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raminasi posted:Why is offsetting taxes the goal, though, when the method is just “make more money?” That chart doesn’t even have tax rates on it, which is my point. the point is to create roth ira like conditions in a taxable environment, im extremely dumb but im assuming taking on even more leverage would substantially increase risk thus defeating the original purpose
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Jan 14, 2021 17:33
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Mad Wack posted:the point is to create roth ira like conditions in a taxable environment, im extremely dumb but im assuming taking on even more leverage would substantially increase risk thus defeating the original purpose And that makes sense. But the original piece doesn’t tie tax rates to risk at all - it just picks your marginal tax rate as the spot to target without doing any evaluation of the risk of that particular spot, which is what confuses me.
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Jan 14, 2021 17:37
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yeah the article feels a little breezy on the risk side of things but again i might just be misunderstanding it
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Jan 14, 2021 17:39
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cheese eats mouse posted:Would like to thank this thread's education and my partner's support as I crack 50k in retirement savings tomorrow. It's a big milestone for me. I've been saving even a little bit since I started working post college and I think even the little $100 a month back when I was making 30k a year helped give me a headstart. hell yeah that hundred bucks a month helped. congrats! the next 50k is gonna be a whole lot easier.
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Jan 14, 2021 17:42
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Mad Wack posted:the point is to create roth ira like conditions in a taxable environment, im extremely dumb but im assuming taking on even more leverage would substantially increase risk thus defeating the original purpose yeah. those two articles i posted tie in together but they aren’t exactly the same. the first article is about how leverage can change your risk/return profile and allow you to achieve higher expected returns for the same risk, or lower risk for the same expected returns. that’s what that chart is showing. what that chart doesn’t show you is what your risk level should be or what goals you should have. the second article is talking about using the strategy from the first article to achieve the goal of approximating a roth ira in a taxable amount. nobodies saying that needs to be your goal but it’s an example of how you could potentially use leverage in a concrete way. you obviously can’t just lever money out of the aether risk free which is why he wasn’t talking about tripling your returns
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Jan 14, 2021 17:43
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what im saying is forums poster zuarg is leaving money on the table by not rolling futures contracts
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Jan 14, 2021 17:46
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2 Quick questions. I recently changed employment (for the first time in my adult life) 1) I have a 401K with Vanguard, I currently plan to roll the funds over to the new company's 401K plan with Fidelity. The new plan offers a decent selection of funds with very low expenses. Vanguard seems to recommend moving it to a Vanguard IRA. I don't plan on making any retirement contributions outside the new company 401K at this point in time 2) I have an HSA account with a couple thousand in it from the old job with BofA. Is there anywhere I can move this to avoid the monthly maintenance fee? New company uses an HRA system which they fund, so I believe I have to use all the HRA funds first and then I can use the HSA funds. I won't use all the HRA funds they offer in a normal year. I know it's only like 30 bucks a year in maintenance, but hey, 30 bucks is 30 bucks.
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Jan 14, 2021 18:06
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Ropes4u posted:I am a couple months to three years away from pulling the plug on work and was wondering how much risk everyone thinks they will be willing to accept in retirement? My current plan (decades away from enacting it) is: cash/CD ladder for ~5 years' worth of expenses, 100% equities for the rest. cheese eats mouse posted:Would like to thank this thread's education and my partner's support as I crack 50k in retirement savings tomorrow. It's a big milestone for me. I've been saving even a little bit since I started working post college and I think even the little $100 a month back when I was making 30k a year helped give me a headstart. Congrats!
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Jan 14, 2021 18:09
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skipdogg posted:2) I have an HSA account with a couple thousand in it from the old job with BofA. Is there anywhere I can move this to avoid the monthly maintenance fee? New company uses an HRA system which they fund, so I believe I have to use all the HRA funds first and then I can use the HSA funds. I won't use all the HRA funds they offer in a normal year. I know it's only like 30 bucks a year in maintenance, but hey, 30 bucks is 30 bucks. Fidelity offers a no-fee HSA you can roll your existing one into.
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Jan 14, 2021 18:28
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KYOON GRIFFEY JR posted:hell yeah that hundred bucks a month helped. congrats! the next 50k is gonna be a whole lot easier. This is so true. Started following this thread in the Spring of 2018 with about $40k in retirement savings. Passed $100k in August and am already over $150k.
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Jan 14, 2021 18:40
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skipdogg posted:2 Quick questions. I recently changed employment (for the first time in my adult life) Echoing Fidelity HSA for #2. For #1 - If you ever think you'll need to do a standard Backdoor Roth, moving to an IRA might be bad. If you're not moving to an IRA, then it depends on both old and new 401k funds available and fee structures. I left my last company's 401k as-is because my new company's has both worse funds and higher fees (slightly on both). Plus, rollovers take effort.
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Jan 14, 2021 18:51
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cheese eats mouse posted:Would like to thank this thread's education and my partner's support as I crack 50k in retirement savings tomorrow. It's a big milestone for me. I've been saving even a little bit since I started working post college and I think even the little $100 a month back when I was making 30k a year helped give me a headstart. Hell yeah, congratulations! The math on the value of early investments versus the same amounts invested later is staggering. Those first contributions definitely helped--I wish I had had the money or knowledge to do the same back then.
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Jan 14, 2021 18:51
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raminasi posted:Fidelity offers a no-fee HSA you can roll your existing one into. Excellent. Thank You! CubicalSucrose posted:Echoing Fidelity HSA for #2. The new 401k plan is pretty good but has a limited fund selection. Big focus on low ER funds. The usual 9 target date funds, and 9 others. Very low ER though. I've been 100% into S&P 500 index the last few years which has worked out well, but I turn 40 soon and may start moving towards 10% bonds. cheese eats mouse posted:Would like to thank this thread's education and my partner's support as I crack 50k in retirement savings tomorrow. It's a big milestone for me. I've been saving even a little bit since I started working post college and I think even the little $100 a month back when I was making 30k a year helped give me a headstart. This is awesome! I can't stress enough to anyone who might read this, start saving as soon as you can, especially if there is an employee match. (Free money!) My wife and I started saving as soon as we started our "adult" careers about 15 years ago, just enough to get the full match from work, and we recently broke 300K in combined retirement savings. I turn 40 next month and she's a couple years younger than me. I often feel like we're behind where we should be, but I also know a ton of people my age with ZERO retirement savings and that's scary.
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Jan 14, 2021 20:51
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It’s awesome having a small retirement nest egg saved up at a relatively young age. We could contribute very little for the next 30 years and still have a comfortable retirement. The wonders of compound interest! Of course, the trade off is that we don’t own a house since we jammed everything into retirement for the past five years.
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Jan 14, 2021 21:31
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laxbro posted:It’s awesome having a small retirement nest egg saved up at a relatively young age. We could contribute very little for the next 30 years and still have a comfortable retirement. The wonders of compound interest! The other part of that trade off is that you will be housed and not living on cat food in your old age. I think that's a pretty fair trade. Good job getting this started.
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Jan 14, 2021 21:58
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Hey guys, need a bit of advice. My financial background for context: Me and the stay at home wife are 39 and have a 1 year old baby. I’m making about $200k and that should hopefully go up by about 50% in the next few years, no debt, 9mo emergency fund. Maxing out 401k, HSA, Roth IRA and putting $350 a month on the baby’s 529. Life is good for now, but I’m in the airline industry so things can turn bad on a dime. We are renting in NYC, but planning to move out in the next few years. Don’t know where, we can go anywhere in the country. But when we do, we wanna buy a house. I have never owned any property. I was just looking into opening for my wife a spousal Roth IRA to max out the last bit of tax advantaged space available to us. Is it a better idea to save that money into a down payment? I was planning to start saving for that this year, even though the end goal is nebulous as we don’t know where we wanna live or how much we wanna spend. I’m assuming I should just dump money into a HYSA and let the chips fall were they may when the time comes. Another question, my wife is planning to go back to school when the kid starts going to school, so in about 4 years. She’s thinking of studying something practical like becoming a Sonogram Technician. Probably won’t be cheap. Should I pivot our 529 savings from the baby to the wife and increase the amount we save? This would also affect the allocation as it’s currently set for aggressive growth for an 18 year glide path. Thanks. Animal fucked around with this message at 08:07 on Jan 15, 2021 |
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Jan 15, 2021 08:02
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fart simpson posted:https://earlyretirementnow.com/2016/07/20/lower-risk-through-leverage/ If I have the option to plow a bunch of money into a Roth 401k + Roth/backdoor Roth (or a mega-backdoor Roth 401k), is there any reason NOT to go that route, assuming the fund options don't suck? (As compared to other saving/investment options.) Small White Dragon fucked around with this message at 08:25 on Jan 15, 2021 |
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Jan 15, 2021 08:16
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Animal posted:Hey guys, need a bit of advice. My financial background for context: Watch the income limits on the roth IRA, you're close to the border there. I mean, at $300k you could save enough to retire in five/ten years if you want to live in a LCOL area. Is early retirement a goal? What do expenses look like? You can get lots of credits through community college for those kinds of medical tech positions, definitely spend time researching the best options.
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Jan 15, 2021 09:12
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moana posted:Will the state you're moving to have a 529 tax benefit? Many don't, so just keep that in mind. I have no idea, since we don’t know where we will end up. For now, 529’s are tax deductible from NY taxes up to $10k and my state and city taxes are high enough that I thought it’s worth saving a lot through the 529. I’ll start throttling down the 529 down to $200 and save more for the house. quote:Watch the income limits on the roth IRA, you're close to the border there. Yeah... I need to start getting acquainted with the backdoor thing. quote:I mean, at $300k you could save enough to retire in five/ten years if you want to live in a LCOL area. Is early retirement a goal? What do expenses look like? We are pretty frugal overall. I’d say we could live a decent life on a $50k gross yr budget, and on $75k our lifestyle wouldn’t change much. But then again, I don’t know how that might change as my daughter ages. As far as I’m aware, the only big sacrifice would be a cut in travel, and having to live somewhere we consider “boring” just because it’s low cost. For my disposable income I have two dumb hobbies I spend money on but I’m usually close to breaking even and sometimes profit after selling my trinkets. But I already plan to cut that off, it’s not like it sparks a ton of joy. My wife has been doing quite a lot of home and baby related shopping therapy after having the baby, but I can’t fault her because it’s how she’s been coping with not working anymore and the isolation of raising a child all by herself under COVID while I am gone abroad for weeks for work. She’s on a ‘nesting instinct’ phase. It’s definitely not a permanent character flaw and I’m sure she’ll go back to her normal frugal self. I don’t wanna retire early. I enjoy my job. I do wanna be financially independent, in case I am suddenly unable to do my job anymore. Also, I wanna attain enough wealth so that if my daughter turns out to be incapable of earning a decent income, she can live a decent life off of what we leave behind. So I’m aiming for age 60 for retirement. quote:You can get lots of credits through community college for those kinds of medical tech positions, definitely spend time researching the best options. I didn’t know this, thanks. We’ll look into it. So what about her Roth, should I start maxing that out while I still can, or should we prioritize saving for a home? Animal fucked around with this message at 10:09 on Jan 15, 2021 |
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Jan 15, 2021 09:59
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Animal posted:I love my job I’m 56 and also love my job, but knowing that I can walk away is making it very hard to continue to my planned retirement age of 60.
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Jan 15, 2021 11:43
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Ropes4u posted:I’m 56 and also love my job, but knowing that I can walk away is making it very hard to continue to my planned retirement age of 60. lol your old as hell
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Jan 15, 2021 12:47
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Animal posted:Hey guys, need a bit of advice. My financial background for context: Just from the more emotional side of things, you might want to rent wherever you end up moving for a little bit before you buy a house. It's good to figure out how a community works, and whether or not it really works for you, before you have a half million dollar millstone tying you to that community and a specific place in that community. My wife went back to school and student loan rates were not good at all, so you will probably want to pay cash. Since you have a lot of upcoming short term cash needs, I think it's a good idea to put a bunch of money in to HYSA. If you plan to begin spending from a 529 in 4 years, the tax savings are pretty negligible since you'll want to be in a really low risk portfolio. I think personally I'd just plan on paying for wife school directly out of your income or income and ordinary savings in HYSA, and stay the course in your 529. Also, thanks for bringing up the spousal IRA. My wife didn't earn income in 2020 so we had just assumed IRA contributions were out of the question for her. Now to figure out how this works with her existing IRAs.
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Jan 15, 2021 13:11
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KYOON GRIFFEY JR posted:Just from the more emotional side of things, you might want to rent wherever you end up moving for a little bit before you buy a house. It's good to figure out how a community works, and whether or not it really works for you, before you have a half million dollar millstone tying you to that community and a specific place in that community. Thanks, I think you are right. I’m just gonna dump as much cash as I can into a HYSA for a down payment and then pay for her school out of my income. I’ll try to simultaneously keep maxing out my tax advantaged accounts. I guess it’s time to stop buying Rolex watches  We intend to rent for a year when we move. We are looking into Austin, TX or St Pete/Tampa, FL as contenders but I really need to get educated on stuff like how good the public schools are. Wherever we go it’ll be a big tax savings moving out of NYC which should go a long way towards paying for her school. The spousal IRA - someone correct me if I’m wrong, but I think you just put money into her regular IRA and then do your taxes jointly. Then the only requirement is that you made as much money as you saved inside both IRA’s. https://investor.vanguard.com/ira/spousal-ira Animal fucked around with this message at 13:44 on Jan 15, 2021 |
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Jan 15, 2021 13:41
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Ropes4u posted:I’m 56 and also love my job, but knowing that I can walk away is making it very hard to continue to my planned retirement age of 60. My friend's dad retired at about 60 and the last 5 years or so he pretty much said "no I'm not doing that. Because I don't want to" to anything he felt like. Said it was the best five years of his whole career lol.
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Jan 15, 2021 13:43
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Xguard86 posted:My friend's dad retired at about 60 and the last 5 years or so he pretty much said "no I'm not doing that. Because I don't want to" to anything he felt like. Said it was the best five years of his whole career lol. This is my goal in life. Airline pilots don’t live to be very old and I already had two coworkers keel over and die within months of retiring at age 65. I’ve heard a figure that for every year a pilot retires early, it adds about 3 years to their potential lifespan. So while I love my job, 60 is a good target. That being said, I wanna work long enough that we have enough capital saved so that when I eventually do keel over and die, my wife will live a comfortable life for the next 30 years she will probably outlast me, and hopefully some for my daughter. Playing the really long term game here.
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Jan 15, 2021 13:49
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Animal posted:I guess it’s time to stop buying Rolex watches hittin them pilot stereotypes I know people who live in both of those places and really like them, although they are very much Not For Me. Good luck!
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Jan 15, 2021 14:08
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Animal posted:So what about her Roth, should I start maxing that out while I still can, or should we prioritize saving for a home?
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Jan 15, 2021 14:17
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Can you take a loan from your Roth like you can from your 401k?
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Jan 15, 2021 14:18
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Animal posted:Can you take a loan from your Roth like you can from your 401k? You can always withdraw contributions without penalty. quote:Withdrawals from a Roth IRA you've had less than five years.
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Jan 15, 2021 14:57
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zaurg posted:Can I buy the book from you if you're done with it? 
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Jan 15, 2021 16:12
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So I got married last year, and am trying to figure out how (if?) things change for retirement savings. We're talking to an accountant/tax person later this month but I'd like to be somewhat informed before going in. Wife and I are both high earners and have contributed max to all retirement prior to getting married. Do things have to change now that we're married? Can we both still max out all of our accounts individually or I'd there some new limit I need to know about before I change my deductions/enrollments? Wife does mega backdoor Roth 401k and I believe I just became eligible for that through my employer as well.
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Jan 15, 2021 16:54
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The Big Jesus posted:So I got married last year, and am trying to figure out how (if?) things change for retirement savings. We're talking to an accountant/tax person later this month but I'd like to be somewhat informed before going in. Wife and I are both high earners and have contributed max to all retirement prior to getting married. Do things have to change now that we're married? Can we both still max out all of our accounts individually or I'd there some new limit I need to know about before I change my deductions/enrollments? Wife does mega backdoor Roth 401k and I believe I just became eligible for that through my employer as well. Nothing should change, but as someone who went through something similar: 1. Continue to max our your 401k/Backdoor Roths individually 2. See if your employer has options for additional tax free savings in 457 accounts available. These become a nice option for shielding money from taxes (at least temporarily) at your highest marginal rate (37% potentially). 3. Make sure your withholdings take into account both of your salaries so you're not bitterly watching the IRS take $$$$ from your account on April 15th due to underwitholding.
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Jan 15, 2021 17:10
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Animal posted:This is my goal in life. Airline pilots don’t live to be very old and I already had two coworkers keel over and die within months of retiring at age 65. I’ve heard a figure that for every year a pilot retires early, it adds about 3 years to their potential lifespan. So while I love my job, 60 is a good target. That being said, I wanna work long enough that we have enough capital saved so that when I eventually do keel over and die, my wife will live a comfortable life for the next 30 years she will probably outlast me, and hopefully some for my daughter. Playing the really long term game here. Without completely derailing the thread, could you explain this a little more? Is there some particular reason why airline pilots die early? That seems strange. Most of the ones I see (anecdotal) don't seem particularly fat, and I can't imagine what else would make them particularly susceptible to early mortality compared to the average American lifestyle.
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Jan 15, 2021 17:27
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SlyFrog posted:Without completely derailing the thread, could you explain this a little more? pretty sure it's because being in the sky all the time exposes you to much more cosmic radiation which significantly increases your cancer risk
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Jan 15, 2021 17:34
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Residency Evil posted:Nothing should change, but as someone who went through something similar: I'm interested in point 3 there. Are you saying her income will affect my taxes and vice versa?
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Jan 15, 2021 17:35
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SlyFrog posted:Without completely derailing the thread, could you explain this a little more? I think mortality rates associated with any road warrior lifestyle are pretty bad. Lots of sitting, bad sleep, family and personal issues, unhealthy food.
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Jan 15, 2021 17:50
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The Big Jesus posted:I'm interested in point 3 there. Are you saying her income will affect my taxes and vice versa? Yes, because of how our tax system is set up with progressive brackets. Right now, your job is withholding your taxes based on your salary only. When you get married, you need to make sure you're withholding enough in taxes to account for your salary, but also to account for the fact that the income you and your wife make together will be taxed at a higher rate at the top end. Imagine there are two tax brackets: Income from 0-100k gets taxed at 10% Income from 100k gets taxed at 50%. If both of you make 100k, and your companies only account for making 100k, they'll only withhold 20k in taxes, and not take into account that your total income is 200k, and the additional 100k is taxed at a higher rate. Does that make sense?
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Jan 15, 2021 18:16
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The Big Jesus posted:I'm interested in point 3 there. Are you saying her income will affect my taxes and vice versa? If you are married filing jointly, it’s no longer “my taxes” but “our income and our taxes.” You should be okay if you fill out the new W-4 form and check the married filing jointly box, but in 2018 the IRS reduced the W-4 withholding amounts to sync up with the new tax law. This ended up in a good chunk of people under withholding taxes and having to pay more at tax time, even though those some W-3 withholding elections had gotten them a refund in years past. If you fill out the new form and input your wife’s salary information, the withholdings should be correct and you won’t get sticker shock on April 15th.
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Jan 15, 2021 18:22
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Residency Evil posted:Yes, because of how our tax system is set up with progressive brackets. Right now, your job is withholding your taxes based on your salary only. When you get married, you need to make sure you're withholding enough in taxes to account for your salary, but also to account for the fact that the income you and your wife make together will be taxed at a higher rate at the top end. That's not quite how it works, because married filing jointly scales (mostly), so while I know you're using huge swings in brackets to illustrate a point, it's still assuming that both of you will be evaluated as a single person, not married jointly. https://www.nytimes.com/interactive/2015/04/16/upshot/marriage-penalty-couples-income.html This NY Times chart is outdated (2015) and doesn't reflect current brackets, but this illustrates the point better. There can be benefits, or penalties, depending on if you are married filing jointly, or if you had stayed single. It gets worse the more income both of you earn unfortunately, and stops scaling on a 1:1 basis.
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Jan 15, 2021 18:42
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Noah posted:That's not quite how it works, because married filing jointly scales (mostly), so while I know you're using huge swings in brackets to illustrate a point, it's still assuming that both of you will be evaluated as a single person, not married jointly. Well, yeah, but maybe leave the complexities out of "my first lesson on taxes?"
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Jan 15, 2021 18:48
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