|
I've had a similar conversation with my dad. He's 62 and semi-retired, he's worked in IT for a life insurance company his whole career where he still works part time as a 1099 contractor. He was wanting to roll over his 401k from Principal, and he was asking me for my opinion on some options some financial advisor gave him. Having worked in life insurance for 30-some years he seems to be obsessed with annuities and it was a little difficult talking to him because he calls every investment account an annuity. Anyway, his advisor proposed to him some investment where he split his money 50/50 int something where on one half of his money he'd get like 70% of the gains, but if the fund went negative for the year he wouldn't lose anything, and the other half he'd get like 150% of the gains, and the same deal if the fund went negative. (it's been a couple weeks since I spoke to him so I don't remember the exact numbers). I asked him if he could put all of his money into the one that paid over 100% on gains, and he said for some reason or the other he couldn't. My advice anyway was to look at fees and expense ratios, and I pointed him toward Vanguard. I don't know if he was receptive to that because he's more concerned with never losing money than he is with growing his portfolio. I tried telling him he should hold onto some amount of short term expenses in cash/bonds whatever, and at least keep something in stocks that will keep growing as he gets older, but he seems to think social security will be enough income.  I don't want to be too pushy about it with my parents, they've both had good careers and have been frugal their whole lives. I don't want to ask how much money they have, I'm sure it's a lot, but I don't want to see them end up penniless in old age.
|
#
?
Nov 7, 2020 17:36
|
|
|
|
| # ? May 30, 2024 06:47 |
|
|
Baxate posted:Having worked in life insurance for 30-some years he seems to be obsessed with annuities and it was a little difficult talking to him because he calls every investment account an annuity. Anyway, his advisor proposed to him some investment where he split his money 50/50 int something where on one half of his money he'd get like 70% of the gains, but if the fund went negative for the year he wouldn't lose anything, and the other half he'd get like 150% of the gains, and the same deal if the fund went negative. (it's been a couple weeks since I spoke to him so I don't remember the exact numbers). I asked him if he could put all of his money into the one that paid over 100% on gains, and he said for some reason or the other he couldn't. Also there's likely a spread fee, where they just say "okay 5% spread" and then if the market goes up 7% the annuity only sees a gain of 2%. Just because. And please please please note that the "gains" they calculate are only on stock price. Dividend payout, not price increase, makes up a huge chunk of stock returns, and you don't get any of that in an index annuity. Also we have clients who come in with these lovely annuities and they can't get out of them since the surrender fees are even worse than the loving over they're getting by essentially keeping their money in a savings account. Fixed index annuities: like a savings account that will chop off your hand if you try to take your money out. If anyone wants to post up details of an annuity, I can pick it apart. Fixed index annuities in particular are loving awful. Just don't. https://www.bogleheads.org/forum/viewtopic.php?t=278967
|
|
#
?
Nov 7, 2020 18:10
|
|
|
Thank y'all so much. Baxate, that is more or less how I came to hear about this; just add being asked to interpret information 😣 it is definitely being talked about like a CD but with gains that I wasn't sure were realistic. It sounds like putting money away for 10 years would be better done other ways. Moana, thank you for these resources, I am looking into them for better options.
|
|
#
?
Nov 7, 2020 20:44
|
|
|
If they are extremely risk averse, a single premium immediate annuity or single premium deferred annuity from a reputable provider like USAA would be infinitely better than any indexed annuity product.
|
|
#
?
Nov 7, 2020 23:19
|
|
|
Magna Kaser posted:I'm in my early 30s and student loans having no interest for the last several months has helped me finally finish the things off. your just me but 1 year behind
|
|
#
?
Nov 8, 2020 10:32
|
|
|
fart simpson posted:your just me but 1 year behind Trad IRAs are fine, but most people have access to a 401k, which is also pretax, so diversifying is a better option. The income limits also aren't that high and you can't backdoor to avoid those like you can with a Roth IRA. FEIE probably interacts the same way as with the Roth, but I don't know for certain. I also assume you can backdoor if above the Roth income limits, but don't know if FEIE somehow throws a wrench in that. Taxable investments are probably going to have to make up a substantial portion of your retirement plan if you only have access to an IRA and no country sponsored retirement plan.
|
|
#
?
Nov 8, 2020 21:44
|
|
|
CubicalSucrose posted:All in VTSAX. H110Hawk posted:Who does your 401k? If it's fidelity they've been adding "after tax" accounts with automatic in service roll over. Ask me about putting $57,000 this year into my 401k between trad 19.5k, employer match, and after tax in service Roth rollover. The last time I talked to them about it (about a year ago) they automatically rolled over once you hit the limit. Of course at that time I was doing a traditional (pre-tax) plan. The last couple of years I've been doing a Roth 401k as it seems more flexible? I just was playing around with the 401k website and it seems like a I can roll into a traditional IRA, but not into a Roth account. So does that really do anything? Maybe I should look at rolling over all of my traditional 401k account to a roth 401k?
|
|
#
?
Nov 9, 2020 02:11
|
|
|
this flowchart from the financial independence subreddit actually covers both the backdoor roth and the mega backdoor roth - it covers all of the topics of the personal finance flowchart but explodes them out into more detail and covers a few steps beyond the personal finance flowchart without being crazy
|
|
#
?
Nov 9, 2020 02:22
|
|
|
SA-Anon posted:I'm not sure if I can or can't do mega back door Roth... What I am referring to is a very specific thing and is money beyond the $19,500 limit for Pretax or Roth deferrals. Its the "After Tax" below, and you need to probably just talk to someone about this. It's a very specific thing and you need to make sure that they talk back to you in the correct terms. Like, "To be clear, this is not Roth, but 'After-Tax In Service Roth Conversion' "  MyPlanDocsSomewhere posted:In addition to pre-tax (or Roth) deferrals you may use payroll deductions to make an after tax contribution between 1% and 80% of your compensation. You may change your after tax contribution percentage at the beginning of each payroll period. These are subject to certain annual limits imposed by the IRS. After-tax contributions can be auto converted to Roth within the Plan. Please call the plan's Advisor as noted above for more information. Notice how it talks about After Tax being converted to Roth? That's because they aren't Roth to begin with, and that is the your-mom's-mega-backdoor.
|
|
#
?
Nov 9, 2020 02:49
|
|
|
I assume putting 10% or so of my retirement savings into a geared bull fund is a bad idea.
|
|
#
?
Nov 9, 2020 04:01
|
|
|
asur posted:Trad IRAs are fine, but most people have access to a 401k, which is also pretax, so diversifying is a better option. The income limits also aren't that high and you can't backdoor to avoid those like you can with a Roth IRA. FEIE probably interacts the same way as with the Roth, but I don't know for certain. I also assume you can backdoor if above the Roth income limits, but don't know if FEIE somehow throws a wrench in that. magna kaser and i both live in the same foreign country and i think are in a p similar situation where we use the foreign earned income exemption on all our income, so afaik it's just taxable investments
|
|
#
?
Nov 9, 2020 05:21
|
|
|
gay picnic defence posted:I assume putting 10% or so of my retirement savings into a geared bull fund is a bad idea.
|
|
#
?
Nov 9, 2020 05:58
|
|
|
moana posted:Are you pairing with a leveraged bond fund and long VIX futures as part of an overall strategy to hit a tangent sweet spot on the efficient frontier curve, or are you just timing the market here? No, I just want more exposure to what I think will be a bull market for the next few years.
|
|
#
?
Nov 9, 2020 07:58
|
|
|
gay picnic defence posted:No, I just want more exposure to what I think will be a bull market for the next few years. As always, safest way to do that is something like total stocks. By bull fund, do you mean a Value fund ?
|
|
#
?
Nov 9, 2020 15:07
|
|
|
tangy yet delightful posted:In full thread disclosure I'm not going to buy any retirement funds until Nov 10th, so I'm timing the market for like 14 days or whatever that is but then I promise I'll buy and hold 
|
|
#
?
Nov 9, 2020 17:01
|
|
|
Tip: Buy Cinemark stock on November 6th
|
|
#
?
Nov 9, 2020 17:11
|
|
|
tangy yet delightful posted:In full thread disclosure I'm not going to buy any retirement funds until Nov 10th, so I'm timing the market for like 14 days or whatever that is but then I promise I'll buy and hold I did the same thing: haven't contributed for a few months and just maxed out the rest of the year last night. It didn't matter but it made me feel good.
|
|
#
?
Nov 9, 2020 17:24
|
|
|
Duckman2008 posted:As always, safest way to do that is something like total stocks. Say, if the market does tank and you lose 3x as much as everyone else. Do you have the fortitude to stick it out, or are you going to bail? Is this a long term strategy to increase risk or just market timing?
|
|
#
?
Nov 9, 2020 18:05
|
|
|
gay picnic defence posted:No, I just want more exposure to what I think will be a bull market for the next few years. If you plan on de-levering at some point, how will you determine when to do so? e; f, b
|
|
#
?
Nov 9, 2020 19:01
|
|
|
If I'm not exceeding employee max for 401k and contributing into a Roth IRA, should I be putting the IRA $ into the 401k until I hit the limit?
|
|
#
?
Nov 9, 2020 20:08
|
|
|
MJP posted:If I'm not exceeding employee max for 401k and contributing into a Roth IRA, should I be putting the IRA $ into the 401k until I hit the limit? If you're missing out on matching, yes. If not, doesn't matter much.
|
|
#
?
Nov 9, 2020 20:20
|
|
|
H110Hawk posted:If you're missing out on matching, yes. If not, doesn't matter much. I'm presently contributing 11%, way above and beyond matching. My logic is that if I can reduce my taxable income by putting the Roth $ into the 401k instead and put any excess into the IRA, I might as well do that. Only issue I can think of would be that I wouldn't have access to Roth $ that go to the 401k, but my e-fund and normal post-tax brokerage are both in good shape. We have a house, no kids, etc.
|
|
#
?
Nov 9, 2020 20:24
|
|
|
i would say your four possible advantages to roth IRA vs 401(k) are 1) you can access your contributions if you need them for other purposes - this can be discounted if you are otherwise financially secure 2) you get to pick your own account manager and funds and thereby keep expenses low - this can be discounted if your 401(k) offers equivalent funds and expense ratios (mine does), although beware that this may change at any time based on your employer's whims 3) you have less of an administrative burden in the event you leave your job 4) you can use the Roth IRA to hedge against future changes in tax policy vs your 401(k) because they have essentially opposite tax treatments it could possibly make sense to me to reduce your taxable income if there are reasons to do so in terms of benefit programs, funding support for higher ed, etc. but otherwise i would prefer to keep the money within my direct control. by contributing to your Roth IRA you are decreasing your future taxable income, so (simplifying somewhat) it's only a current tax savings to move money in to the 401(k), not a total lifetime tax savings.
|
|
#
?
Nov 9, 2020 21:14
|
|
|
Makes sense. I was looking at my take-home and revising based on changing charitable contributions, some medical expenses for 2021, and other stuff, then noticed how much IRA contributions were hitting/401k contributions weren't. One of these days I just need to convince myself that the minmaxing which you correctly called out in the car finance thread is just that - minmaxing - and I can indeed retire on the projected total I'll have with my pessimistic 5%-6% rate of return. It always feels like if I'm not doing FIRE-scale savings for retirement, I'll be working for the rest of my life despite probably being OK.
|
|
#
?
Nov 9, 2020 21:53
|
|
|
MJP posted:Makes sense. I was looking at my take-home and revising based on changing charitable contributions, some medical expenses for 2021, and other stuff, then noticed how much IRA contributions were hitting/401k contributions weren't. This is what I was driving at with the matching. Lost match is cash left behind forever. Everything else is roughly a rounding error assuming you aren't in some 1%+ funds in your 401k. Once you're saving money at all the rest is "easy." Much of america (and the world) never gets to the "save for the long term" part of the flow chart. They wind up with a glorified slush fund that could generously be called an emergency savings account.  Keep saving.
|
|
#
?
Nov 9, 2020 22:05
|
|
|
Since you pay income taxes on a Roth up front does that also contribute to your taxable income for purposes of student loan IBR? I don't want Roth investments to increase my student loan payments by increasing my apparent taxable income.
|
|
#
?
Nov 9, 2020 22:10
|
|
|
UnfurledSails posted:I'll be permanently leaving the US in about 6 months after my work visa ends. I have a Roth 401k. If I withdraw what's in it when I leave (I can, right?) do I just pay the 10 percent penalty and take home 90 percent of what's in there, or do I pay any additional taxes or other fees? want to ask this again so that someone other than zaurg can take a shot at it
|
|
#
?
Nov 10, 2020 00:35
|
|
|
UnfurledSails posted:want to ask this again so that someone other than zaurg can take a shot at it
|
|
#
?
Nov 10, 2020 01:10
|
|
|
man imagine being one of the guys who sold before the election because of biden
|
|
#
?
Nov 10, 2020 01:15
|
|
|
UnfurledSails posted:want to ask this again so that someone other than zaurg can take a shot at it And if it's 5 years old you can withdraw your basis free.
|
|
#
?
Nov 10, 2020 02:35
|
|
|
Nitrousoxide posted:Since you pay income taxes on a Roth up front does that also contribute to your taxable income for purposes of student loan IBR? I don't want Roth investments to increase my student loan payments by increasing my apparent taxable income. I can't speak to the mechanics of IBR, but contributing to a Roth IRA does not increase your taxable income in absolute terms, it just increases your taxable income relative to contributing the same amount of money to a 401(k) or trad IRA. Very simplistically, if you make $60K, and you contribute $5K to a 401(k), your taxable income is $55K. If you make $60K and you contribute $5K to a Roth IRA, your taxable income is $60K.
|
|
#
?
Nov 10, 2020 14:37
|
|
|
For my IRA I am above the income limit to deduct the contributions from my taxable income. So I would like to contribute to a Roth IRA instead. If it doesn't increase my taxable income from the perspective of the IRS then that's great. IBR uses your tax return to determine your payment amount. It's based entirely on your taxable income. If I'm looking to limit my required IBR payment though, I guess I should continue to contribute to the traditional 401k even though I switch my IRA over to a Roth. I don't think there's a lower limit like there is with the IRA where it stops deducting 401K contributions from your taxable income?
|
|
#
?
Nov 10, 2020 15:07
|
|
|
Nitrousoxide posted:For my IRA I am above the income limit to deduct the contributions from my taxable income. So I would like to contribute to a Roth IRA instead. If it doesn't increase my taxable income from the perspective of the IRS then that's great. Contributing to a Roth IRA will NOT increase your taxable income for purposes of IBR. Contributing to a 401k WILL decrease your taxable income. I guess if you're not maxing out your Roth and your 401k, then contributing to a Roth instead of a 401k will...kind of...increase your taxable income, since it's pre versus post tax money, in a roundabout way.
|
|
#
?
Nov 10, 2020 15:10
|
|
|
Nitrousoxide posted:Since you pay income taxes on a Roth up front does that also contribute to your taxable income for purposes of student loan IBR? I don't want Roth investments to increase my student loan payments by increasing my apparent taxable income. Reading the other responses it sounds like if your goal is to keep your ibr payment as low as possible you should be doing traditional 401k (maybe traditional IRA). I don't know the exact line ibr uses to determine income. If you paid for TurboTax or whatever last year try editing your return to have a max trad IRA, max 401k, and then review the paperwork to see if the correct line (agi?) is lower. The other responses are technically correct, nothing makes it go up but I feel like they missed the spirit of your question.
|
|
#
?
Nov 10, 2020 16:09
|
|
|
Yeah, relative to a traditional contribution it would make your student loan payment increase. IBR uses MAGI, so as has been mentioned, traditional deductible retirement plan contributions do reduce your repayment.
|
|
#
?
Nov 10, 2020 16:22
|
|
|
Thanks. I have about 15 years left on my student loan forgiveness and about $225,000 in student loans. Since my monthly payments right now is about a little under a thousand or around $900 depending on the year's income if I stay on ibr then I actually pay less than the current principal by the time it ends up being forgiven. So it really doesn't make sense to try and pay it off at this point. My focus is on trying to keep the ibr payment down barring some sort of major loan forgiveness in the interim like was proposed recently. But if that happens I will reanalyze my situation.
|
|
#
?
Nov 10, 2020 17:14
|
|
|
I think in your case without knowing anything else it might be a good idea to contribute to your 401(k) as much as possible before contributing to a Roth IRA.
|
|
#
?
Nov 10, 2020 17:34
|
|
|
KYOON GRIFFEY JR posted:I think in your case without knowing anything else it might be a good idea to contribute to your 401(k) as much as possible before contributing to a Roth IRA. My plan is to do $750 per paycheck into my 401k and then $500 into my Roth IRA each month. That should max me out for both over the course of the year since I get paid bi-weekly. I'm able to set a flat dollar amount for contributions into my 401k in my paycheck so that makes getting it evenly spread throughout the year nice and easy and makes budgeting easier.
|
|
#
?
Nov 10, 2020 17:42
|
|
|
Nitrousoxide posted:My plan is to do $750 per paycheck into my 401k and then $500 into my Roth IRA each month. That should max me out for both over the course of the year since I get paid bi-weekly. Ya if you are able to max then you can't really do anything else and you should be good to go.
|
|
#
?
Nov 10, 2020 17:48
|
|
|
|
| # ? May 30, 2024 06:47 |
|
|
A friend from grade school reached out to me about "wealth management" and I told him I was happy with my Vanguard target retirement fund and that actively managed funds weren't for me. He's still trying, so what's a good bit for "the absolute worst thing to hear from a client as a wealth management advisor"
|
|
#
?
Nov 10, 2020 17:54
|
|
