|
My priorities have shifted a bit since my 26th birthday. My parents decided to talk about their finances and what I will eventually inherit from them. It's way more than what I thought it would be, and turns out I'm pretty much set even if I don't save a cent. However, it's still their money, and I will not have any control of that money until I inherit it, so it might as well not exist right now. However, I'm not thinking about saving as much as possible for retirement like before, but more about having a more comfortable life from my late thirties on. Maybe supplement my income, or be able to afford a take a risk with my career and try something interesting. Who knows what I might use the extra cash for? I'm currently maxing out my 401k and Roth IRA, and putting anything extra I have at the end of each month (about one third of my take-home) into VFIAX. But since I know I will start withdrawing in around 2030 on, should I keep doing this? I guess this is no longer "long-term" investing, but I didn't know where to put it.
|
#
?
Mar 5, 2018 04:23
|
|
|
|
| # ? May 25, 2024 22:00 |
|
|
moana posted:I don't think so, I'm just anal retentive about keeping things simple. Which reminds me that I should probably close out my solo 401k and convert it to an IRA soon. Vanguard might be able to merge the two accounts if you ask support about it. Simple is good. Mu Zeta posted:I think it means that the SEP IRA is tax deductible, so if you convert it to a Roth IRA then you'll have to pay taxes on it to convert it. So you pay taxes on it now so you don't have to pay taxes when you withdraw later when you're 59 1/2. UnfurledSails posted:My priorities have shifted a bit since my 26th birthday. My parents decided to talk about their finances and what I will eventually inherit from them. It's way more than what I thought it would be, and turns out I'm pretty much set even if I don't save a cent. On the other hand, if you're making out both 401k+Roth IRA right now, you *probably* are going to be pretty set for retirement as it is if you're 50 and have been doing this since 26.
|
|
#
?
Mar 5, 2018 06:18
|
|
|
Yeah I think I wasn't clear about my age there. I was trying to say I recently turned 26.
|
|
#
?
Mar 5, 2018 06:55
|
|
|
UnfurledSails posted:Yeah I think I wasn't clear about my age there. I was trying to say I recently turned 26. I would keep on socking money away; there are lots of not-especially-out-there ways to see the money you think you will get, frittered away long before that actually happens. I obviously don't know your parents situation but all the same it seems unlikely given details so far that you should bank on those funds for your retirement at this point.
|
|
#
?
Mar 5, 2018 08:01
|
|
|
If you're talking like high sevens in a trust that they won't need to depend on, sure, quit saving. But if that number is in any way vulnerable to your parents spending habits, health, or other potential issues, you should not depend on it at all
|
|
#
?
Mar 5, 2018 17:26
|
|
|
Also if your parents weren't already in their 40s when they had you, there's a significant possibility one or both will still be alive on the day you retire. Possibly using up hundreds of thousands annually on unreimbursed medical expenses, full-time care in a nursing home, or investing in african princes due to still having control of their money a little bit after they really shouldn't anymore. My stepdad and mom have assured me I have a substantial inheritance coming, but I'm just pretending in my head they're gonna live forever and planning as though I'm not getting one red cent.
|
|
#
?
Mar 5, 2018 17:51
|
|
|
Yeah unless it's in an (irrevocable) trust, don't count on anything. People typically spend over 50% of savings in the last 5 years of their lives, regardless of how much their savings was in the first place. Medical treatments, living expenses and other such things will always skyrocket up to match the amount of money available for them. You're also at the mercy of a lot of unknowns. Falling out with your parents? Money gone. Parents divorce and each remarry? Money cut to 25%. Parents decide to retire in Maui with an oceanfront 2 HD condo? Money gone. Waiting for rich parents to die is a terrible retirement plan. My grandparents died when my parents were 58. You won't know for 30 years if your Plan is going to work, or if you're going to start saving for retirement at 58 when you go through the estate paperwork and discover they got scammed or had it all invested in Toronto condo land. Like the wise Kyoon said, these problems are less severe the more money your parents have (America.txt) and potentially irrelevant if they have an irrevocable trust in your name with the big bucks in it, but I would be careful about planning your life around "parents dying while I'm still young and without any changes to their wealth or health or relationship with me"
|
|
#
?
Mar 5, 2018 17:58
|
|
|
Thanks for the responses. I agree that things can change, and I'm still saving aggressively as if my parents don't exist. My indecision mostly is related to the allocation of my savings here, as in I'm not sure whether I should continue maxing out my tax-advantaged accounts or just enough to get the company match and some in a HSA, and stash the rest in a taxable account where I can withdraw whenever I want without penalties. Or maybe something in between these two extremes.
|
|
#
?
Mar 5, 2018 19:32
|
|
|
Roth IRA contributions can be withdrawn at any time for any reason. That's $5,500 a year which might put you in that Between the Two Extremes you mentioned. Regarding skipping the 401k, though, you'd be valuing the "chance" of needing/wanting that money before retirement age over the Guarantee of avoiding taxes. Ignoring tax shelters in favor of taxable investing is the opposite of saving as if your parents don't exist. Also don't forget that your asset allocation influences your liquidity as much as your tax shelters. The early withdrawal penalty is significantly lower than the last 3 stock market crashes. Basically, you currently have no real retirement plan, although you're doing a good job with the saving part and have some good prospects for your future.
|
|
#
?
Mar 5, 2018 19:48
|
|
|
UnfurledSails posted:Thanks for the responses. I agree that things can change, and I'm still saving aggressively as if my parents don't exist. My indecision mostly is related to the allocation of my savings here, as in I'm not sure whether I should continue maxing out my tax-advantaged accounts or just enough to get the company match and some in a HSA, and stash the rest in a taxable account where I can withdraw whenever I want without penalties. Or maybe something in between these two extremes. Not to dissuade you from saving nor to encourage you to drastically change your lifestyle, but if you're living on rice and beans just so you can put yourself on a path to retirement by 50, it's okay to not do that. And you absolutely can/should try to find a happy medium in savings that isn't just company match 401k or max everything.
|
|
#
?
Mar 5, 2018 20:26
|
|
|
totalnewbie posted:Not to dissuade you from saving nor to encourage you to drastically change your lifestyle, but if you're living on rice and beans just so you can put yourself on a path to retirement by 50, it's okay to not do that. Counterpoint: Maxing an IRA and a 401k ($23,500 a year) puts you on track for retirement after a 30-year career (napkin math, 30 years at 6% real and $23,500 annual payments = a retirement balance of $1,858,000 and monthly income of $6,200 with the 4% withdrawal rate). I don't get the impression that he's on rice and beans, maxing IRA/401k, or on path to retire at 50 unless it's via inheritance. Definitely allow yourself a healthy and enriching life, but don't think that maxing IRA/401k is a crazy penny pincher's move.
|
|
#
?
Mar 5, 2018 20:35
|
|
|
Start working in your early 20s with a 30 year career is about 50, right? The point is just that maxing tax advantaged space at the expense of enjoying 30 years of your life isn't BWM, but it's also not the only way to be GWM. Not maxing your retirement savings so you can have a steak every now and then is perfectly okay.
|
|
#
?
Mar 5, 2018 20:41
|
|
|
Mu Zeta posted:I think it means that the SEP IRA is tax deductible, so if you convert it to a Roth IRA then you'll have to pay taxes on it to convert it. So you pay taxes on it now so you don't have to pay taxes when you withdraw later when you're 59 1/2. This is what I figured. From what I've been reading, my advantage of just going full Roth (instead of keeping my SEP) now is that today I'm in a low income bracket, so if I (hopefully) am in a better financial position by the time I retire, whatever taxes I pay are going to be far less than what I pay in the future. So I sacrifice today's tax break for a future tax break.
|
|
#
?
Mar 5, 2018 21:14
|
|
|
UnfurledSails posted:Thanks for the responses. I agree that things can change, and I'm still saving aggressively as if my parents don't exist. My indecision mostly is related to the allocation of my savings here, as in I'm not sure whether I should continue maxing out my tax-advantaged accounts or just enough to get the company match and some in a HSA, and stash the rest in a taxable account where I can withdraw whenever I want without penalties. Or maybe something in between these two extremes. If you post some real numbers people can probably give you a better idea of what makes sense
|
|
#
?
Mar 5, 2018 23:27
|
|
|
GoGoGadgetChris posted:Like the wise Kyoon said, I feel it's important to emphasize we're not taking about a wise Kyoon, because he was anything but. We're taking about a wise Kyoon Griffey Jr.
|
|
#
?
Mar 6, 2018 06:26
|
|
|
Imagine not knowing who Kyoon was in context of KGJr's username.
|
|
#
?
Mar 6, 2018 17:03
|
|
|
1. Last week I set up a SEP IRA and contributed $1800 (this was the limit given my 2017 income) 2. During the weekend I opened up a Roth IRA and contributed $5500. When asked, I applied the whole thing to 2018. I'm now thinking of just converting the SEP IRA to a Roth IRA. Vanguard tells me the SEP will be rolled into the Roth I opened in step 2. What I'm not clear is whether the money in the SEP will be applied towards my 2017 contribution limit, or my 2018 limit. Vanguard told me that they just send paperwork to the IRS that shows the contribution was made in 2018 but they don't specify what year it's applied to (which is weird, because they specifically ask that when making a contribution). So my understanding is that it will really just depend on what I inform the IRS in my tax filing. I was hoping maybe someone could shed some clarity on that.
|
|
#
?
Mar 6, 2018 17:54
|
|
|
EAT FASTER!!!!!! posted:Imagine not knowing who Kyoon was in context of KGJr's username. I don't just have to imagine.
|
|
#
?
Mar 6, 2018 18:10
|
|
|
I'm gonna be honest - I thought Kyoon just reregged and was stabilized on some good meds now. Didn't know KGJr was just a fan!
|
|
#
?
Mar 6, 2018 18:14
|
|
|
UnfurledSails posted:Thanks for the responses. I agree that things can change, and I'm still saving aggressively as if my parents don't exist. My indecision mostly is related to the allocation of my savings here, as in I'm not sure whether I should continue maxing out my tax-advantaged accounts or just enough to get the company match and some in a HSA, and stash the rest in a taxable account where I can withdraw whenever I want without penalties. Or maybe something in between these two extremes. We stand to inherit a very substantial income when my in laws leave for the golden shore but I’m 46 and this could easily be 20 or more years away. The women in the family have been known to make it deep into their 90s and develop dementia. So, I’m maxing every savings advantage I have as I just can’t count on the inheritance, I still need to put kids through college and my wife might need it so as not to be a burden on our children towards the end. My personal plan is to just assume we will see none of it. Maybe that’s extreme but eh, I don’t intend to bag groceries in my 70s.
|
|
#
?
Mar 7, 2018 16:17
|
|
|
Rebalancing/REIT question: Say I have approximately 30k in a Roth, 30k in a 401k currently invested in target funds (total of 60k). If I wanted to rebalance my funds to: Total Stock: 45% Total International: 36% Total Bond: 10% REIT: 9% Would it make sense to: 1. Place Tax inefficient (Bond/REIT) in to the 401k ($11.4k) 2. Place all of Total Stock (27k) in to Roth. 3. Use remainder of Roth (3k) /401k (18.6k) for Total International
|
|
#
?
Mar 7, 2018 16:23
|
|
|
Tax efficiency doesn't matter since they are both tax advantaged accounts. I'd do the split based on fees. It's common for 401k offerings to have a decent low fee total us or s&p500 funds while having high fee international or reit funds. This is why I have almost all my us stock in my 401k and all of my international in my Roth. So ya, my suggestion is to try and split based on what gives the lowest fees. The easiest option is that you have 50% of the amount in each account so just modify your diversification slightly and go 50% us stocks in there and everything else in Roth.
|
|
#
?
Mar 7, 2018 19:49
|
|
|
So I've decided late I want to do the Backdoor Roth for 2017. Does anyone know of a guide/wiki/site that covers what sorta things I need to pay attention to when filing my taxes for 2017? I checked the OP but it didn't explicitly mention it.
|
|
#
?
Mar 7, 2018 20:04
|
|
|
Dustoph posted:Tax efficiency doesn't matter since they are both tax advantaged accounts. I'd do the split based on fees. It's common for 401k offerings to have a decent low fee total us or s&p500 funds while having high fee international or reit funds. This is why I have almost all my us stock in my 401k and all of my international in my Roth. The 401k money is just a vanguard account (no matching until later this year). My understanding was that you wanted to preferentially put things with a likely higher return in to a tax-free account like a Roth? For the remainder of the year, I have to use a taxable account. Should I rebalance in the middle of the year?
|
|
#
?
Mar 7, 2018 20:27
|
|
|
Dick Nipples posted:So I've decided late I want to do the Backdoor Roth for 2017. Does anyone know of a guide/wiki/site that covers what sorta things I need to pay attention to when filing my taxes for 2017? I checked the OP but it didn't explicitly mention it. File form 8606. It's pretty simple -- part 1 covers the nondeductible contribution and part 2 covers the rollover.
|
|
#
?
Mar 7, 2018 21:23
|
|
|
As a follow up to my Vanguard saga, it turns out that they do still offer mutual fund only (no brokerage capability) accounts specifically for people like me. It all has to be done over paper, not online, with a couple of extra hoops, though. I'm working on that process now.
|
|
#
?
Mar 8, 2018 15:19
|
|
|
As someone going through that process with vanguard, it sucks! As you said everything is paper for account setup. Also, you can’t do any in-kind transfers. If you need to move a Roth over from somewhere you have to liquidate everything first. This transfer process is a form you have to fill out and send in by mail as well. Hopefully after this form I can put most things back on autopilot. My personal opinion: gently caress FINRA forever. Its my wife who works for a FINRA member. Before we got married I had my own accounts despite us cohabitating for years. Then after we got married her compliance department wanted statements.. ok no problem. Then I made the mistake of wanting to move my taxable account to another broker. Then we learned that her compliance department and the department that collects statements don’t actually talk to each other. The compliance department said we don’t know about this other account that you’ve been sending statements in for 2 years! Get rid of it! And here we are. /rant simble fucked around with this message at 15:35 on Mar 8, 2018 |
|
#
?
Mar 8, 2018 15:29
|
|
|
Yeah it's not ideal, but since all I want to do is buy one mutual fund and then just keep funneling money into it, I'm hoping that once I get the initial setup done it will be simple. Even if that's just a phone call a month telling someone to put $X into Y like I have to do currently with my brokerage account, that's still fine by me.
|
|
#
?
Mar 8, 2018 15:51
|
|
|
My wife's company just switched from a 401k at John Hancock to a SIMPLE IRA with American Funds. The fees are poo poo (1.38%!), but we're still contributing to get our 3% match. My understanding is that after 2 years we can roll over any funds in the SIMPLE to her trad IRA, once per year. My question is does that rollover count towards the $5,500 annual contribution limit? If not, is there a reason why we wouldn't want to try to max her SIMPLE IRA ($12,500) yearly and then just keep rolling over into the trad IRA every year to take advantage of the (much!) lower fees?
|
|
#
?
Mar 8, 2018 18:37
|
|
|
Richard Noggin posted:My wife's company just switched from a 401k at John Hancock to a SIMPLE IRA with American Funds. The fees are poo poo (1.38%!), but we're still contributing to get our 3% match. My understanding is that after 2 years we can roll over any funds in the SIMPLE to her trad IRA, once per year. My question is does that rollover count towards the $5,500 annual contribution limit? If not, is there a reason why we wouldn't want to try to max her SIMPLE IRA ($12,500) yearly and then just keep rolling over into the trad IRA every year to take advantage of the (much!) lower fees? I'll be damned I had no idea. So you can do this while still employed there? https://www.irs.gov/pub/irs-tege/rollover_chart.pdf
|
|
#
?
Mar 8, 2018 19:04
|
|
|
H110Hawk posted:I'll be damned I had no idea. So you can do this while still employed there? That's my understanding. The more I read about it, the more I think that as long as we a.) don't rollover prior to two years after the date of the first contribution to the SIMPLE and b.) only perform one rollover per year, we're good (it's a rollover like any other). This is basically backdooring a trad IRA, right? e: This Bogleheads wiki page seems to agree. Richard Noggin fucked around with this message at 20:02 on Mar 8, 2018 |
|
#
?
Mar 8, 2018 19:47
|
|
|
SpelledBackwards posted:I feel it's important to emphasize we're not taking about a wise Kyoon, because he was anything but. We're taking about a wise Kyoon Griffey Jr. first point, Kyoon owned. :kyoon: GoGoGadgetChris posted:I'm gonna be honest - I thought Kyoon just reregged and was stabilized on some good meds now. Didn't know KGJr was just a fan! i am, conceptually, loving this
|
|
#
?
Mar 9, 2018 18:47
|
|
|
Kyoon was a symbol. In a way, we are all Kyoon.
|
|
#
?
Mar 9, 2018 21:22
|
|
|
Is there a such this as a commodities ETF?
|
|
#
?
Mar 10, 2018 02:04
|
|
|
Ur Getting Fatter posted:1. Last week I set up a SEP IRA and contributed $1800 (this was the limit given my 2017 income) With my Roth IRA, I can change the transaction contribution period. Can you do this for a SEP? Because if you can't, I expect Vanguard won't let you go over the 5,500 2018 limit - it won't let me add more for 2017 since it has recorded 5,500. Vanguard support was how I found this when I wanted to change some contributions to prior year, so perhaps it's all different for a SEP.... 
|
|
#
?
Mar 10, 2018 02:28
|
|
|
SiGmA_X posted:This is NOT experienced advice at freaking all. I've never dealt with a SEP before, from an investing or tax standpoint. Thanks for the tip. I checked and I definitely can't do that for the SEP conversion, it's only available for cash contributions. The more I think/read about it, I've accidentally done a backdoor roth (needlessly, given my income). SEP IRAs are basically traditional IRAs with a different contribution restriction (25% of your income vs. a flat $5500). This would explain why Vanguard shows my 2017 as $0 (as opposed to $1800) and my 2018 contribution as $5500 (as opposed to $7300). So I guess a different version of my question is: if I do a backdoor roth before paying taxes on the original, traditional IRA contribution, do I need to report that original contribution? Or do I treat it as never existing? Also, it's pretty much quintessential me stumbling into the most convoluted scenario on my first try.
|
|
#
?
Mar 10, 2018 03:50
|
|
|
Ur Getting Fatter posted:Thanks for the tip. I would definitely contact Vanguard again, they were really helpful with my moms Solo 401(k).
|
|
#
?
Mar 10, 2018 05:04
|
|
|
obi_ant posted:Is there a such this as a commodities ETF? There are but if you have to ask if they exist then you have no business buying them. There are structural issues from how futures are traded and bundled into an ETF that can just demolish you if you don't understand what you're doing. For example, UNG is a natural gas ETF that has been a big loser over time because NG futures are almost always contango. See: https://www.investopedia.com/stock-analysis/2013/got-a-commodity-etf-watch-out-for-contango-ung-blnd-gld0214.aspx
|
|
#
?
Mar 10, 2018 22:17
|
|
|
I might be receiving five to ten thousand dollars as part of a car insurance settlement related to my mom's passing. Honestly, I find that really emotionally complicated, and I've been trying to think of how she would've wanted me to use that money. I think she mainly would've wanted me to use it as an emergency fund, but I'd also like to take a big portion of it and put it in some kind of investment for my niece and nephew (two years old and newborn). That way, when they're going to school or getting their lives started in ~20 years, I can give that to each of them as a gift from their grandmother. We have a history of grandparents giving grandchildren savings bonds in our family, but I have to think that an investment approach would do better. I have a Vanguard brokerage account. Do any funds come to mind that would make sense for this? I figure it could be a pretty risky fund for the first 10-15 years and then I could move it into something low-risk as they get closer to adulthood.
|
|
#
?
Mar 10, 2018 22:24
|
|
|
|
| # ? May 25, 2024 22:00 |
|
|
You can do a target date retirement fund of the year you want to give it to them. Alternatively, just do an S&P index. This is what I would do as a parent, and once they were teenagers or so I would let them see their investments grow so that they could get used to the idea that the money can go up and down, etc, to give them a real life education in how investing works, have discussions with them about how they feel about their money going up and down, talk about how much risk THEY want to have and switch to bonds if they are risk averse. This is much more hands on, but imo it would be a million times more valuable than "hey, you're eighteen, here's a thousand dollars you can spend on beer." edit: also if your state has tax benefits, a 529 plan would be good for this.
|
|
#
?
Mar 10, 2018 22:58
|
|
