Retirement Targets

[Jayshellberg]

As far as taxation, when a person retires it is unearned income generally so there is no SS tax. Plus SS benefits can be exempt from taxation depending on income level. Iowa income tax will mostly go away for retirees with retirement income. Property taxes will be up significantly in the future.

This is fair. Whether you will pay more taxes and retirement or whether tax rates will increase are two separate questions. Plus, the answers depend on what type of taxes we are referring to (federal, state, social security, property, etc.).

One of my elderly dad’s biggest tax burdens are RMDs from his IRA. The Secure 2.0 Act extended the age to start taking RMDs to 75. While that’s generally good, people are likely to encounter a tax nightmare if they wait that long because their account balances will grow to a point where the RMDs are very larage, which are taxed as ordinary income.

To counter act this, you can earmark your 401K contributions as Roths if your employer allows. Also, beginning in 2024, you can request the employer match portion to be a Roth contribution rather than a traditional contribution (really wish that as allowed when I was working). Further, I suggest that people start converting their traditional IRAs to Roths as soon as they retire, when their personal tax rate is lower (younger folk may not have to worry about this if they already have a sizable Roth balance). Trust me, you will be glad you did the Roth conversion. Lastly, start taking even modest withdrawals from your traditional IRA or 401K before RMDs kick in.

Just like the old Fram commercial, “you can pay me now, or pay me later.”

 

[Stormin]

This is fair. Whether you will pay more taxes and retirement or whether tax rates will increase are two separate questions. Plus, the question depends on what type of taxes we are referring to (federal, state, social security, property, etc.).

One of my elderly dad’s biggest tax burdens are RMDs from his IRA. The Secure 2.0 Act extended the age to start taking RMDs to 75. While that’s generally good, people are likely to encounter a tax nightmare if they wait until that time because their account balances will grow to a point resulting in very large RMDs, which are taxed as ordinary income.

To counter act this, you can earmark your 401K contributions as Roths. In addition, I suggest that people start converting their traditional IRAs to Roth after they retire, but before RMDs kick in. Lastly, start taking even modest withdrawals from your IRA or 401K even before RMDs kick in.

Just like the old Fram commercial, “you can pay me now, or pay me later.”

Good point about IRA’s. IRA management is an area seniors need to get figured out. Mix of Roth and traditional IRA’s gives flexibility. Good tax advice is valuable.

 

[4theCYcle]

I know but he was in the biz a long time. I like all perspectives. And he gets the big time CEOs on his shows.

Fair enough. I just find his schtick funny. He claims hes for the "little guy," but then you can find a video recording of him saying something contradictory (I can't even remember what it was specifically).

 

[yowza]

Fair enough. I just find his schtick funny. He claims hes for the "little guy," but then you can find a video recording of him saying something contradictory (I can't even remember what it was specifically).

I did subscribe to his investment club thing for 1 year about 4 years ago or so and he is way more muted and sensible in that then the TV version of him. Much more conservative plays.

 

[BCClone]

Fair enough. I just find his schtick funny. He claims hes for the "little guy," but then you can find a video recording of him saying something contradictory (I can't even remember what it was specifically).

Like Mr Dave. He likes to say no debt now, but admitted early on he took loans out for parts of his business. He had conveniently stopped airing that rerun of his.

 

[brokenloginagain]

Start funding a HSA (if you are eligible) next step then would be a roth IRA, just do basic mutual funds for those. If you want to get into stocks slowly, start with something like AT&T since it usually has a nice dividend and if the price falls, you get a quarterly dividend that eases the pain.

I normally would say Roth first but with what you mention, I would consider a HSA first

Poor guy says he's nervous about the stock market and a friendly poster suggests AT&T.

48 hrs later AT&T drops 10% in a day, its biggest one day drop in 23 years lol.

Welcome to the stock market - we've all been there!

 

[ClonerJams]

I think I know the basics of retirement savings but I've recently become more interested in figuring out what my goals should be. More aware might be a better term instead of interested as I'm turning 40 next year. I guess milestone bdays can get you thinking about stuff like this... Anyway, I stumbled on this thread a few weeks ago and have read some of it. The gist I get from what I've read is that I'm probably not doing nearly enough currently. I haven't dug deep enough to understand things like the 4% rule I saw mentioned somewhere in here, but I do plan to do more research and reading.

The basics are: I do the max 6% into 401K that my company matches but that's it. I think it's set to whatever the default investment settings are as I haven't adjusted it one way or the other. It's currently at 200K+and lost like 15k in the last year. I don't have any IRAs or stock portfolios. Stocks scare me and seem like a good way for me to gamble and lose. My wife has TIAA through ISU, but I'll be honest and say I haven't looked at that in a long time.

I'll probably get an advisor to help me at some point and I know more info would be needed to give any real, specific advice, but what are a couple things/steps that people think I should do now at the bare minimum to get started? One other caveat I'll mention is that I have some issues that are already affecting my mobility and it will continue to progress. I'll probably have trouble walking in my 50s and definitely by 60. So, I might be in an "the earlier the better" type of situation. Lastly, I bought that "We're Talking Millions" book and plan to read it soon. Anyway, try not to roast me too bad but... fire away.

200k at 40 isn't bad - in fact its probably better than a lot of people. If you didn't invest another penny in that, at 65 it would be almost 900k with a conservative 6% return (used 6% to account for inflation and fees).

Investment Calculator

With our investment calculator, you can find out how much you can expect to have in your retirement portfolio over time.

www.ramseysolutions.com

Now I am not a financial advisor and would recommend you get with one. That said, index funds are your friend. Going heavy in the S&P 500 is a smart strategy. I currently have my 401k set up as 50% S&P 500, 20% small/mid cap, 15% target fund, 10% international, and 5% balanced.

Pick ones that have performed well over the past 5-10 years and have low fees.

 

[BCClone]

Poor guys says he's nervous about the stock market and a friendly poster suggests AT&T.

48 hrs later AT&T drops 10% in a day, its biggest one day drop in 23 years lol.

Welcome to the stock market - we've all been there!

Want me to recommend another so you can short it?

 

[JP4CY]

As seen this morning:

 

[Dirt Boy 2]

I think I know the basics of retirement savings but I've recently become more interested in figuring out what my goals should be. More aware might be a better term instead of interested as I'm turning 40 next year. I guess milestone bdays can get you thinking about stuff like this... Anyway, I stumbled on this thread a few weeks ago and have read some of it. The gist I get from what I've read is that I'm probably not doing nearly enough currently. I haven't dug deep enough to understand things like the 4% rule I saw mentioned somewhere in here, but I do plan to do more research and reading.

The basics are: I do the max 6% into 401K that my company matches but that's it. I think it's set to whatever the default investment settings are as I haven't adjusted it one way or the other. It's currently at 200K+and lost like 15k in the last year. I don't have any IRAs or stock portfolios. Stocks scare me and seem like a good way for me to gamble and lose. My wife has TIAA through ISU, but I'll be honest and say I haven't looked at that in a long time.

I'll probably get an advisor to help me at some point and I know more info would be needed to give any real, specific advice, but what are a couple things/steps that people think I should do now at the bare minimum to get started? One other caveat I'll mention is that I have some issues that are already affecting my mobility and it will continue to progress. I'll probably have trouble walking in my 50s and definitely by 60. So, I might be in an "the earlier the better" type of situation. Lastly, I bought that "We're Talking Millions" book and plan to read it soon. Anyway, try not to roast me too bad but... fire away.

Didn’t see someone post about Jack Bogle yet. Any Bogleheads here? Great place to start for any beginner, www.bogleheads.com. Book recommendations and a you name it gathering site for investing without or minimal costs.

 

[KnappShack]

Good point about IRA’s. IRA management is an area seniors need to get figured out. Mix of Roth and traditional IRA’s gives flexibility. Good tax advice is valuable.

This is interesting and I haven't cracked the code.
I will be 67 when my youngest graduates from high school. At best I'll have kids on the payroll until my early 70s if they go to college.

Wife is 7 years younger and I'll assume still working until I'm 72.

A lot of moving pieces. I'm doing roughly 50-50 traditional/Roth split.

I'm guessing we could have some years where we don't show much income, but I really have no certainty for any dang thing

 

[dmclone]

Didn’t see someone post about Jack Bogle yet. Any Bogleheads here? Great place to start for any beginner, www.bogleheads.com. Book recommendations and a you name it gathering site for investing without or minimal costs.

I was just listening to their monthly podcast. I also follow their forum, which is very useful.

 

[qwerty]

This is interesting and I haven't cracked the code.
I will be 67 when my youngest graduates from high school. At best I'll have kids on the payroll until my early 70s if they go to college.

Wife is 7 years younger and I'll assume still working until I'm 72.

Dang, I thought I started late when I was 53 at last HS graduation. You look around during the ceremony and most other parents are in their early 40s.

 

[KnappShack]

Dang, I thought I started late when I was 53 at last HS graduation. You look around during the ceremony and most other parents are in their early 40s.

Yes. I'm listening to a couple of young kids having a rough morning.

I don't recommend waiting until late in life to have kids. It wouldn't take much for me to not recommend kids period, but that's another topic.

Kids do throw a very large wrench in financial plans.

 

[BCClone]

Dang, I thought I started late when I was 53 at last HS graduation. You look around during the ceremony and most other parents are in their early 40s.

I was 28 when the oldest was born. 35 when the youngest was (which was 16 years ago today). The oldest we were a little older at Kinder roundup. The second 2 years later we were definitely in the old group. For the youngest one, I felt like grandpa at his stuff.

 

[cjclone]

I was 28 when the oldest was born. 35 when the youngest was (which was 16 years ago today). The oldest we were a little older at Kinder roundup. The second 2 years later we were definitely in the old group. For the youngest one, I felt like grandpa at his stuff.

I was coaching my daughter’s fifth grade basketball and the girls on the other team asked our girls why they had such an old coach. it goes on and on. Last night several people asked me if Imwas retired and I said I wasn’t old enough formSocial Security. Eight more years and the rest of the land we bought will be paid off. Then I can retire for sure.

 

[BCClone]

I was coaching my daughter’s fifth grade basketball and the girls on the other team asked our girls why they had such an old coach. it goes on and on. Last night several people asked me if Imwas retired and I said I wasn’t old enough formSocial Security. Eight more years and the rest of the land we bought will be paid off. Then I can retire for sure.

I could but, am going incase one of the kids has interest to take over. Once a family quits, it’s almost impossible to get back into the game.

 

[madguy30]

I'm just going to invent something that's super clever and simple and will be 'needed' for a long time to mass produce and go with that.

 

[Beernuts]

as a couple in their mid 50's that probably could retire...things that are a concern on our minds:

1) health insurance - would be a killer for the next 10 years
2) purpose - we enjoy our work - how would we stay engaged
3) location - if we moved (warmer climate) it would effect our friendship group / church responsibilities / etc
4) health - we are both healthy and active

however, we know nothing is promised and that time will speed by quickly in our lives. so we are balancing finances with time with health with goals with etc.

we honestly feel humbled that we have options...now just the courage to make a decision

 

[KnappShack]

as a couple in their mid 50's that probably could retire...things that are a concern on our minds:

1) health insurance - would be a killer for the next 10 years
2) purpose - we enjoy our work - how would we stay engaged
3) location - if we moved (warmer climate) it would effect our friendship group / church responsibilities / etc
4) health - we are both healthy and active

however, we know nothing is promised and that time will speed by quickly in our lives. so we are balancing finances with time with health with goals with etc.

we honestly feel humbled that we have options...now just the courage to make a decision

I'd say if you have #2 nailed down I'd work as long as possible.

A relative recently retired and completely fell apart after leaving a role she found important.

It's been stunning and sad to see. So much of her self worth was tied to her job. Now she's....lost