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spwrozek posted:. I have put money into a Roth IRA for her (it has about $5k in it) Does she he have an equivalent or greater amount of earned income for the contribution year you're applying it to?
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Feb 4, 2020 19:52
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spwrozek posted:This thread is about investing and retirement. Take whatever the gently caress you are arguing about somewhere else. The rule of thumb for safe withdrawal of conservative investments in retirement is 4% per year. You don't have enough money to set up any kind of significant fixed income out of her investments; you'd be looking at ~$600/year. Your best bet is probably to put the savings into something conservative, probably a 2020ish Vanguard target retirement fund, or LifeStrategy Income/Conservative Growth. Work out a budget based on social security income (I hope to god she has some), and keep the retirement funds as an emergency fund that might see minimal growth if there's no need to tap into them. When you build out that budget, keep in mind that she might be eligible for significant public services including SNAP (what used to be food stamps), heating/utility assistance, Medicaid to help with costs Medicare doesn't cover, and so forth. There are federally funded nonprofits called AAAs (not the car club but Area Agencies on Aging) that can help her and you navigate social services and figure out how to structure finances to allow her to save as much as possible and remain eligible for programs that will help her cover costs. Your state might also have an agency or agencies that can help you navigate public services. One final thing: consider a term life insurance policy if she's going to be dependent on a portion of your income. Just like a kid, if anything happens to you, she probably wouldn't be able to support herself. Good luck. You're facing a very difficult situation, and I hope you're able to set everything up to take care of your mom. political hot take: like everyone, she deserves a safe and comfortable retirement
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Feb 4, 2020 19:54
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DaveSauce posted:I talked to Fidelity tonight and looks like I was reading the 2020 SPD (they did make changes in 2020 so it is a different document). That said I'm pretty sure I read the 2019 SPD earlier in the year and saw the true up mentioned. The Fidelity rep said he didn't see true up as a feature for 2019, though... BUT dude said 2019 docs aren't available anymore and I have to get it from HR. So maybe! welp it's been a while and I finally got a response that yes, 2019 had true-ups, and that they're working through them and will be done soon. This was after a 10 minute slightly-heated discussion with my local HR, who was being EXTREMELY defensive, and included such gems as: "you need to put in X% to get the full match" "well is it a lot of money you're missing?" "how do you know how much it should have been?" "but you didn't work here the full year" and, "we don't give you that money Fidelity does, so if you didn't receive it then you must not qualify for it" She finally agrees to rope in corporate HR via e-mail, and they essentially answer my questions with the first response without even trying (despite local HR completely misstating my question). I mean I'm not even mad about them not knowing off the top of their head, I'm just annoyed that they took what should have been a simple question and instead of saying, "I don't know how to determine that, let me find out for you" they just got so defensive and tried to convince me that I was wrong. Moral of the story: push back on HR because there's a non-zero chance that they have absolutely no idea what they're talking about, and always remember that they don't exist to help you, they exist to protect the company. DaveSauce fucked around with this message at 22:00 on Feb 4, 2020 |
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Feb 4, 2020 21:52
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DaveSauce posted:Moral of the story: push back on HR because there's a non-zero chance that they have absolutely no idea what they're talking about, and always remember that they don't exist to help you, they exist to protect the company.
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Feb 4, 2020 21:53
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spwrozek posted:This thread is about investing and retirement. Take whatever the gently caress you are arguing about somewhere else. Did she previously work somewhere that will give her a pension? How much is her SS going to be? Can she still currently work, and if so, can she save money while working? Why do you think she will need the money at 65? If she has nothing else, she needs to work as long as she can. SS caps out in payout amount at age 70. You also need to know her expenses. Remember that she has to be completely transparent with you, no hiding credit card debt or anything like that.
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Feb 4, 2020 22:15
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DaveSauce posted:Moral of the story: push back on HR because there's a non-zero chance that they have absolutely no idea what they're talking about, and always remember that they don't exist to help you, they exist to protect the company. In this case, HR is probably in the same boat as you are - completely out of the loop for this sort of thing. It IS dumb, though, that they didn't even understand your question, though your question is probably more in-depth than 99% of other questions they get about 401ks.
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Feb 4, 2020 22:16
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totalnewbie posted:It IS dumb, though, that they didn't even understand your question, though your question is probably more in-depth than 99% of other questions they get about 401ks. Hi yes hello, How much do I need to have contributed to the account to withdraw $401,000 for an educational horse loan?
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Feb 5, 2020 01:45
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Sorry for the giant wall of text but I wanted to answer everyone and thank you also for your thoughts. I tried to lay it all out there but a lot of unknowns. I do think the CD + Ally savings is the best place for the money I have for her right now but if you read the below let me know if you think otherwise. H110Hawk posted:Why isn't your mom going to keep working? My mom realistically hasn't worked for about 10 years. In the 70's she was a manager at McDonald's, from 80-87 a stay at home mom, 88-2000 she had an at home day care but I believe my dad worked it so she made zero money, 2001-2010 (ish) she worked as 1099 medical insurance submit person (again my dad maybe someone had her make no money?, 2010/11 she had a grand mal seizure and has had issues since, 2014 she found out my dad was cheating on her and they divorced, 2015 to now she has been watching my sisters kids (7,6,4,1) 3 days a week. She says she wants to get a job (I suggested whole foods or starbucks or somewhere she doesn't have to pay out the rear end for insurance) but we will see where that goes. She had cancer last year but has beat that but the medical bills (despite having insurance) are kind of killing her (thanks america...) She gets alimony of 36000/yr until June 2022 She has about $120K in a 401K (from the divorce, don't ask what the gently caress my parents did with their money since that was half of what was in there...) She should get ex-spousal SS benefits If she works 1 more year she hits her own 10 years as far as the government is concerned (she says that she wants to get those qualifications done by having a job but getting her to get out of bed and actually show up is questionable...) As far as her spending goes...lol...who knows. She has a new house (despite telling her to rent!), she has a new car (can't afford), she wants to move from ohio to florida (why? no family is there), she has credit card debt, she basically tried to continue living a life style like she was married and making $150K/year despite me trying to set her up a budget and make her see that she can't afford any of what she wants. My overall goal right now is to get her to hold off on SS until 67. But all of this is very hard as both my sisters are really no help on explaining all the financial stuff and they enable my mom and I live 2000 miles away so I tend to ruin every time I visit by being an "rear end in a top hat" about everything. The money I am saving is because who knows what is going to happen with her. Will she have enough? will she move to florida or into my sisters? who knows. I figure I should have about $20K when the alimony stops and realistically I could give her $800 a month if I stopped putting money in my brokerage account. Will my sisters or brother be any help at all.... who knows. My mom is a good person though and was obviously blindsided by the divorce (we all were, I am the only one who still talks to my dad). I am not going to let her live on the street or something. So back to the money I currently have for her, maybe I could do better with it but I am kind of at a loss for what it is needed for and when, it is really hard to get all the facts. SpelledBackwards posted:Does she he have an equivalent or greater amount of earned income for the contribution year you're applying it to? Yes. Her alimony counts since the divorce was under a previous tax law. Space Gopher posted:The rule of thumb for safe withdrawal of conservative investments in retirement is 4% per year. You don't have enough money to set up any kind of significant fixed income out of her investments; you'd be looking at ~$600/year. Yes I know all the normal financial rules of thumb (I personally max all tax advantaged space, have a healthy emergency fund, and brokerage on top). Still not sure I should invest the money based on not knowing what she will need it for (see above) only that she will. I have tried to get her to budget, I am not sure I will ever be able to. My basic approach right now is to be like "here is $300/mo, I hope you survive". Kind of joking but with how far she lives from me it is kind of impossible to do much else. Right now with the alimony she basically makes just enough to not qualify for anything, we will see in the future. I have a really hard time getting straight answers on everything. Good idea on agencies that could help figure out what she might be able to get in the future. I have some life insurance ($300K ish with her as the beneficiary). I also have her as the beneficiary to my retirement accounts. She should be able to make it on that. Thanks for the well wishes. It is tough and even harder from long distance. Ultimately I will make sure she has a roof and is generally OK but we will see what else sticks. She was a great mom growing up and everything so I don't want to let her down, even though a lot of this is up to her. Inept posted:Did she previously work somewhere that will give her a pension? How much is her SS going to be? Can she still currently work, and if so, can she save money while working? Why do you think she will need the money at 65? No Pension, Ex-Spousal SS should be pretty good, her own is a ?, says she wants to get a job and she could but she has said that for like 2 years with no result. I think at 65 because that is basically when her alimony stops and my sisters kids will not need watching (they pay her some cash to do it). I agree with all the stuff you say in the second paragraph but I am not sure how realistic any of it is. I am willing to just put money down the tubes as long as I know that is the way it is. Sucks but after not getting straight answers for 5 years........ 
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Feb 5, 2020 05:55
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What to do with your savings depends on what time frame you’ll need to withdraw it, and from what you’ve said a HYSA + CDs isn't a terrible option. I hope this doesn’t come as a huge unexpected downer, but if you don’t know, spousal Social Security benefits are one-half the other spouse's benefits.
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Feb 5, 2020 07:07
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This year I have to take a RMD from a beneficiary IRA by 12/31/2020, and the amount is close to $7k. My plan is to take 30% off that amount for taxes, but then take the remaining amount and put it into my Roth IRA. Since I'll have only a day or two of lag time between the RMD and the Roth deposit, and since both are invested in the same Vanguard funds, does it really matter when I take the RMD? Since I'm going to take a tax hit no matter at some point this year, I might as well get the money back into a Roth to grow as long as it can tax-free, right?
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Feb 5, 2020 13:57
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WithoutTheFezOn posted:What to do with your savings depends on what time frame you’ll need to withdraw it, and from what you’ve said a HYSA + CDs isn't a terrible option. I was aware of that part. Thanks though.
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Feb 5, 2020 14:21
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DJCobol posted:This year I have to take a RMD from a beneficiary IRA by 12/31/2020, and the amount is close to $7k. My plan is to take 30% off that amount for taxes, but then take the remaining amount and put it into my Roth IRA. Since I'll have only a day or two of lag time between the RMD and the Roth deposit, and since both are invested in the same Vanguard funds, does it really matter when I take the RMD? Since I'm going to take a tax hit no matter at some point this year, I might as well get the money back into a Roth to grow as long as it can tax-free, right? Nope. Just do it. Today is great.
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Feb 5, 2020 14:50
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H110Hawk posted:Nope. Just do it. Today is great.
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Feb 5, 2020 14:53
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KYOON GRIFFEY JR posted:firecalc is the only one that's remotely any good. user interface is lousy and you have to have a rudimentary understanding of mathematics but it's the only one that gives you enough output to make a decision imo It's paid (but cheap), but I've found ontrajectory to be suiting to my needs. Mostly I like it because it lets you also sketch out scenarios where your earnings or expenses might change dramatically (kids, houses, parents, partner leaves jobs, etc). All the other calculators assume you cogging it out unchanged for 40 years.
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Feb 5, 2020 17:28
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needless complexity for this type of decision making imo
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Feb 5, 2020 17:35
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I apologize if I'm asking like I'm five, but I had some basic questions about doing a backdoor Roth IRA. In 2019 my AGI let me contribute to a Roth normally, but in 2020 my AGI will definitely not let me contribute (good problem to have). I have a Vanguard Roth and I want to keep contributing to it. So if I open a trad IRA, throw $6k in it after tax, and recharacterize it into my existing Roth (it does go into the existing one and not a new one, right?), does the Trad IRA stay open at zero or does it close out out? Meaning do I have to open a new IRA every year to do this? Also, since it's after tax, can I contribute more than the $6k limit to the trad and convert it all to my Roth in one year?
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Feb 5, 2020 17:43
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It stays open year to year. You can't contribute more than $6000 per tax year, sum of traditional and Roth contributions.
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Feb 5, 2020 19:38
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Be sure to do a rollover, not a recharacterization, also.
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Feb 5, 2020 19:45
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Pretty sure "conversion" is the word you want to look for.
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Feb 6, 2020 05:41
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On this subject, is it too late to do a backdoor Roth for 2019 in Feb 2020 as a catch up? On a previous subject: abrosheen posted:I have my Roth in a vaguard target retirement fund too and I was investigating this situation with the regular and Admiral Shares recently, and it looks like their ETFs have even lower fees than the Admiral Shares do. Mu Zeta posted:Well with mutual funds like VTSAX you can own partial shares. So if you have exactly $891.04 to invest it will buy that exact amount of VTSAX. With ETFs you have to buy whole shares at a time. So that $891.04 won't be fully used. It's a slight inconvenience but really both VTSAX and VTI are really good. I just discovered you can own fractional shares of these Vanguard ETFs in M1 finance, and they offer Roth IRAs and the ability to create a robo-balanced portfolio. Edit: M1 Finance has target retirement date pies that work like target retirement date funds at the likes of Vanguard and charge no fees, but invest in Vanguard or other ETFs that do have their own fees. The expense ratio on my Vanguard target retirement date fund is .15, and I think it would be more like .04-.05 in the M1 pie. Edit:. I think the M1 target date pies DO charge a fee, they're listed at .08 in the app. BigShasta fucked around with this message at 20:01 on Feb 6, 2020 |
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Feb 6, 2020 18:21
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Kylaer posted:It stays open year to year. You can't contribute more than $6000 per tax year, sum of traditional and Roth contributions. spf3million posted:Pretty sure "conversion" is the word you want to look for. Gotcha. I need to make a few phone calls now. I have to call them up to set up an account since I work for a bank, so I'm thrilled I can just keep the IRA open and empty year over year to avoid having to do the whole "ask permission in writing/fedex forms everywhere" every year.
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Feb 7, 2020 02:22
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Big discussion with the wife as to what would be best for our retirement/overall financial health. I'm arguing that we should throw an extra $200 a month towards our 30 year mortgage. That pays it off about 8 years earlier and we'd save around $50k. My thought is that if paid off earlier we'd have a significantly more money to live off of during retirement. It'd also let me retire earlier without having to worry about a house payment. She's arguing we're better off investing that $200 a month in a 403b or IRA. I'm sure mathematically she's probably right over the long run. BUT. I'd rather not have a house payment hanging over our heads as we approach retirement.
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Feb 12, 2020 21:13
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BaseballPCHiker posted:Big discussion with the wife as to what would be best for our retirement/overall financial health.
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Feb 12, 2020 21:17
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BaseballPCHiker posted:Big discussion with the wife as to what would be best for our retirement/overall financial health. How much are you contributing toward retirement every year? Paying down principal on the mortgage is a personal choice that should be considered only after your IRA and 401k are maxed out. You can't spend home equity in retirement.
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Feb 12, 2020 21:17
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We're at 4.8%for the house. Wife has roughly 70k in student loans at 5%. One car payment $177 a month with about $3k left on it at 5%. Another car payment $368 a month at 2.8% with $15k left. And rather shamefully.... $13k in credit card debt at 18%. Though we're paying that down at a rate of $1k a month in principal. I know thats our first priority. Edit: Retirement - 15% of gross income plus 10% net for me. The 15% is a state pension, the 10% is a 403b. Wife gets %6 401k plan for hers. BaseballPCHiker fucked around with this message at 21:32 on Feb 12, 2020 |
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Feb 12, 2020 21:27
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Woah, stop. Kill the CC debt before you put ANYTHING extra towards the mortgage. 18% is killer. Any extra pennies you can put towards that will pay dividends. Personally once that CC debt is gone, I'd hedge the $200 towards the student loans and retirement. But don't do either of those things until that CC debt is gone. Honestly unless you're getting matching dollars somewhere for retirement, I'd even consider dialing that back until the CC debt is gone.
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Feb 12, 2020 21:32
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BaseballPCHiker posted:We're at 4.8%for the house. Credit cards -> $3k Car -> Student Loans -> House -> $15k car
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Feb 12, 2020 21:33
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Well that’s a no brainer, put it towards the 18% credit card. Then ask the same question next year. Spoiler: the best thing still won’t be extra mortgage payments.
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Feb 12, 2020 21:33
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Agreed on the cc debt, we're tackling that first. The question was what to do with the extra money once we've caught up on it. My thought with throwing extra money at the house is that it'd help us more in retirement and having extra money. But I can see the upside of the extra income earned from throwing more money in our retirement funds.
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Feb 12, 2020 21:38
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BaseballPCHiker posted:My thought with throwing extra money at the house is that it'd help us more in retirement and having extra money. Why would you have more money by pouring it into an illiquid money pit (your home) to save 4.8% when you could be putting it in at the very least taxable brokerage if not a tax sheltered account where it will make over 2% more? Money is fungible. Yes, you'll still have a house payment for longer, but you'll have more cash to pay it than if you paid it off early. Also, you should refinance. That's an awful mortgage rate compared to what is available today.
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Feb 12, 2020 21:44
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Motronic posted:Why would you have more money by pouring it into an illiquid money pit (your home) to save 4.8% when you could be putting it in at the very least taxable brokerage if not a tax sheltered account where it will make over 2% more? Because I guess psychologically it bothers me to have that huge debt hanging over my head. Knowing that I wouldnt have to make that payment as I approach retirement and have a place to live for the cost of maintenance, taxes and utilities appeals to me. I looked into refinancing. The best rate I could get was 3% but in the end it didnt make sense for us. Of our remaining $180k loan $20k of that is through a first time home buyer program that is interest free. Sorry I left out a lot of details in ignorance there, and thanks to all for the advice.
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Feb 12, 2020 21:48
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So technically speaking, your best payoff is to put extra money towards the highest interest rate. Doesn't matter if it's debt or if it's market gains. The stock market returns about 10% per year on average, more reliably 6-8. Logically, all your money should go towards retirement because that's higher than any of your other interest rates (CC debt aside). Buuuuuut that's not completely right. Because paying down a debt is a guaranteed returns, whereas the stock market is gambling. Not really, but let's go with that for a minute. First, your student loans are there for life. Except for a select few circumstances, you can't even discharge them in bankruptcy. So you're probably better off paying them down quickly. But also, your cars are depreciating assets. Meaning they lose value over time. So not only are you paying interest on them, but the value is going down at the same time. This is bad, so you probably want to prioritize those as well (even though they have a low interest rate). I'm not 100% sure I'd put the cars over student loans, but it'd be a tough call. Finally, your house is (generally) an APPRECIATING asset. Meaning it will gain value over time. Paying interest on a house is really not all that bad, because some of that loan interest is offset by the appreciation. Unless you have a very high interest rate on your mortgage, you should be putting your money in other places. Not to say that you should NEVER overpay your mortgage, but you'd have to have a VERY strong argument to convince me that it's the right decision. Maybe throw $50-$100/mo extra at it once you've killed some of your other debt and you REALLY REALLY want to, but make sure all your other ducks are in a row first. The fine folks at reddit's personal finance sub have put together this flowchart:  Long story short, kill all your non-mortgage debt first, then make sure you're saving at least 15% of your income for retirement, THEN you can consider paying down your mortgage quicker.
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Feb 12, 2020 21:48
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BaseballPCHiker posted:Agreed on the cc debt, we're tackling that first. The question was what to do with the extra money once we've caught up on it. Ok, I could be wrong, but I have to ask this because your username looks familiar. Were you the poster asking a few years back about living in a houseboat in like, Minnesota ? If I’m wrong, apologies. If I’m right, welcome back !
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Feb 12, 2020 21:51
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Duckman2008 posted:Ok, I could be wrong, but I have to ask this because your username looks familiar. Yes that was me. And no, I'm sorry goons I never did buy the houseboat. Thanks DaveSauce for the flowchart. We're throwing roughly $800 a month towards our savings account right now that we'll cut back on and throw more of it at the credit card.
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Feb 12, 2020 21:53
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DaveSauce posted:But also, your cars are depreciating assets. Meaning they lose value over time. So not only are you paying interest on them, but the value is going down at the same time. This is bad, so you probably want to prioritize those as well (even though they have a low interest rate). I'm not 100% sure I'd put the cars over student loans, but it'd be a tough call.
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Feb 12, 2020 21:54
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BaseballPCHiker posted:Because I guess psychologically it bothers me to have that huge debt hanging over my head. Knowing that I wouldnt have to make that payment as I approach retirement and have a place to live for the cost of maintenance, taxes and utilities appeals to me. Uh, did you actually run the numbers on this? Because even if you refinanced at 3.625, you'd still be paying less interest a year, by about $1,000, even when factoring in that 20k interest free amount.
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Feb 12, 2020 21:59
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Loan Dusty Road posted:Uh, did you actually run the numbers on this? Because even if you refinanced at 3.625, you'd still be paying less interest a year, by about $1,000, even when factoring in that 20k interest free amount. I did with our lender yes. I just checked and the rate we got was actually 3.8% and we'd have to either roll that $20k we have now into a new loan or immediately come up with the money to pay off that portion first.
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Feb 12, 2020 22:02
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BaseballPCHiker posted:I did with our lender yes. I just checked and the rate we got was actually 3.8% and we'd have to either roll that $20k we have now into a new loan or immediately come up with the money to pay off that portion first. What is your current payoff amount and har far are you into your current mortgage? This is all simple math, and I don't see how it doesn't work out in your favor to refinance. What did you consider or calculate to make your decision that this wasn't worthwhile? What factors were included that you haven't already mentioned?
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Feb 12, 2020 22:13
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BaseballPCHiker posted:I looked into refinancing. The best rate I could get was 3% but in the end it didnt make sense for us. Of our remaining $180k loan $20k of that is through a first time home buyer program that is interest free. 1.8% of $160k pays for a refi in 2 years time. Even if you "only" save 1% it still pays for itself in 5 years time. Why not take that free money once you're out from under your credit card? That should split the difference for you and your wife. The way I've seen mortgage vs invest explained that helped me out was looking at it like a bond allocation in your portfolio. Slow and steady returns. The hard answer here is you're both right, if you never lose your job it doesn't matter if you have a mortgage, if you do lose your job, it would be nice to not worry about it. There are mathematical and psychological benefits to both. I would get out from under all of your other debt first, and re-finance your mortgage, before looking at killing it off entirely.
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Feb 12, 2020 22:17
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dy. posted:Just curious how the math works here. For the purposes of prioritizing paying something down quickly, why does it matter if your car is a depreciating asset or not? It's going to depreciate the same amount whether you pay it off quickly or slowly, right? I don't know if mathematically it makes any difference. But that's assuming all goes well. The issue as I see it is risk. Cars depreciate VERY quickly. So if you've got some lovely loan terms as way too many Americans do (low down payment, long 60+ month term, high interest, or any combination of the 3), you can end up underwater for quite a while. Unless you're paying for gap insurance, a not-at-fault accident can cost you a lot of money.
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Feb 12, 2020 22:17
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