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so i went to check on my 401k yesterday because of all this backdoor talk and ... what exactly is a good amount of money to have in my 401k? i'm in my mid-late 30s and i guess i'm hoping i can retire at 50-65? 50 if i run into a string of good luck i suppose. its with t-rowe, and they have an estimate of how much i could pull out by the time i "retire" and it looks like a number that seems a bit high? maybe not so high by the time i retire and stuff i guess but more than i was expecting.. which makes me a little less stressed about it.
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Jun 30, 2021 04:32
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Strong Sauce posted:so i went to check on my 401k yesterday because of all this backdoor talk and ... what exactly is a good amount of money to have in my 401k? i'm in my mid-late 30s and i guess i'm hoping i can retire at 50-65? 50 if i run into a string of good luck i suppose. [panic] is long gone, which is a shame. It would be pretty good to get Fidelity's roadmap onto the OP. Read the assumptions (it bakes in the expectation that you're saving 15% of your income, and that you'll maintain the about the same overall quality-of-life after retirement as before, vs jet-setting it or chasing eternal summer on cruise lines or something), but it's ~pretty good~. The tax factor on Roth savings aren't figured in; they'll be "worth a bit more" but it's probably best to treat that as icing on your cake.
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Jun 30, 2021 05:34
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Strong Sauce posted:so i went to check on my 401k yesterday because of all this backdoor talk and ... what exactly is a good amount of money to have in my 401k? i'm in my mid-late 30s and i guess i'm hoping i can retire at 50-65? 50 if i run into a string of good luck i suppose. i think my dumb fidelity roadmap says you should have 3x salary by 40, probably a decent rule of thumb. kind of gets out of whack if you are a high earner but that means you have the Good Problems
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Jun 30, 2021 12:47
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Strong Sauce posted:so i went to check on my 401k yesterday because of all this backdoor talk and ... what exactly is a good amount of money to have in my 401k? i'm in my mid-late 30s and i guess i'm hoping i can retire at 50-65? 50 if i run into a string of good luck i suppose. The 3x your starting salary is probably a good reference, but the real answer is "it depends" because you also need to take into account how much you plan to spend. Focusing on only how much you have misses half the equation. You should calculate how much you need at retirement (25x your projected annual spend would probably be very safe for retirement at 50+), and see if your current savings now along with your savings rate and projected growth (~5% real is probably safe) can get you there on time. Of course, you do not know for certain how much you plan to spend in retirement or the actual growth rate of your investments, but it will get you in the ballpark and let you know if you are super far off or not. Since you seem to be getting your financial house in order, such an exercise will give you an anchor point for future decisions. drainpipe fucked around with this message at 13:20 on Jun 30, 2021 |
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Jun 30, 2021 13:05
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Strong Sauce posted:what exactly is a good amount of money to have in my 401k?
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Jun 30, 2021 15:47
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did you seriously just link an hour long youtube video? can you please summarize
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Jun 30, 2021 17:04
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Strong Sauce posted:so i went to check on my 401k yesterday because of all this backdoor talk and ... what exactly is a good amount of money to have in my 401k? i'm in my mid-late 30s and i guess i'm hoping i can retire at 50-65? 50 if i run into a string of good luck i suppose. What is your budget in retirement? Can you pay yourself ~3% of your retirement buckets to sustain that budget? And if you are going to retire under 59.5, can you pay yourself out of non-retirement accounts at 3%? What will you do for healthcare? I just picked 3% because it's what I see on the fire forums. The later you retire the higher the % can be in a way, because you have fewer actuarial years to live. Are you likely to need in home or facility based healthcare? You want to retire in 20ish years, can you accumulate that number including compound 6% interest in that time?
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Jun 30, 2021 17:15
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That reminds me to ask. I have a lot saved up at the moment, but most of it is actually in a non-retirement, meaning non-tax advantaged, account in Vanguard. I’d say the ratio of non-advantaged to advantaged (i.e. Vanguard Roth + Vanguard rollover + Principal pre-tax 401k) is about 2.05:1. How does this change my approach to retirement, if at all?
Pollyanna fucked around with this message at 17:32 on Jun 30, 2021 |
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Jun 30, 2021 17:26
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Strong Sauce posted:so i went to check on my 401k yesterday because of all this backdoor talk and ... what exactly is a good amount of money to have in my 401k? i'm in my mid-late 30s and i guess i'm hoping i can retire at 50-65? 50 if i run into a string of good luck i suppose. I mean, it 100% depends on where you live, what your salary is, etc. Generally if you're following a good PF flowchart (maintaining an E-fund, maxing contribution limits and employer match etc.) and aren't paying 2-and-20 fees or something on your retirement you're good to go. Comparing to what other people have, or where they are is really counter-productive, because what has happened is over and you can only change what happens today and they have different goals. Ideally you would have been investing your allowance as a kid into a vanguard ETF. You can easily check average American retirement savings if you'd like, but you'll be comparing your situation with millionaires and completely broke people and it won't be useful. Maybe ask people in similar economic situations?
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Jun 30, 2021 17:40
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Pollyanna posted:How does this change my approach to retirement, if at all? First, the good: there’s no penalty to early withdrawal, so you can start your retirement before age 59.5. Then the neutral: because it’s not a 401(k) or trad IRA it didn’t accumulate as quickly/easily, since you were putting post-tax dollars. Then the bad, and there are a few angles: Since it’s not a Roth you will be taxed on gains at withdrawal time, so you’ll need more dollars in the account to be equivalent in terms of retirement planning. Also since your dividends are reported and taxed year by year you need to be more careful about the tax efficiency of what you hold in the non-privileged accounts, and shouldn’t just put it into target retirement funds without being aware that you’re losing some tax efficiency. I’m pretty hazy on things the further I get into that paragraph but I would refer you to the Bogleheads wiki on tax efficiency in non-advantaged accounts for more info.
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Jun 30, 2021 18:11
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Pollyanna posted:How does this change my approach to retirement, if at all? Basically you'll get cap gains on the taxable stuff when you sell, so you'll want to factor that in to any math, also you'll want to draw down the taxable stuff first so that your tax-free accounts get to keep growing, tax free, even while you're retired + making withdrawls on the taxable stuff. Also the time when you're withdrawing from your taxable accounts potentially gives you a good low-tax-bracket time to do any remaining backdoor roth conversions if you've still got stuff sitting in a Traditional IRA.
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Jun 30, 2021 18:44
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Ulf posted:There are good and bad angles. You're missing a really big point in the "good" column, I think: namely that the money contributed has already been taxed, so the only taxes you'll pay on withdrawal will be capital gains on the actual gains. So if you've got $100,000 in a taxable brokerage, of which 20% is capital gains, and withdraw it all, you'll pay 15% of the 20%, or $3,000. Leaving $97,000 in your pocket. Whereas if you have $100,000 in a pre-tax retirement fund, and withdraw it all, you'll pay ~$18,000 in taxes at current tax rates (or more - this calculation assumes this is your only taxable income for the year), leaving only $82,000 in your pocket. Granted you're obviously not going to withdraw it all at once, but this is illustrative.
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Jun 30, 2021 18:57
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Leaving a lot of investments outside of tax-advantaged accounts makes a lot more sense if you are very confident that you will retire early, and not early like a couple years. At least this is what I tell myself to justify my actions, without doing something as rash as ignoring tax advantaged accounts entirely.
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Jun 30, 2021 19:41
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I'll remind people that you can access money from your retirement accounts before 59.5 via the Roth ladder https://www.madfientist.com/how-to-access-retirement-funds-early/. It does requires some advanced planning, but it's doable. You do need to have some money immediately accessible in the first five years, but that's about it. So for people looking to retire early, you should probably still fill out your tax-advantaged buckets, especially if you are at high marginal tax rates.
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Jun 30, 2021 20:04
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On the plus side for taxable savings, cap gains is taxed at 0% up to like 40k per individual. If you don't have any other income and you're just drawing from that, you might not have to pay any taxes at all. One thing you should do in your taxable is make sure that you have the funds broken down some. Rather than one global fund, you want to split it into various component funds so you can be picky when you withdraw and keep your taxes optimized.
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Jun 30, 2021 21:16
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Finding out now that the new HSA charges 0.03% per month as an administrative fee for investments. Not to exceed $10/mo. I feel like I'm being ripped off but it's not like I have a choice. Edit: I don't math good. But I'm still indignant. Fhqwhgads fucked around with this message at 21:50 on Jun 30, 2021 |
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Jun 30, 2021 21:28
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Fhqwhgads posted:Finding out now that the new HSA charges 0.03% per month as an administrative fee for investments. Not to exceed $10/mo. I feel like I'm being ripped off but it's not like I have a choice. You can probably move some of the funds out i to a zero-fee HSA. Your current HSA administrator will make the process as much of a pain in the rear end as possible (and make sure to not accidentally close your current HSA) but it might be possible. Or, just eat the dumb penalty until you switch jobs and then roll everything out. Or roll once a year or something.
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Jun 30, 2021 22:22
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drainpipe posted:I'll remind people that you can access money from your retirement accounts before 59.5 via the Roth ladder https://www.madfientist.com/how-to-access-retirement-funds-early/. It does requires some advanced planning, but it's doable. You do need to have some money immediately accessible in the first five years, but that's about it. So for people looking to retire early, you should probably still fill out your tax-advantaged buckets, especially if you are at high marginal tax rates. Does this mean that if you already have both a Roth IRA and traditional IRA you can basically access the tIRA money whenever you’re willing to pay taxes on it by just converting it and immediately withdrawing it?
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Jun 30, 2021 22:40
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raminasi posted:Does this mean that if you already have both a Roth IRA and traditional IRA you can basically access the tIRA money whenever you’re willing to pay taxes on it by just converting it and immediately withdrawing it? If you're laddering you can't withdraw what you just transferred for five years, but you can withdraw earlier Roth contributions whenever you want.
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Jun 30, 2021 23:44
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Fhqwhgads posted:Finding out now that the new HSA charges 0.03% per month as an administrative fee for investments. Not to exceed $10/mo. I feel like I'm being ripped off but it's not like I have a choice. My employer-offered HSA isn't very good so I haven't invested any of the money in it and am planning to rollover all but $100 to my Fidelity HSA once the employer's annual contribution goes in. This is a fairly new job and I haven't done this before, but it seems straightforward from the explanation offered at https://thefinancebuff.com/how-to-rollover-an-hsa-on-your-own-and-avoid-trustee-transfer-fee.html.
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Jul 1, 2021 06:32
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having fun posting posted:My employer-offered HSA isn't very good so I haven't invested any of the money in it and am planning to rollover all but $100 to my Fidelity HSA once the employer's annual contribution goes in. This is a fairly new job and I haven't done this before, but it seems straightforward from the explanation offered at https://thefinancebuff.com/how-to-rollover-an-hsa-on-your-own-and-avoid-trustee-transfer-fee.html. Funny thing is, my employer offered HSA IS a Fidelity HSA. Unless somehow opening up one myself is cheaper than having my employer offer it...?
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Jul 2, 2021 01:47
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Yeah, it definitely can be. One thing to watch out for is that payroll deductions for HSAs are exempt from FICA taxes so you do get a discount for making contributions to your employer’s HSA plan.
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Jul 2, 2021 14:06
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people posted:
Fascinating, good to know. Looks like I'm going to be fine if keep contributing to my 401k and Roth IRAs. One thing, though: Kylaer posted:You're missing a really big point in the "good" column, I think: namely that the money contributed has already been taxed, so the only taxes you'll pay on withdrawal will be capital gains on the actual gains. So if you've got $100,000 in a taxable brokerage, of which 20% is capital gains, and withdraw it all, you'll pay 15% of the 20%, or $3,000. Leaving $97,000 in your pocket. Whereas if you have $100,000 in a pre-tax retirement fund, and withdraw it all, you'll pay ~$18,000 in taxes at current tax rates (or more - this calculation assumes this is your only taxable income for the year), leaving only $82,000 in your pocket. Granted you're obviously not going to withdraw it all at once, but this is illustrative. If your account has been growing over time, then most of it is capital gains. Like if you start with $100,000 and it grows at 3% for 30 years, that's $100,000 * (1.03 ^ 30) = $242,726.25. So you'll be taxed 20% on any of that $142,726.25 you withdraw, right? moana posted:On the plus side for taxable savings, cap gains is taxed at 0% up to like 40k per individual. If you don't have any other income and you're just drawing from that, you might not have to pay any taxes at all. o!!! that's good to know!!!!
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Jul 3, 2021 03:06
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about taxable vs advantaged
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Pollyanna posted:If your account has been growing over time, then most of it is capital gains. Like if you start with $100,000 and it grows at 3% for 30 years, that's $100,000 * (1.03 ^ 30) = $242,726.25. So you'll be taxed 20% on any of that $142,726.25 you withdraw, right? Probably not. The 20% cap gains tax rate only kicks in at a total income of roughly $441k/yr for a single filer, and $496k/yr for MFJ. It's 15% otherwise, and the whole thing works like ordinary tax brackets, with the caveat that other income eats up the low buckets before your capital gains touch it. So, if you're not making tons of money elsewhere, you'd pay somewhere around 15%. It could go as low as about 10.8% if you have no other income. On the other hand, if you're already making a bunch of money elsewhere, MAGI over $200k single/$250 MFJ means you have to pay an additional 3.8% net investment income tax. So, cap gains can go up to 23.8%.
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Jul 3, 2021 03:47
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Pollyanna posted:
That's still better than being taxed at (a variable rate, but most likely 22 or 24)% on all $242,726. And your total income needs to be >$441,451 for the 20% capital gains rate to apply, less than that it's 15% (or 0% for income up to $40,000 as already mentioned). $58,254 in taxes on the tax-advantaged account, $21,408 on the taxable brokerage. Edit: To clarify, I'm not saying a taxable brokerage is better than a tax advantaged account. As the name implies, a tax advantaged account is better, and if you have tax-advantaged space, it's better to fill it up before contributing to a taxable account. But a taxable account is not bad, and you need to keep the implications of pre-tax versus post-tax money in mind when you're looking at your overall asset breakdown. If I could have a hundred thousand dollars in a taxable brokerage or a hundred thousand in a pre-tax 401k, I'd take the taxable brokerage. But, flip side, it's a lot easier to actually achieve a hundred thousand dollars to a 401k than in a taxable brokerage. Kylaer fucked around with this message at 03:58 on Jul 3, 2021 |
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Jul 3, 2021 03:51
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Here's a good article on how to not pay taxes on your capital gains during early retirement: https://earlyretirementnow.com/2019/11/20/how-much-can-we-earn-in-retirement-without-paying-federal-income-taxes/ edit: federal taxes, obv. California will take their cut on anything, even cap gains 
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Jul 3, 2021 03:55
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I have 15% going into my 401k currently, company match to 4%, and I maxed out my roth ira and put it into a bogleheads style 3 fund portfolio for the year. From here, should I be looking at maxing out my 401k first and foremost at the end of the year and then putting anything extra into additional 3-fund portfolio shares on a standard brokerage account?
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Jul 3, 2021 05:04
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Meow Tse-tung posted:I have 15% going into my 401k currently, company match to 4%, and I maxed out my roth ira and put it into a bogleheads style 3 fund portfolio for the year. From here, should I be looking at maxing out my 401k first and foremost at the end of the year and then putting anything extra into additional 3-fund portfolio shares on a standard brokerage account? Yes, you have the sequence exactly right. Assuming you have an adequate emergency fund and no outstanding high interest debt, of course.
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Jul 3, 2021 12:48
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Ok originally my plan was to read pages 900-940, but lots of side tangents looking up symbols and terms like "bond tent" got me to about page 906. I'll have to loop back around and read the rest soon. I'm starting to notice15-20 account handles over in the home buying, salary negotiation, and oldie software programming threads keep popping up in this thread as well. I have been playing along in the other gambling thread, and so far I've managed to not lose much money over the last three months, which I guess isn't surprising as the market has been on an absolute tear, but it's given me some basic exposure etc etc A couple of intentionally daft questions, looking for any feedback here: 1. How does this look as a very basic initial investing strategy Looking at things, I have about $1500/mo to dump into, I guess the Bernstein's 33/33/33 split thing, this is kind of what I'm looking at for a first pass Rust code:VXUS, VEU, IXUS, VEA all seem to be largest internaitonal funds operated by blue chip industry players, eyeballing their valuation graphs they all appear to be about the same? BND, AGG, IUSB, SCHZ are all some of the largest bond funds, mostly operated by the same people doing the international stock market fund, seem like very sober, safe bets 2. back around page 901 someone else had a similar post, live in a very high CoL area (nyc, bay area) and pay near/at top tax rate, but the plan is to move to a low cost of living/low tax area around age 55-57, so it sounds like putting money into 401k makes more sense than a "roth"... but i guess there is "Straight roth" and "401k roth"... my new employer does a straight 4% match on 401k, i think, so I'll top that off, and then on top of that I want to do the $1500 monthly, is that just going to go into my personal account, I guess? and then I pay taxes on long term capital gains, which, we probably will be taxed at the 20% rate, but now biden is pushing to set that at 39.x%. At that point I'm kind of tempted to go start a business in another country with that money , or just wait 4-8 years to pull my money out when republicans repeal that? you can't time the market etc ok i'm rambling now 3. I'd still like to gamble with an additional $200/mo  day trading and then move the 4. I know you can't time the market, but it sure feels like we're about to have a great big market bubble pop. Is it better to just buy bonds for the next 3-6 months, then rotate into stocks when the market bottoms out, and then rebalance about 3 months after that. I know the received bernstein wisdom is to rebalance annually, but if I can avoid losing 20% of my initial investment, that seems like a not terrible beginning strategy. As for financial picture, I already have a house, and we have a sizable nest egg in 401k, but now that I'm kind of done saving for buying a house, the only other long term big purchase is some acreage out in the country in 2-5 years, and the rest will go towards retirement/additional emergency savings etc. Hadlock fucked around with this message at 13:06 on Jul 3, 2021 |
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Jul 3, 2021 13:04
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Hadlock posted:
For this part, you answered your own question in your first sentence: Hadlock posted:
Even assuming there is a bubble (def possible sure), no one knows how long until it pops, when, how quick the rebound. Think of it this way. In April and May 2020, everyone (myself included) was very sure we were looking at years of recession. Obviously not quite what happened, so if you were to have tried to game the market, you would have lost out. People were posting here predicting the market would hit bottom when trump became president. They posted the same thing for Biden. It’s human nature to want to , but you cannot time the market. Period. Everything you are doing should be with the goal of over 20-40 years, you get investment returns. Now, figuring out your portfolio balance, great idea. I’ll let others confirm if your proposed balance is good or not (looks fine to me but I didn’t look closely). Pick balance / risk based off of your preferred risk level, IE “how much risk do you want to be exposed to if the market does crash?” Then, stick to it regardless of whether the market goes up or down. For # 3 , as long as you are aware it is gambling and it should be just fun money and ONLY fun money (seems to be the case), just be aware of tax consequences around day trading and selling stocks with short term capital gains (IE holding under a year).
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Jul 3, 2021 13:39
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For #4, do not time the market. For #3, I would definitely hold your gambling money in a completely different account, even financial institution, if possible. You want the delineation between serious retirement money and fun gambling money as clear as possible. That way, you won't be tempted to rebalance some of your serious money back into your fun money if you take on trading losses in the latter.
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Jul 3, 2021 13:44
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Just some comments: You're spreading your cash over a bunch of funds that do the same thing for no apparent reason. Why? I mean I actually hold a chunk of SFY and feel no reason to move to SPY, like you said they do basically the same thing. More funds with the same target doesn't diversify you much, just makes your life more complicated. TGIF is a bond fund but listed under equity. Also TGIF and WKLY both have like a 0.5% expense ratio so if you like them fine, but don't put too much in them. Biden's LTCG tax increase would only hit you if you were making over ~half a million dollars of capital gains per year. If you're really pulling in that kinda cash go pay someone to manage your money, you can afford it, and stay away from guillotines. Just do something like 28% SFY or SPY, with fractional shares they're basically the same 5% WKLY, with the intent to move this money out 33% VXUS 33% BND And don't try to time the market.
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Jul 3, 2021 15:30
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So I got a job offer this week and need some help here. I can join as either w2 or 1099. With the w2, I'd have to do a Simple IRA. This means I can only sock away 13.5 in that. Do I also lose the ability to do regular IRA contribution of 6k with this? Going as 1099 it looks like I can do a solo 401k and put 58k in some sort of tax advantaged account. I assume I can still do my regular 6k in IRA contributions with this still. Do I have to do anything fancy with the way I get paid (file some paperwork to make my own company and get paid through that)? I've already maxed my 401k for the year at my former job so I'll have to wait until next year to take advantage of this. I'll be talking to my accountant/tax people about this (as well as quarterly tax filings) sometime soon, just wanted to have a good idea so I can have all my questions ready for them.
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Jul 3, 2021 16:34
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This is all good advice, thanks!ranbo das posted:Just some comments:  everything else Biden and Trump have rolled out over the last 5+ years has been tied to a magic 100% phase-out number, I had just assumed that the new LTCG was tied similarly. Sounds like even if I were to pull out 300,000 of pure profit from my account to buy some land, it wouldn't be taxed at more than 20%, for now 
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Jul 3, 2021 20:17
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Here's a fairly straightforward beginner question I've been chewing on, please forgive if I come across as an idiot: As a teacher I'm paying into the state pension fund as a pretty good rate, and plan to continue doing that for the rest of my career even if I change schools/states. The website's calculator predicting my payout if I keep going at the current rate and retire at 65 or later is very encouraging after the stress of having nothing toward retirement through most of my 20s. But I find myself with some cash on top of my emergency fund sitting around that I want to use as a start to some regular supplementary retirement investing, since I started paying in and building that pension relatively late. Do you think its worth using an IRA for that supplementary investing if I'm already putting in on a pension plan, given the restrictions on the money once its in there? Or would it be better to not bother with that instrument so I have more flexibility, since this is "extra," retirement money?
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Jul 4, 2021 10:11
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Sanguinia posted:Here's a fairly straightforward beginner question I've been chewing on, please forgive if I come across as an idiot: We're all idiots, it's all good. If you don't have a 401k/403b option in addition to your pension, my suggestion is a Roth IRA.
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Jul 4, 2021 10:44
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Sanguinia posted:Do you think its worth using an IRA for that supplementary investing if I'm already putting in on a pension plan, given the restrictions on the money once its in there? Or would it be better to not bother with that instrument so I have more flexibility, since this is "extra," retirement money? Roth IRAs allow you to pull the contribution, that is the amount you actually put in (but not the growth), at any time, so contributing to that is probably a good idea.
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Jul 4, 2021 12:31
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KYOON GRIFFEY JR posted:i think my dumb fidelity roadmap says you should have 3x salary by 40, probably a decent rule of thumb. kind of gets out of whack if you are a high earner but that means you have the Good Problems What do these x times your salary measurements mean practically? The present day salary you would guess would suit you in retirement? Because, like, my salary now at 34 is nearly double what it was for me at 30. I may have been on track from the old salary level, but I’m less likely to be now. My expenses now are also way higher than I assume they’ll be in my late 60s. Kids will be out of the house, my mortgage will be paid off, I’ll have a lifetime of existing consumer goods purchases, etc. How is all of this factored in?
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Jul 4, 2021 13:26
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fsif posted:What do these x times your salary measurements mean practically? The present day salary you would guess would suit you in retirement? Salary multiples are garbage for those reasons, look at steady-state annual expense multiples. You'll want 25-35x. Read up on the 4% rule of thumb and why it might be more like 3-3.5%. Also your healthcare costs likely go up in your late 60s etc.
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Jul 4, 2021 15:06
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Sanguinia posted:Here's a fairly straightforward beginner question I've been chewing on, please forgive if I come across as an idiot: If in your budget you have this money earmarked as retirement then yes, I would toss it in a IRA, probably Roth. It's similar to putting in your pension as far as restrictions go, but you're in control of its destiny for better or worse. Given you have another source of decent income I would suggest investing aggressively. You don't say how old you are but you could easily "over shoot" your retirement by a decade as far as pairing back the aggressiveness in your IRA. (Think if you were going to choose Target Date 2060, choose Target Date 2070.)
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Jul 4, 2021 15:12
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