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drk posted:I have a slightly hard time believing a disabled person in their 60s is really living on $1800/month inclusive of rent, utilities, food, medical bills, and all of life's other expenses. My MIL in her 60s has zero savings and lives off ~$800/mo. Subsidized rent/utilities of ~$300/mo, medicaid, etc. She has very little and generally lives simply by necessity. My wife and I did set aside some cash in case she ever needs assisted living, etc, in the future. It's possible to lead an inexpensive life when you strip away all the unnecessary luxuries most people take for granted. That said, it's not great. If OP's mom can do this and keep spending under control, $225k can last a long time. OP, do you have any idea what your mom's SSI benefit will be? She should have some documentation or estimate for starting asap vs delaying. Does the disability cease when SSI begins or is it additive?
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Aug 3, 2023 22:06
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SSDI flips to regular Social Security at the full retirement age according to what I read. My MIL also has zero savings, lives off 1300 a month in social security (she took at 62), and takes care of her 95 year old dad. She's going to probably have to move in with us when paw dies if she doesn't go to an assisted living place
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Aug 3, 2023 22:12
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H110Hawk posted:Is it fdic insured? It is not, and I understand that's one of the downsides as well.
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Aug 3, 2023 22:49
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Pungent Mammy posted:It is not, and I understand that's one of the downsides as well. Government money markets have the same credit risk as FDIC insured accounts, the US government. If it's a "prime" money market you are taking on non-zero credit risk since they hold corporate debt.
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Aug 4, 2023 00:48
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Re: HYSA. If you are okay with putting money into Western Alliance Bank, which was one of the banks people were worried would go under during the whole SVB fiasco,... they're at 5.20% on Raisin (formerly SaveBetter)
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Aug 4, 2023 05:18
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drk posted:Government money markets have the same credit risk as FDIC insured accounts, the US government. Yeah that's the case. So it sounds like pretty risk-free and little downside. Thanks all.
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Aug 4, 2023 15:13
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skipdogg posted:What goals are you trying to achieve? She’s spending about $1000/month out of savings, but that’s just a baseline. That doesn’t include any trips or doing anything beyond just essentially scrapping by. She’s resourceful, but I want better than that for her. She’s already living in rent-controlled apartments (though they are increasing the rent each year s much as they can), get food stamps and utility support is a one-time payment in NM. Her mom lived into her 80s and died due to borderline-malpractice gently caress up by her GI doctor. There’s no reason to believe she won’t live a lot longer than that. (Eats incredibly healthy, daily yoga, former nurse and stays up-to-date) Magicaljesus posted:
She says social security payments should be about what her SSDI payments are. I’ll talk to her about waiting to start them so they’ll be more. Social security replaces SSDI.
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Aug 5, 2023 01:24
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I have a 2 year old and we want to start saving for his college fund. Since that's 16+ years from now there's some giant questions like what does my son want to do with his life and will we get our act together as a country and provide free college. Given the uncertainty I'm considering using a Roth IRA for his college fund - that way worst case we just end up with more retirement money instead of a giant education fund that maybe pays for something for someone someday. My wife and I both have good 401k options at work (trad/roth and good funds) and we're maybe contributing a third of the max between us so we have plenty of room to keep growing our own retirement savings. My understanding is that we can take the contributions out to pay for his college and then let the earnings sit in there to be additional retirement funds for us. Is there anything dumb or wrong with this plan? If not, are there any recommended funds I should put this money into?
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Aug 5, 2023 15:19
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drk posted:Do you find the 0.25% fee worth it? What do they invest you in? I don’t think there’s a fee on the savings accounts - I’ve had it for maybe 5 months and haven’t seen any fees pulled out. I do think the other accounts aren’t really worth it. The fees seem high and the returns haven’t exactly blown me away. I intend to move my accounts there in the future, especially since I’ll probably be consolidating my various retirement accounts anyway. The savings account has been cool though.
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Aug 5, 2023 15:51
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A GIANT PARSNIP posted:I have a 2 year old and we want to start saving for his college fund. Since that's 16+ years from now there's some giant questions like what does my son want to do with his life and will we get our act together as a country and provide free college. Given the uncertainty I'm considering using a Roth IRA for his college fund - that way worst case we just end up with more retirement money instead of a giant education fund that maybe pays for something for someone someday. My wife and I both have good 401k options at work (trad/roth and good funds) and we're maybe contributing a third of the max between us so we have plenty of room to keep growing our own retirement savings. My understanding is that we can take the contributions out to pay for his college and then let the earnings sit in there to be additional retirement funds for us. There was a semi-recent change to 529 accounts, where after so many years the money can be moved to a retirement account. https://www.fidelity.com/learning-c...%20withdrawals.
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Aug 5, 2023 16:07
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A GIANT PARSNIP posted:I have a 2 year old and we want to start saving for his college fund. Since that's 16+ years from now there's some giant questions like what does my son want to do with his life and will we get our act together as a country and provide free college. Given the uncertainty I'm considering using a Roth IRA for his college fund - that way worst case we just end up with more retirement money instead of a giant education fund that maybe pays for something for someone someday. My wife and I both have good 401k options at work (trad/roth and good funds) and we're maybe contributing a third of the max between us so we have plenty of room to keep growing our own retirement savings. My understanding is that we can take the contributions out to pay for his college and then let the earnings sit in there to be additional retirement funds for us. Your retirement savings > your kids' college. Don't use your tax-advantaged retirement savings space for your kids' college. You can finance college (as much as that sucks) you CANNOT finance retirement. Properly funding your retirement will help your children out in the long run far more than paying for your college. My parents paid for a lot of my college. My dad is now dead and my mom can barely work due to RA and she has no savings. Guess what I stress out about? If you want to set money aside, use a 529. If they don't use it all you can convert unused funds to a Roth IRA for your kid(s).
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Aug 5, 2023 20:00
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Ok but we have good 401k options and aren't maxing those out so the choice is use a Roth IRA for his college fund or don't use a Roth at all and use a 529.
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Aug 5, 2023 21:07
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A GIANT PARSNIP posted:there's some giant questions like... will we get our act together as a country and provide free college. no
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Aug 5, 2023 21:22
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It might depend on your state, as different states offer different levels of tax deductions for donating to a 529. Some have no tax deduction at all. Some require you to use the state's specific 529 provider etc. The new option referenced above allowing up to $35k of the 529 to be rolled into your kid's future Roth IRA is a huge boon. It also takes away a lot of the anxiety that they might not use up the 529 on tuition and you might get hit with a tax penalty withdrawing the funds for non-educational uses. Another question would be whether you and your spouse still have student loan debt. 529s are weird in that you can change the beneficiary on them at any time. You can also use them to pay off up to $10k of student loans per beneficiary once, so you could potentially change the beneficiary on the plan and use it to pay off student loans for multiple people if need be.
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Aug 5, 2023 21:28
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Jows posted:Your retirement savings > your kids' college. Don't use your tax-advantaged retirement savings space for your kids' college. You can finance college (as much as that sucks) you CANNOT finance retirement. Properly funding your retirement will help your children out in the long run far more than paying for your college. A GIANT PARSNIP posted:Ok but we have good 401k options and aren't maxing those out so the choice is use a Roth IRA for his college fund or don't use a Roth at all and use a 529. This is incongruous. If you have tax advantaged space that you are not taking advantage of, then I also think that should come first.
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Aug 5, 2023 21:29
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A GIANT PARSNIP posted:Ok but we have good 401k options and aren't maxing those out so the choice is use a Roth IRA for his college fund or don't use a Roth at all and use a 529. I would advise against saving for your kids college. Save for your retirement instead. If you aren't at a minimum maxing your 401k and iras then I don't think you can afford to further segment your savings.
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Aug 5, 2023 21:30
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I’ve been pretty lazy with finances to this point, mostly just stocking away extra money into savings. I’d like to get more serious about long-term investment and figure out what to do with my cash. 29 y/o $100k annual salary $130k in HYSA $25k in taxable investment account (100% VTI) $30k in Roth IRA (VTSAX, VTI) $150k in ESOP No debt, no kids. Expenses are under control. I may want to buy a house within the next 5 years. Median home price in my current area is $350-450k. I also may want to move to another area, so that complicates the house buying thing. Likely need to replace my car within the next 5 years. My employer has a 401(k) plan through Vanguard, but doesn’t offer any matching so I didn’t consider it a priority. Now I know that’s an oops. Would it make sense to contribute a huge portion of my income to 401(k) for the remainder of the year and live mostly off my excessive savings? There’s no way to contribute cash to a 401(k), right? Until early this year, I had almost all my savings in a standard low interest account. Feels better now in a HYSA, but that balance is still staring me in the face and I feel like I should invest it, though I’m not sure exactly where. If I managed to max out my 401(k) somehow, what would your next step be with the cash I have on hand? Also, is Ally Invest horrible for a set-and-forget taxable account?
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Aug 5, 2023 21:38
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The Earl of ToeJam posted:My employer has a 401(k) plan through Vanguard, but doesn’t offer any matching so I didn’t consider it a priority. Now I know that’s an oops. Would it make sense to contribute a huge portion of my income to 401(k) for the remainder of the year and live mostly off my excessive savings? Yes, though the annual 401k employee contribution limit is $22.5k, so it might take multiple years to burn through those savings. Even at a max contribution rate you will have a good amount of income (and your taxes will go down, so contributing $22.5k will reduce your take home income by much less than $22.5k). That being said, if you are going to buy a house in the next 5 years that will need a $100k down payment or so, keeping some or most of that in savings isnt the worst idea (or other short term alternatives like money markets, treasury bills, etc).
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Aug 5, 2023 22:29
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The Earl of ToeJam posted:I’ve been pretty lazy with finances to this point, mostly just stocking away extra money into savings. I’d like to get more serious about long-term investment and figure out what to do with my cash. Just saying both great job to take a step back and re arrange to maximize your money, and also you have $335,000 saved at age 29, my opinion that is phenomenal. Def re diversify to get better long terms savings, etc, but I’m just here to say nice work, you’re def on the right track. If we ever meet you can buy me a beer.
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Aug 5, 2023 22:38
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The Earl of ToeJam posted:I’ve been pretty lazy with finances to this point, mostly just stocking away extra money into savings. I’d like to get more serious about long-term investment and figure out what to do with my cash. Wow at that HYSA
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Aug 5, 2023 23:28
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You're going to want to decide on the house thing asap. If you're aiming at 20% down, you're around 80k you'll want safely liquid plus a buffer post move-in, so call in 100k. Plus you're thinking about a car. 130k sitting at a hysa is honestly going to be close to your best bet (probably can do some optimizing) if you actually are buying a house and car soon. Edit: what's up with your esop? Typically we'd suggest not staying heavily invested in the company you work for. Gotta diversify your bonds. Jenkl fucked around with this message at 23:41 on Aug 5, 2023 |
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Aug 5, 2023 23:39
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Jenkl posted:You're going to want to decide on the house thing asap. If you're aiming at 20% down, you're around 80k you'll want safely liquid plus a buffer post move-in, so call in 100k. Plus you're thinking about a car. I think the answer is "ESOP and ESPP are different things."
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Aug 6, 2023 00:57
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What does mind reading have to do with this?
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Aug 6, 2023 01:03
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Mind-reading is how you figure out the right stocks.
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Aug 6, 2023 01:13
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if ESOP is Employee Stock Option Plan then the poster may have options, not stock. They should wait till those options are vested and in the money before exercising them. However, they have posted a valuation for them, which implies at least that they are in the money. If they are both in the money and vested, then the advice not to concentrate a large amount of your wealth in the same place that your employment is dependent on still holds. If the company folds or collapses or even just has a significant downturn, you can lose your job and the value of your stock simultaneously. Hence the usual advice here is to divest when you can, and invest that money in a more diverse way.
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Aug 6, 2023 01:30
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ESOP is most likely employee stock ownership plan, ie employee owned company. I think you're usually stuck for a long time with ESOPs. My old ESOP I can't start cashing out until 2028 and won't be done until 2033.
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Aug 6, 2023 01:59
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I definitely interpreted it as an employee share ownership plan, so shares they owned and were able to sell. Mine allows withdrawals up to twice a year. Ignore me!
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Aug 6, 2023 02:28
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Thanks all!drk posted:Yes, though the annual 401k employee contribution limit is $22.5k, so it might take multiple years to burn through those savings. Even at a max contribution rate you will have a good amount of income (and your taxes will go down, so contributing $22.5k will reduce your take home income by much less than $22.5k). Good info! I'll see what I can do to max out the 401k. Duckman2008 posted:Just saying both great job to take a step back and re arrange to maximize your money, and also you have $335,000 saved at age 29, my opinion that is phenomenal.  I've been lucky to get into a decent job shortly after school that turned into a good job, and no major surprise expenses. And eating rice and beans like I'm still in college.Jenkl posted:You're going to want to decide on the house thing asap. If you're aiming at 20% down, you're around 80k you'll want safely liquid plus a buffer post move-in, so call in 100k. Plus you're thinking about a car. Yup, the house thing is the big unknown that's hanging over me. If I pushed out my timeframe for buying a house past 5 years, what does the advice look like then? Max 401k + taxable investment account and let it ride till I'm ready to look at houses? Jows posted:ESOP is most likely employee stock ownership plan, ie employee owned company. Yeah, it's this one. It's a % contribution of salary toward stock ownership each year. Unsure of the exact terms, but I don't believe there's any ability to divest aside from leaving the company, which transfers the funds to a 401k. I'm vested and would get the full amount if I left, but I'm not sure about other options. I'll check into this. Would maxing my 401k provide that diversification if I can't touch the ESOP amount? e: Bumped my 401k contribution to 75% of paycheck. We'll see how that feels. I also confirmed the ESOP balance can't be diversified until 10 years with the company, at which point 5% of the balance each year can be pushed to 401k. The Earl of ToeJam fucked around with this message at 19:02 on Aug 7, 2023 |
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Aug 6, 2023 02:36
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The Earl of ToeJam posted:Yup, the house thing is the big unknown that's hanging over me. If I pushed out my timeframe for buying a house past 5 years, what does the advice look like then? Max 401k + taxable investment account and let it ride till I'm ready to look at houses? Yep. I'm not up on US specifics, but the OP is. Def read that. Short version: 1) take any company matches 2) tax-advantaged accounts 3) non-advantaged accounts, buying low fee index funds suited to your risk profile.
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Aug 6, 2023 02:47
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A quick gut-check: while I was underemployed* over the past dozen years, I put retirement savings into a Roth IRA. I also have about 20% as much in taxable accounts (mostly** checking, savings, CDs, HYSA). The job I have now is the first in which I've ever been eligible for a 401(k). I had been splitting my contributions 50-50 between Roth and trad 401(k), because I don't know what the tax situation will be like in a few decades, so I figured I might as well split the difference. But actually, considering I have 5/6 of my investments in Roth accounts already, it would make more sense to be 100% traditional 401(k), right? * To give an idea of how much my income has changed over the past year, as of a year ago I had about triple my annual income in various savings and investments, in line with what it 'should' be for my age. This year, despite maxing out my Roth contributions for the first time ever in fiscal year 2022, the amount I have saved + invested is just under 60% of my annual income. ** But, in fact, I also have about 20% of that in stocks. This is mostly "play money"; I keep no more than 5% of my portfolio in single stocks or very specific targeted ETFs, just in case one of them takes off, and this is a subset of those. But considering I'm taxed on those gains in this account, and holding cash inside my Roth accounts isn't very efficient, maybe I should sell them from the former and rebuy them, or similar stocks, inside the latter? How do I know when that's worth it? For the most past I've been selling things I used to hold in this taxable account when I need to rebalance, and buying that asset class inside a Roth when I need to rebalance the other way. But should I just pull off the band-aid, or is it not even worth worrying about for this 2.3% of my portfolio?
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Aug 6, 2023 15:25
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I just discovered that I'm eligible for an HSA (BWM: not understanding your health care benefits). I have individual coverage through my employer that qualifies as a HDHP. My spouse and I have annual, out-of-pocket expenses that are close to or exceed the contribution limit. We're already maxing out both Roth IRAs and getting the most out of our employer's retirement plan. Maxing the HSA is a no-brainer, right? Then my question is: what's the best way to use the HSA? Use it to pay those qualified expenses with pre-tax HSA funds as they come up? Or pay the expenses with cash and sit on the HSA to be used in retirement?
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Aug 8, 2023 12:47
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Easychair Bootson posted:Then my question is: what's the best way to use the HSA? Use it to pay those qualified expenses with pre-tax HSA funds as they come up? Or pay the expenses with cash and sit on the HSA to be used in retirement? It’s less paperwork and better for cashflow to use it for expenses but if you are already maxing out your other tax advantaged accounts and have money left over it is better to pay cash and save receipts to take out the money later.
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Aug 8, 2023 13:03
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nelson posted:It’s less paperwork and better for cashflow to use it for expenses but if you are already maxing out your other tax advantaged accounts and have money left over it is better to pay cash and save receipts to take out the money later. What kind of paperwork comes into play? I was thinking when it comes tax time I just say I contributed $x to a HSA and don't pay income tax on that amount.
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Aug 8, 2023 14:10
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Easychair Bootson posted:What kind of paperwork comes into play? I was thinking when it comes tax time I just say I contributed $x to a HSA and don't pay income tax on that amount. When you pay expenses (either with the debit card or through reimbursement filing) you have to keep documentation on why the spend is covered as a medical expense (usually just pharmacy receipts and doctor/hospital invoices) in case the IRS audits you. My HSA provider has a (lovely) webapp to upload pictures and PDFs as supporting documents then match them to transactions, but you can also just use a cloud drive folder or whatever document filing system you like best. Iirc the min-max strategy is that there's no time limit on reimbursing yourself for medical expenses. So if you have say a $1000 hospital bill you can just pay out of pocket in cash, let the $1000 in HSA money grow tax free for a number of years, then reimburse yourself later after that $1000 principal has generated some tax free gains. Or you can just pay for things as they come up like I do because that's extra work.
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Aug 8, 2023 14:40
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Same. I'm not about to trust an online medical services company or generic Internet cloud provider to be present and still in business years later, all the while handling my receipt and sensitive medical data beyond what everyone's already doing. And I don't trust myself to keep up with the receipts in my own storage system. And I'm lazy. And I have enough savings as it is without having to hardcore min-max this stuff. "It's my money and I want it now!" (Ironically, J.G. Wentworth went bankrupt somehow in both 2009 and 2017).
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Aug 8, 2023 15:14
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I expect to have plenty of expenses in the future. I don't save any of my current bills. Maybe I should though for my two big items that I hit my max out of pocket.
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Aug 8, 2023 16:19
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yeah i don't think it's worth trying to save receipts, i'm certainly not organized enough nor disciplined enough so just having pre-tax money to pay for it is great. any kind of Gainz are just a bonus.
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Aug 8, 2023 16:22
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lol I have a file cabinet with all my tax stuff for every year going back to like, 1993. It's easier to save everything than it is to decide when you no longer need it and cull it selectively. Another option is to take a pic of every receipt as you get them and then upload the pics to dropbox or something. That said, it's probably a good bet that you'll have large medical expenses when you're old, so just waiting till you're old to use the HSA is a very valid approach that doesn't require you to save lots of receipts.
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Aug 8, 2023 16:45
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and if you somehow make it to 65 without a bunch of medical expenses, congrats now you can draw down your HSA as if it were a traditional IRA
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Aug 8, 2023 16:47
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Or just save receipts over some "de minimis" threshhold. Or EOBs. Not that I would ever suggest submitting out of network EOBs to your HSA for reimbursement at whatever they claim you owe or anything. But if you wind up with a $1000 receipt, sure, but why save every $10 bottle of pills? Though mine come on stickers, so I stick em to a sheet of paper, when it fills up, take a picture and send it to my FSA. Good luck suckers those stickers all say "receipt" at the top.
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Aug 8, 2023 17:16
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