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GhostofJohnMuir posted:rational reminder did a good episode on basic investing theory and common questions. their "basic" info episode ends up being almost laughably technical (immediately diving into discounted cash flows as the first topic), but still a very nice starting video for people early in their investing journey who don't just want to be told "save as much as possible and stick it in a target date fund) To be fair the concept of investing essentially is the idea of discounted cash flows. That's all the Gordon growth model really does.
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Dec 17, 2022 10:34
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GhostofJohnMuir posted:it should be noted that even if the research is correct for the average investor, that doesn't mean it's right for you. i'm going much heavier on trad contributions to my 457 because i'm aiming to retire at 52 with a moderate pension and rely fairly heavily on distributions from my trad 457 from 52 to 70, when i'll start drawing on social security. having a much longer period of drawdowns from a trad account means the tax burden will be less overall, and managing rmds will be less of an issues, so the main issues with a trad account will be minimized I'm 52 and I can tell you that it's really going to be the exception to retire this young. It's your prime earning years and life happens I'm not saying that it's bad to save money, but now that I'm here I'm realizing that I'd need 10 million to comfortably retire.
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Dec 17, 2022 12:01
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My dad has been retired for about 7 years now and has his retirement stuff at fidelity. He’s presently using one of their “managed” services and got irritated because the guy didn’t even know the ratio of bonds to stocks he had when they checked in. I guess I’m just asking if the process of taking RMDs and the like is complex enough that it’s burdensome enough to justify an advisor fees, or if just putting all his funds into a three fund portfolio and letting fidelity’s automation do the RMDs and taxes “unmanaged” is feasible. My dad is financially savvy but not tech savvy.
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Dec 17, 2022 14:30
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daslog posted:I'm 52 and...now that I'm here I'm realizing that I'd need 10 million to comfortably retire. I mean this could possibly be true, but uhh... This sounds like some Suze O bullshit? What are your annual expenses? Do you really spend $300k+ after tax per year?
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Dec 17, 2022 15:53
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pseudanonymous posted:At least when I researched it for options for my orgs benefits plan, employer contributions had to go to a trad 403(b) we couldn't put matching contributions into Roth regardless. But it's possible with a different kind of plan the rules are different. That’s right, I can’t put the match into Roth. So I’m putting as much into Roth as I can. But I wonder if I should back off on that some, and shift some of my contributions to trad.
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Dec 17, 2022 16:57
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CubicalSucrose posted:I mean this could possibly be true, but uhh... This sounds like some Suze O bullshit? What are your annual expenses? Do you really spend $300k+ after tax per year? It’s all that avocado toast !
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Dec 17, 2022 17:53
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Muir posted:That’s right, I can’t put the match into Roth. So I’m putting as much into Roth as I can. But I wonder if I should back off on that some, and shift some of my contributions to trad. Between my IRA, 401k, and match i split 50/50 trad/Roth because.... Seemed good
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Dec 17, 2022 17:53
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Velius posted:My dad has been retired for about 7 years now and has his retirement stuff at fidelity. He’s presently using one of their “managed” services and got irritated because the guy didn’t even know the ratio of bonds to stocks he had when they checked in. I guess I’m just asking if the process of taking RMDs and the like is complex enough that it’s burdensome enough to justify an advisor fees, or if just putting all his funds into a three fund portfolio and letting fidelity’s automation do the RMDs and taxes “unmanaged” is feasible. My dad is financially savvy but not tech savvy. RMD process at any of the big brokerages are super easy as long as you don't have any special requirements that require special calculation (i.e take all RMD's from one account at one brokerage and none at another). Sounds like all his stuff is at Fidelity... it will be super easy and automated and money can be automated to go to his bank account or something on a monthly basis. You'll get a 1099-R annually that is very easy to process with the most basic tax software.
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Dec 17, 2022 18:16
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Wow, I'd never actually done the backdoor Roth before and I simply cannot believe they even bother to have income limits What even is our tax code
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Dec 17, 2022 18:17
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GoGoGadgetChris posted:Wow, I'd never actually done the backdoor Roth before and I simply cannot believe they even bother to have income limits A miserable pile of secrets
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Dec 17, 2022 18:22
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GhostofJohnMuir posted:ouch, was this the vanguard poo poo show? they really screwed over their retail customers on that one, but at least it's not really something that can happen again Funds of funds like the target date retirement funds are always going to be less tax efficient than holding individual single asset class funds right? Due to the need to rebalance occasionally? The specific thing with the target date funds last year had to do with some share class changes, but even absent that the target date funds have more capital gains distributions. For example, this year: VTSAX (Total US Stock) year end cap gains distributions: 0.00% of NAV VTIVX (Target 2045) year end cap gains distributions: 0.57% of NAV source: https://www.vanguard.com/pdf/PIFYEEST_122022.pdf
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Dec 17, 2022 18:25
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Spent a bit of time today trying to get better records sorted out for my very long-lived taxable investments at Vanguard that include some non-covered stuff from before 2012. Really regretting that one year I set all my dividends and capital gains from all my funds to reinvest in VTSAX. Also love how Vanguard has 20+ years of records but the data varied over the years and they never cleaned it up. Like funds have different identifiers before and after they converted people to brokerage accounts. Or like how reinvested dividends used to be in the "Dividend" category with a purchase amount and price, but now they are in the "Reinvestment" category and "Dividend" is just the ones you took as cash.
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Dec 17, 2022 20:33
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Alright I need some help. I started a new job and my 401k elections start in January. My two options are Roth or 401k, and I get a 2% match through either. It looks like all the options are for funds are T Rowe, which I know nothing about. My plan is to max my contributions for now, with maybe a backdoor option later - which I think would make me lean towards the Roth option? Can they be rolled into a single account at a later date? Isn't Vanguard the general go to for Roths? Would it be possible for me to ask my company if they would put the match contributions into a Vanguard account instead of T. Rowe? e: also I'm not old (33), so I was thinking I would skew fairly aggressively into an aggressive allocation, maybe 80-20 ? e2: What are acceptable fees? Looks like its about 1% on these T. Rowe funds. https://imgur.com/a/dvPXSsS Ubiquitus fucked around with this message at 23:37 on Dec 17, 2022 |
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Dec 17, 2022 23:31
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Yikes, Price's target date fund expense ratios really exceed 1%, that's worth steering clear if possible. Are there any more funds on the menu for creating your own set of allocations? For comparison's sake, the only funds I use from my own workplace's fund menu are S&P 500 and US small cap index funds due to all the rest having higher ER, and it took me several months to hold my nose and include a EuroPacific fund with a 0.46 ER.
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Dec 17, 2022 23:55
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Wow those T Rowe Price target date funds are packed full of unnecessary complexity. 16 equity funds and 5 bond funds is silly. It honestly looks like a cynical cash grab by putting people into smaller / presumably expensive funds. The typical retirement investor does not need to be invested in 21 different asset classes. Here's 2045: 
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Dec 18, 2022 00:41
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Ubiquitus posted:e: also I'm not old (33) 
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Dec 18, 2022 00:47
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Ubiquitus posted:e2: What are acceptable fees? Looks like its about 1% on these T. Rowe funds. A Vanguard target date retirement fund has expenses of 8 bp (0.08%) for reference. I dont think id lose sleep over paying 20 or 25 bp, but by the time you are at half a percent or more, there really should be some better option available to you.
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Dec 18, 2022 00:53
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Ubiquitus posted:Alright I need some help. I started a new job and my 401k elections start in January. To clear something up: you are almost definitely being offered the choice between Roth 401k contributions and traditional (pre-tax) 401k contributions. You’re not going to be able to get them to put money into an account at an arbitrary broker you request. Down the road, once you leave this company, you will be able to roll your Roth contributions into a Roth IRA wherever you want, and your traditional contributions into a separate traditional IRA, also wherever you want. If you go 100% Roth then you’ll keep more options open for backdooring later, once you leave this job.
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Dec 18, 2022 03:37
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Space Fish posted:For comparison's sake, the only funds I use from my own workplace's fund menu are S&P 500 and US small cap index funds due to all the rest having higher ER, and it took me several months to hold my nose and include a EuroPacific fund with a 0.46 ER.
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Dec 18, 2022 03:41
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KYOON GRIFFEY JR posted:
Unfortunately not. I have an Roth i401k through my small business that I have some saved up in a TDF, but that business is winding down in the next few months. I also have some index and other stocks (from before I knew better like ASPS and VDE and Ford) in taxable, but I’m unfortunately 100% Roth besides that. Valicious fucked around with this message at 16:00 on Dec 18, 2022 |
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Dec 18, 2022 15:31
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raminasi posted:To clear something up: you are almost definitely being offered the choice between Roth 401k contributions and traditional (pre-tax) 401k contributions. You’re not going to be able to get them to put money into an account at an arbitrary broker you request. Down the road, once you leave this company, you will be able to roll your Roth contributions into a Roth IRA wherever you want, and your traditional contributions into a separate traditional IRA, also wherever you want. If you go 100% Roth then you’ll keep more options open for backdooring later, once you leave this job. But if you get any company match, that will go into the traditional 401k pool regardless of whether your contributions are traditional or Roth.
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Dec 18, 2022 19:29
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CubicalSucrose posted:I mean this could possibly be true, but uhh... This sounds like some Suze O bullshit? What are your annual expenses? Do you really spend $300k+ after tax per year? We spend about $180K per year, with $30 k on vacations. I don't like the idea of living to 95 and being poor for the last 15 years of my life, and I want to have some money to help out the kids.
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Dec 18, 2022 19:40
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Thanks for the feedback! Hm so then my best option is most likely to take the 2% match pre-tax, and separately open a vanguard IRA and max the rest of my allowable (post tax) limit there? Sorry if these are dumb questions, all my previous retirement options were much more clear cut than this one.
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Dec 18, 2022 19:58
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daslog posted:We spend about $180K per year, with $30 k on vacations. I don't like the idea of living to 95 and being poor for the last 15 years of my life, and I want to have some money to help out the kids. OK, but cant retire early because you dont have enough saved for a modest retirement and cant retire early because you want to live in luxury and leave substantial amounts to your children arent the same thing. $10M would put you just about in the wealthiest 1% of Americans.
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Dec 18, 2022 20:21
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Ubiquitus posted:Thanks for the feedback! Yes. That's what the OP recommends: "[panic posted:" post="345722713"] Remember to continue to step 3 when possible. A bad 401k is better than no 401k, and when you leave that company you can roll it over to something better. Do you have any funds available besides what you posted? There weren't any equity funds. The target date funds at this point are mostly equity, so it's not much more risky to put everything into a SP500 or total US fund for a few years at your age.
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Dec 18, 2022 20:46
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daslog posted:We spend about $180K per year, with $30 k on vacations. I don't like the idea of living to 95 and being poor for the last 15 years of my life, and I want to have some money to help out the kids. $30k a year on vacations, someone who is good at budgeting help my my family is dying. Spend less on vacations. No.
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Dec 18, 2022 22:13
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Duckman2008 posted:$30k a year on vacations, someone who is good at budgeting help my my family is dying. deciding you want to work longer in order to take more and more expensive vacations is absolutely a valid choice
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Dec 18, 2022 22:18
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How does one spend 30k annually on vacations? I'm trying to map out what that would even look like. Back of envelope that's multiple international trips a year, right? Or some sort of...oh. Is this cruises? Multiple luxury cruises a year?
Discendo Vox fucked around with this message at 22:22 on Dec 18, 2022 |
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Dec 18, 2022 22:19
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Discendo Vox posted:How does one spend 30k annually on vacations? I'm trying to map out what that would even look like. Back of envelope that's multiple international trips a year, right? Or some sort of...oh. Is this cruises? Multiple luxury cruises a year? Usually the way stuff like this gets expensive is through the addition of people - kids, parents etc.
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Dec 18, 2022 22:28
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Discendo Vox posted:How does one spend 30k annually on vacations? I'm trying to map out what that would even look like. Back of envelope that's multiple international trips a year, right? Or some sort of...oh. Is this cruises? Multiple luxury cruises a year? $3-5k per week of international travel for 2 people if you aren't trying to be frugal seems about right.
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Dec 18, 2022 22:29
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Discendo Vox posted:How does one spend 30k annually on vacations? I'm trying to map out what that would even look like. Back of envelope that's multiple international trips a year, right? Or some sort of...oh. Is this cruises? Multiple luxury cruises a year? Add kids/grandkids in to a few vacations and the price goes up quickly. Edit: alternatively, go on one of those yacht charter trips the ritz advertises. Seems like you can blow 30k without trying! Residency Evil fucked around with this message at 22:34 on Dec 18, 2022 |
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Dec 18, 2022 22:30
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Two people, no kids, 9 nights, airfare to and from Maui from the west coast was about $12k That's 5 days of Vacation from a work time off perspective. If you get 20 days of vacation a year you're on track for ~$50k a year on vacations easy. Got kids? Add 50%-100% Obviously you can spend Less, easily, but "how much does a vacation cost" is like wondering "how much does a house cost"
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Dec 18, 2022 22:57
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daslog posted:We spend about $180K per year, with $30 k on vacations. I don't like the idea of living to 95 and being poor for the last 15 years of my life, and I want to have some money to help out the kids. While I think it's fine for you to plan to have 10M in order to retire in luxury, the language of "wind up poor" is pretty awful for someone who is, apparently, rich. There is not a binary choice between having enough money to live in luxury on the one hand, or being broke on the other, it is actually this vast spectrum. Perhaps more relevantly for the thread, you will probably have the ability in retirement to make regular adjustments of your spending. So you could, say, retire with $5M, spend 30k on vacations the first year and $150k on whatever else, and then look at the returns you got on the remaining $4.82M and say "OK we had a bad returns year, let's drop our budget next year by $25k" and still be living a lavish lifestyle that does not remotely resemble being poor. The median American household income last year was a bit under $71k and that's solidly middle class. This year the federal poverty level for a family of four is $27,750. Obviously what constitutes poor varies greatly by locality because of high and low cost of living areas. But I feel pretty confident in saying that if you retired at age 60 with $5M in today's dollars and then spent reasonably for two retired persons, you and a spouse or partner can both live to be 95 without ever flirting with "poor." A 4% drawdown rate would be $200k a year, by taking out merely say $150k or so you'll be secure for most scenarios even taking into account the low end of sequence-of-returns risk, and like I said you could cut vacations during recessions if you actually started to fall behind. I will also add that some fraction of your current annual spending might be payments on property you'll own outright by the time you retire, possibly? Also you may be currently paying money to give children lots of stuff, activities, or maybe a very nice college fund, which you won't need to pay for when you're 60? Retirement planning should not end with "we'll spend as much then as we do today" although that's an OK starting point for napkin math to see if you're wildly under-saving.
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Dec 18, 2022 23:10
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drk posted:OK, but cant retire early because you dont have enough saved for a modest retirement and cant retire early because you want to live in luxury and leave substantial amounts to your children arent the same thing. Yes, it's absolutely a Lifestyle decision on my part. 15 years ago, neither my wife or I were close to sniffing 100k a year from our jobs. Within the last 5 years, my wife's income has more than doubled and I've been promoted. My kids are adopted and I have 5 grandkids. The oldest one lives with us (we are guardians, see my post about how to get excellent financial aid for college) and literally just this week my daughter announced she's getting divorced and moved back in with us. Before covid, I was 10k away from having my house paid off, but my wife and I made the decision to buy a house with a big garage (my dream) and a 1200 square foot in law so her father and his GF could move in with us. So rather than having no mortgage, I now have 100k mortgage and was paying down the mortgage and extra 3k a month (I stopped doing that when Covid hit because the rate is less than inflation, so free monies.) Sorry, I'm rambling a bit but my points are 1) You 50's are your prime earning years, don't throw that away because you never know. 2) You never know what's going to happen to you 3) You can actually get a job that you like if you put some work in and take some chances. 4) Don't forget to live We have a lot of people depending on my wife and I. We are able to support them all, pay down the house, and live a comfortable lifestyle where we can rent a 6 bedroom house near Disney at Orlando and make memories that no one will ever forget. Between my wife and I after expenses and taxes we are able to put aside $70,000 a year for retirement. 20 years ago I was sure I was going to retire at age 55, but now I can't imagine retiring at all. Maybe when I hit 65 I'll just do freelance PM work but I feel like I'm in a good spot. The way prices are going up, $10,000,000 feels like the right number to make sure everyone is set when it's my turn to go.
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Dec 18, 2022 23:25
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Does your $180k spend a year include that $70k a year you're saving? You'll have your house paid off in a handful of years and suddenly your expenses will drop. Although not much I guess, because: buying a big house with an in-law and still only owing $100k suggests to me you're in a very low cost of living area and you have very low house payments. While it's very generous of you, most people don't include supporting lots of dependents in their retirement planning.
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Dec 18, 2022 23:32
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$10M could also be woefully short depending on what you mean by "We have a lot of people depending on my wife and I" and "make sure everyone is set when it's my turn to go". Helping them out could mean giving them a little walking around money and treating them to vacations, or it could mean they've got three generations of Dependents that will need income for life after OP and Wife pass. (and I'm not asking - It's none of my business. Just pointing out that estate planning can be complicated especially if there are family members who will never be self sufficient)
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Dec 18, 2022 23:44
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GoGoGadgetChris posted:Two people, no kids, 9 nights, airfare to and from Maui from the west coast was about $12k That's why everyone at my job takes off the second half of December, because they can't afford the vacations to use their vacation days. Not that taking four nine-day vacations a year seems necessary... that's a lot of travelling.
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Dec 19, 2022 00:14
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smackfu posted:Not that taking four nine-day vacations a year seems necessary... that's a lot of travelling. And when you get old enough, they become Use or Lose.
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Dec 19, 2022 00:32
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Leperflesh posted:Does your $180k spend a year include that $70k a year you're saving? Only 15k comes out of that for savings. The rest comes from 401k deferrals. I max out the 401k (all Roth) and I get 7% match and a 10% profit sharing contribution which I'm counting towards the total (that 17% is pre-tax). My wife does 12% contributions to her 401k ,and the remaining 10k goes to building the emergency fund, which I increased from $50k to $100k when we bought the house because I like having it on hand for emergencies. I would like to increase that number to a full $50 of our take-home pay, but we just are not at that point yet. The cost of living isn't too bad here. I'm in Southern NH, and bought this house right at the beginning of Covid and got a good deal. Mortgage (without escrow) is 1300 a month, but 12,000 a year in property tax does hurt though. We have put a bunch of money into the house as well, including 11k for a new boiler and indirect hot water for the in-law apartment (that sucked) so I could save more once I stop having to pay for upgrades. The in-law is getting a bathroom remodel, new floor, and some new windows this spring. I might buy a second pellet stove insert for the main house because it really sucks paying $500 per month in heating oil for the budget plan. On your third bullet, that was exactly why I posted. When I was in my early 40's and planning for retirement, I never thought that I'd be in the position that I'm in. Life throws a lot of curve balls at you, and it's a good feeling when you were the person that saved all those years and are prepared.
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Dec 19, 2022 00:39
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GoGoGadgetChris posted:Two people, no kids, 9 nights, airfare to and from Maui from the west coast was about $12k Here's the expenses to fly to maui from SF next month, which is fairly typical:  Assuming you flew the most expensive possible dates, to spend $12k total in 9 days that would be over $1000/day for all non-flight expenses which is a very nice vacation.
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Dec 19, 2022 00:42
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