would be an aberration in my investment plan to do so just because I work for them.
Buying stock in your employer needlessly extends your exposure. Company takes a big hit? It's not just your job at risk, but also now your investments.

 

[nitewulf]

There is no such thing as a swap like that. You have to route through cash and pay the appropriate taxes assuming it's not in a tax shelter.

I'm more curious about independently buying shares in the company you work for. The only reason I own my employer's shares is because of stock grants and discounted stock purchases twice a year. And I sell them immediately as soon as they vest.

This is for several reasons.

My employer is large enough that I have exposure to their stock through index funds (probably not a lot though).
I don't personally think my employer is a great investment and my money would probably do better elsewhere, it's also quite volatile.
I don't buy any other individual stocks so it would be an aberration in my investment plan to do so just because I work for them.
Buying stock in your employer needlessly extends your exposure. Company takes a big hit? It's not just your job at risk, but also now your investments.

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I invest in the corporate stock for several reasons. It is discounted, and I am in ecommerce which has done spectacularly well last year and I feel it'll continue to do well. And it's also just a small subset of my overall investments.

 

[Smiley90]

Traditional IRA contributions are only tax-deductible if you make less than 76'000/year "if you're covered by a plan at work", am I reading that correctly? Does "covered by a plan at work" mean ANY traditional 401k contribution plan, no matter how much you pay into it?

Why would anyone contribute to a traditional IRA if they make more than 76'000 if so? Given that the Roth income limit is much higher and you get no benefit out of the traditional IRA at all then?

 

[Squirrel Killer]

You don't seem to be accounting for inflation at all.
$100k in buying power today is going to be less than half that in buying power in 20 years.
The tax brackets adjust for inflation, as well as by law.

If your target for yearly income in retirement is $100k you have to take into consideration that your tax bracket in retirement is going to be lower than your tax bracket would be today with that same $100k. I mean, it's not guaranteed since laws can change but it is a fact that $100k buying power will be significantly reduced in 20 years so it stands to reason that so will the tax bracket.

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So I was going to let this drop, I composed two long responses and trashed them because even though you hadn't changed my mind, I recognize my limited tax/investing knowledge and didn't find much value in a contentious back and forth.

But then YouTube dropped this in my feed:



And I watched it, expecting it to side on traditional, however the analysis he ran (in which he arguably hamstrung the Roth scenario by having it contribute $7k/yr less than traditional due to current year taxes) ended up finding they were basically equivalent on a federal level. His takeaway seems to be it doesn't matter that much unless you live in a state with state income taxes.

That's been my impression all along, it doesn't really matter that much. But when you combine that with future tax uncertainty, I like how Roth removes that variable and the need to game my income in retirement.

I agree, traditional may make more sense in some cases (like FIRE, high income now, insane savings rate, very early retirement with low income,) but for people who are trying to do a "traditional" retirement (reitire late-50s+ with large nest egg/pension/SS to provide similar to pre-retirement income,) it either doesn't matter much or leans towards Roth.

 

[BasilZero]

Posting in here - need to start working on this.

Was asked if I want Before Taxes or After taxes....for the type of contribution I want to put in 401k...which would be better?

I'm completely new/oblivious to this, so gonna have to explain to me like I'm a child on this lol.

 

[Deleted member 5876]

Posting in here - need to start working on this.

Was asked if I want Before Taxes or After taxes....for the type of contribution I want to put in 401k...which would be better?

I'm completely new/oblivious to this, so gonna have to explain to me like I'm a child on this lol.

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Literally look one post up. But after watching that video also consider that it is a cherry picked example where the people are fairly older and closer to retirement than say… a 24 year old would be.

 

[BasilZero]

Literally look one post up. But after watching that video also consider that it is a cherry picked example where the people are fairly older and closer to retirement than say… a 24 year old would be.

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Thanks

Though I'm not in my 20s lol - early 30s but will consider it.

Got myself a separate savings account as well.

 

[Sibersk Esto]

So anyone have experience holding a Traditional (not 401k) and Roth IRA simultaneously?

 

[FliX]

So anyone have experience holding a Traditional (not 401k) and Roth IRA simultaneously?

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Yea sure, I have both. This does not strike me as rare...

 

[Squirrel Killer]

Posting in here - need to start working on this.

Was asked if I want Before Taxes or After taxes....for the type of contribution I want to put in 401k...which would be better?

I'm completely new/oblivious to this, so gonna have to explain to me like I'm a child on this lol.

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Like the video I posted above notes, it kinda doesn't matter unless your tax situation is going to be significantly different in retirement.

Make sure that the "post-tax" offering is a Roth 401k. When I signed up for the 401k at my new job right before the new year, I saw that there was a post-tax option, but it was weird because a bunch of memos were going out saying that the Roth 401k option was going to be new Jan 1. I signed up for that, but then saw that the company didn't match post-tax contributions, that wasn't going to start until the new year. So I changed my first contributions to go in the pre-tax/traditional 401k and then switched to the matched Roth 401k once it went live.

 

[Deleted member 5876]

In Roth 401k's a companies match is never going to be in 'post tax' dollars. It's going to be pretax. So effectively by choosing a Roth 401k you will have two 401k's : 1. will be contributions with your post tax dollars, and 2. will be the companies match with pre tax dollars, like a traditional 401k.

 

[Rice Eater]

Man with the markets tanking right now I feel like dropping mine and my wife's 401k contribution from 10% to 5. We could use the extra cash because we still want to make some big purchases this year like me wanting a riding mower and her wanting a new refrigerator.

As for why I'm posting about this. I'm kind of stressed about changing the precedent. We're use to our current pay. If I do this I'll eventually change it back, but when that happens it'll feel like our pay was cut.

Not a big deal, just wanted to write this out and get some thoughts if any about this. Oh and I have a nearly $2k hospital bill to pay which is playing a big role in all this. Man US healthcare and insurance fucking sucks lol.

 

[Deleted member 5876]

This is the time you increase your 401k contribution not decrease it.

 

[reKon]

If all goes well, I may be on my way for purchasing my first home! Hoping that nothing serious comes up from the inspection.

Due to rapidly rising rates, the 3% I was pre-approved for is long gone and is now locked at 4.1%. This is still historically low, so I guess I can't complain too much.

Trying to decide what to do down payment wise...

I intended on putting down 15% after learning PMI was only going to be $25 a month. 12% of this was going to be funded from some existing cash I have and the remaining 3% was going to be from borrowing against my M1 Finance account at 2%.

I asked about how much PMI would be if I only put down 10% and I was told $37.5. Therefore, I'd be paying $13 more and have around an $80 higher monthly payment (due to the lower down payment) at the same 4.1% rate.

So, I guess my question is - why wouldn't I just pay down just 10% to free up cash some cash?

The remaining cash would be used to fund the rest of my ROTH IRA for 2021, invest in further dips in the market in my taxable accounts (index funds, and heavily discounted stocks like AMZN, and some purchases for the new home).

 

[Deleted member 5876]

If all goes well, I may be on my way for purchasing my first home! Hoping that nothing serious comes up from the inspection.

Due to rapidly rising rates, the 3% I was pre-approved for is long gone and is now locked at 4.1%. This is still historically low, so I guess I can't complain too much.

Trying to decide what to do down payment wise...

I intended on putting down 15% after learning PMI was only going to be $25 a month. 12% of this was going to be funded from some existing cash I have and the remaining 3% was going to be from borrowing against my M1 Finance account at 2%.

I asked about how much PMI would be if I only put down 10% and I was told $37.5. Therefore, I'd be paying $13 more and have around an $80 higher monthly payment (due to the lower down payment) at the same 4.1% rate.

So, I guess my question is - why wouldn't I just pay down just 10% to free up cash some cash?

The remaining cash would be used to fund the rest of my ROTH IRA for 2021, invest in further dips in the market in my taxable accounts (index funds, and heavily discounted stocks like AMZN, and some purchases for the new home).

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It's absolutely valid to do that. Home expenses are going to be a thing and you'll want some money for the first year or so because things come up that you didn't think about. Also moving expenses, new furniture, etc. When I got my first home I personally only put 5% down.

Make certain you understand the lenders terms for dropping PMI. If you can; negotiate it so you can drop PMI without a refinance once you breach 20%. Keep in mind that an appraisal a couple of years down the road could put you over the 20% if your house grows in value based on your market but not all lenders will honor that. So find out.

 

[Marz]

Man with the markets tanking right now I feel like dropping mine and my wife's 401k contribution from 10% to 5. We could use the extra cash because we still want to make some big purchases this year like me wanting a riding mower and her wanting a new refrigerator.

As for why I'm posting about this. I'm kind of stressed about changing the precedent. We're use to our current pay. If I do this I'll eventually change it back, but when that happens it'll feel like our pay was cut.

Not a big deal, just wanted to write this out and get some thoughts if any about this. Oh and I have a nearly $2k hospital bill to pay which is playing a big role in all this. Man US healthcare and insurance fucking sucks lol.

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Keep it the same or increase it imo...unless you just have to have the extra cash this year. Markets tanking equals a buying opportunity, this is where you make the most gains in the market even though it may not seem like it during a crash.

 

[reKon]

It's absolutely valid to do that. Home expenses are going to be a thing and you'll want some money for the first year or so because things come up that you didn't think about. Also moving expenses, new furniture, etc. When I got my first home I personally only put 5% down.

Make certain you understand the lenders terms for dropping PMI. If you can; negotiate it so you can drop PMI without a refinance once you breach 20%. Keep in mind that an appraisal a couple of years down the road could put you over the 20% if your house grows in value based on your market but not all lenders will honor that. So find out.

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Yep, I think I confirm that, but I can double check with my loan officer again.

Additionally, putting down a higher down payment, may hurt my actual rate of return on this if there ends up being a slight decrease in property value due to the the interest rate increases (I personally think that it's more likely everything stays flat).

 

[GameDev]

Man with the markets tanking right now I feel like dropping mine and my wife's 401k contribution from 10% to 5.

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There's a Homer Simpson investment meme I saw a while back that went something like:
Market crashes when you're a day trader - *Homer Screaming*
Market crashes when you're a long term investor - "Ooo, bargains"

I was actually taking a graduate level investment class when COVID hit and the more market was shitting itself the more my professor just kept putting in money. He's sitting pretty right now.

If you don't trust a professor at a state school, just follow Warren Buffet: When everybody is being greedy be fearful, when everybody is being fearful be greedy.

 

[Deleted member 70788]

Man with the markets tanking right now I feel like dropping mine and my wife's 401k contribution from 10% to 5. We could use the extra cash because we still want to make some big purchases this year like me wanting a riding mower and her wanting a new refrigerator.

As for why I'm posting about this. I'm kind of stressed about changing the precedent. We're use to our current pay. If I do this I'll eventually change it back, but when that happens it'll feel like our pay was cut.

Not a big deal, just wanted to write this out and get some thoughts if any about this. Oh and I have a nearly $2k hospital bill to pay which is playing a big role in all this. Man US healthcare and insurance fucking sucks lol.

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It's a 401k. Unless you're in your late 50s or older this is going to happen way more times. Now is the time when putting money in is good. Just keep steady.

And a reminder that the money you don't put in a 401k is subject to taxes. So you'll only get 75-65% of that anyway.

 

[reKon]

It's a 401k. Unless you're in your late 50s or older this is going to happen way more times. Now is the time when putting money in is good. Just keep steady.

And a reminder that the money you don't put in a 401k is subject to taxes. So you'll only get 75-65% of that anyway.

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That entirely depends on the amount your distributions out of your 401K in retirement. If you don't need to spend excessively in retirement, then you're in a great position. Based on current tax law an individual would be able to withdrawal around 12,500 tax free (covered by standard deduction) and then another 40,000ish or so can end up being taxed at zero percent on long term capital gains. This is why is why it may be worth it for most Americans to contribute to a traditional 401K (at least til match) and to also start funding a taxable account. Also, maxing out 401K (for those who can) = lower taxable income = more savings to contribute to taxable investments

I've worked on creating a different buckets of funds - ROTH funds (mainly established from earlier in my career when my tax rate was lower), traditional funds, and taxable funds. My goal right now is to continue boosting up my taxable investments.

 

[Deleted member 70788]

That entirely depends on the amount your distributions out of your 401K in retirement. If you don't need to spend excessively in retirement, then you're in a great position. Based on current tax law an individual would be able to withdrawal around 12,500 tax free (covered by standard deduction) and then another 40,000ish or so can end up being taxed at zero percent on long term capital gains. This is why is why it may be worth it for most Americans to contribute to a traditional 401K (at least til match) and to also start funding a taxable account. Also, maxing out 401K (for those who can) = lower taxable income = more savings to contribute to taxable investments

I've worked on creating a different buckets of funds - ROTH funds (mainly established from earlier in my career when my tax rate was lower), traditional funds, and taxable funds. My goal right now is to continue boosting up my taxable investments.

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Absolutely. Unfortunately (fortunately?) we make too much as a household to contribute to a ROTH. So my focus is 401k and HSA max before doing backdoor ROTH and then investment accounts.

 

[Ablacious]

Something to consider with non roth iras are required minimum distributions. If people are planning to live past 71 and have a very large amount of money stashed.

 

[Marz]

Is backdoor Roth still being removed by Congress?

 

[Deleted member 70788]

Is backdoor Roth still being removed by Congress?

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That was wrapped in the Build Back Better bill and it has not made any movement as of late.

 

[Marz]

That was wrapped in the Build Back Better bill and it has not made any movement as of late.

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Wow guess I'll take advantage while I still can

 

[leder]

Does anyone have experience with solo 401ks? It looked way too complicated to set up ourselves, so my self-employed partner set one up through some company, but it looks like they only offer mutual funds. The one they are telling us to get has a decent expense ratio (~0.7%), but it has a sales load of 5.5%. My partner is very late to getting a retirement fund set up, so we want to max it out the next few years, and the prospect of paying $1k a year in sales commission kind of makes my stomach churn. Any advice is appreciated.

 

[Deleted member 5876]

Does anyone have experience with solo 401ks? It looked way too complicated to set up ourselves, so my self-employed partner set one up through some company, but it looks like they only offer mutual funds. The one they are telling us to get has a decent expense ratio (~0.7%), but it has a sales load of 5.5%. My partner is very late to getting a retirement fund set up, so we want to max it out the next few years, and the prospect of paying $1k a year in sales commission kind of makes my stomach churn. Any advice is appreciated.

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Yikes… uh. It's hard to give advice without knowing a little more about this.
Can you just move it to Fidelity or Vanguard? I'm assuming not. But that's what I would try really hard to do.

 

[leder]

Yikes… uh. It's hard to give advice without knowing a little more about this.
Can you just move it to Fidelity or Vanguard? I'm assuming not. But that's what I would try really hard to do.

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I'm not sure. Before setting it up, they asked a friend who runs their own CPA business for advice, and they told my partner that it's way too complicated to set up by yourself, and just to use a company. So the account is created, but we haven't invested anything yet. I'm looking online and it seems like Fidelity and Schwab both offer solo 401ks, so I wonder if we can just close the other one and try to go with one of those companies...

 

[HeySeuss]

Hi y'all I'm new to this and looking for some advice. Currently I work where I get a state pension, 70% of my top 3 years after 30 years. I'm 15 years on and my best 3 years will be 100k+.

In addition I started a deferred compensation about 3 years ago. A little late in the game but I'm dumping 600 a month into it.

Recently, I sold my house and made about 70k after it was all said and done. I would like to invest a chunk of it (it's currently in a savings account which I know I need to move it out of). I think I want to invest about 40k of it but I'm not sure the best company or plan to invest in.

Any advice would be welcomed!

(I am going to read through this thread)

 

[FliX]

Hi y'all I'm new to this and looking for some advice. Currently I work where I get a state pension, 70% of my top 3 years after 30 years. I'm 15 years on and my best 3 years will be 100k+.

In addition I started a deferred compensation about 3 years ago. A little late in the game but I'm dumping 600 a month into it.

Recently, I sold my house and made about 70k after it was all said and done. I would like to invest a chunk of it (it's currently in a savings account which I know I need to move it out of). I think I want to invest about 40k of it but I'm not sure the best company or plan to invest in.

Any advice would be welcomed!

(I am going to read through this thread)

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US?
If so you could put 6k into an IRA to tax shelter it somewhat. Beyond that you'll need a taxable account.
The banks/brokers usually cited here are: Vanguard, FIdelity, Charles Schwab. Overall I think it makes little difference.
Personally I have everything with Fidelity because that is where my employer 401k was.

 

[TMC]

Hello everyone!

I recently started a new job and am looking through their 401K plan. I am trying to decide on what stock options I should go with. I'm currently 33 and have 100% stocks in my portfolio. I'm wondering if I should start slowly allocating a percentage to bonds. Currently, I'm invested in the following between my current 401k (That I will be rolling over), Roth IRA, and taxable account:

VTIAX (Vanguard Total International Stock Index Fund)
VTSAX (Vanguard Total Stock Market Index Fund)
VFIAX (Vanguard 500 Index Admiral) -From previous 401K plan
VTNGX (Vanguard Developed Markets Index Fund) -From previous 401K plan

These are the options for my new 401K plan:

401k Options

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I am leaning towards Vanguard Mid-Cap Index Fund and Vanguard Total International Stock Index Fund. Also considering
Vanguard Health Care Index Fund (Adm) and Vanguard Financials Index Fund (Adm). What do you all recommend I select for my options? Should I add more than two? Truly appreciate any help!

 

[Deleted member 5876]

Hello everyone!

I recently started a new job and am looking through their 401K plan. I am trying to decide on what stock options I should go with. I'm currently 33 and have 100% stocks in my portfolio. I'm wondering if I should start slowly allocating a percentage to bonds. Currently, I'm invested in the following between my current 401k (That I will be rolling over), Roth IRA, and taxable account:

VTIAX (Vanguard Total International Stock Index Fund)
VTSAX (Vanguard Total Stock Market Index Fund)
VFIAX (Vanguard 500 Index Admiral) -From previous 401K plan
VTNGX (Vanguard Developed Markets Index Fund) -From previous 401K plan

These are the options for my new 401K plan:

401k Options

4 new items added to shared album

photos.app.goo.gl

I am leaning towards Vanguard Mid-Cap Index Fund and Vanguard Total International Stock Index Fund. Also considering
Vanguard Health Care Index Fund (Adm) and Vanguard Financials Index Fund (Adm). What do you all recommend I select for my options? Should I add more than two? Truly appreciate any help!

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I would consider nothing but the Vanguard options from that list.
All the others are kinda shit.

As far as bonds go.. I wouldn't, given that you are comfortable with the volatility of single stock ownership you should be fine with the volatility of index funds that aren't bonds.