Deleted
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Post by Deleted on Mar 5, 2021 21:30:52 GMT -5
Whenever I try to figure this out for myself, my brain rebels because I just really prefer not to think about it. But I really should be figuring out the details of my retirement so I know what to do today, so please help me.
Right now, the only debt I have is my mortgage payment of $730/month. If I just ride it out, the house will be paid for in 10 years, the same time frame I’d like to retire in.
I pay, on average, $450/month for cable and utilities. But that’s only because I insist, Mister doesn’t care whether I pay household bills or not.
I have a 2003 Honda Accord that I bought new and prefer not to give up anytime soon. I actually still like my car and it’s been very good to me with being reliable and low maintenance. Which is great, because I’m a car person and I fight “new car” fever a lot. I paid my car off in ‘08 and have fully enjoyed not having a car payment over the years. At the same time, I might stroke out or have a heart attack trying to pay cash for a car. I do a lot of silly stuff financially, but if I spend more than $1k in one transaction, my heart literally feels like it’s going to jump out my chest. And any car I’d be comfortable with, would cost a lot more than that. All that to say, as much as I love cars, I’m avoiding buying one for as long as I can.
I also have a 2010 Jeep Wrangler. I like it a lot too, but it’s not really practical. It’s expensive gas-wise, and it’s tiny. If I had to drive it to go grocery shopping, I’d get irritated.
Anyway, I’m going to need a vehicle at some point, whether I like it or not.
My health insurance..... I’ll have access to the same insurance in retirement that I have now, for the same costs. Right now, I pay less than $200/month for decent or better health, dental and vision insurance, but there are other plans I can choose from if any of mine get crazy.
For retirement, I have SS (I’d like to plan as if I wouldn’t need it, but that makes me feel kind of hopeless), my own savings (employer matches @ 5% if I contribute 10%), and a pension that, if I were eligible to retire today, would be about $1500/month. I’m too lazy atm to find or figure out a real number, so let’s just assume SS is $1500/month also.
If I meet all the minimum requirements for retirement before age 62, my employer offers a supplemental income that continues until age 62. I want to say it’s an amount equal to what I’d receive at 62yo from SS, but I’m not absolutely sure. So, for the sake of this, let’s just say $1k.
I currently live off of about $45k after payroll deductions, and minus my after tax savings. After tax savings include my EF and an account for irregular and some regular, but infrequent spending, like house and car maintenance and repairs or travel..... they all have a line in my savings plan. And I have a joint savings account with Mister, for our home, but neither of us seems to want to touch it, so it just keeps growing too. Besides my mortgage payment, basic utility expenses and whatever medical expenses I have (currently limited to $6k/year), most of the remainder is spent on stuff that I have at least a little control over how much I spend. A good portion of that is spent on things I want, but don’t necessarily need. The ability to buy or do some things just because I want them or to do them, is the only thing that convinces me to get out of bed and go to work on many mornings. I would be happy to forego a lot of that if it meant I didn’t have to get up and go to work every day.
Given all that, how much pretax and after tax money do you think I need to retire?
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Tiny
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Post by Tiny on Mar 5, 2021 22:27:41 GMT -5
You want to retire in 10 years. You should go over to SSA.gov and signup and check you SS info and the amount it says you will get. I'd also try to get information on the possible monthly payout from the pension. Does your employer give you yearly info about it?? It helps if you know your expenses now and then 'extrapolate' out into the future. Expenses are everything - property tax, house insurance, car insurance, stickers/plate fees, maintenance for car (oil, wipers, tires), maintenance for the house, utilities, gas for the car, grocery, clothes, charity, hair cuts/color, shoes, holiday gifts (and entertaining), your hobbies, entertainment/travel, etc... you will need healthcare expenses from 62 to 65 and then you'll have medicare and the expenses that go with it. You need to come up with an idea of what you will need... based on your spending (expenses). If you want a lazy answer - assume you will need $50K per year (in 10 years) once you stop working. I picked 50K because you said you have 45K after all your savings and paying payroll taxes and what not. It sounds like right now your "I think I'll have at 62 from pension and SS" number is about $2500K per month = 30K per year so you will need another 20K from your savings/investments to make 50K. Of course there's no "cola" - odds are you might need a bit more as time goes by at 72yo How much do you current have in tax advantage retirement accounts? That's where the 20K per year would come from. My advice would be to find out some better estimates of what your SS will be (the SSA.gov site) and I'd start asking for information about how your Pension will work and if there is a way to get some estimates for the possible monthly amounts you would get. Having a feel for these two numbers AND a guesstimate of your expenses will make it less daunting to figure out how much you need to have in retirement accounts/other $$. Having a good guesstimate of SS and the Pension will most likely will remove some of the drama that keeps you from wanting to think about it. I think you will be pleasantly surprised that it's not all doom and gloom.
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buystoys
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Post by buystoys on Mar 6, 2021 8:41:50 GMT -5
There are a couple of good modeling programs that can help you. FIRECalc and i-ORP can both help you find out how much you'll need to retire. I agree with Tiny that it will be helpful to have real numbers to crunch. I'd also start really tracking spending. I had years of spending information to use when we retired. That was especially helpful as we both had to retire due to disability. I knew we could cover our expenses without needing to touch our portfolios if necessary. That made a big difference in my comfort factor.
Keep us informed of your numbers, please! I always love to hear how people work to their goals.
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Bonny
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Post by Bonny on Mar 6, 2021 11:25:22 GMT -5
There are a couple of good modeling programs that can help you. FIRECalc and i-ORP can both help you find out how much you'll need to retire. I agree with Tiny that it will be helpful to have real numbers to crunch. I'd also start really tracking spending. I had years of spending information to use when we retired. That was especially helpful as we both had to retire due to disability. I knew we could cover our expenses without needing to touch our portfolios if necessary. That made a big difference in my comfort factor.
Keep us informed of your numbers, please! I always love to hear how people work to their goals.
I'll also add that having a person trained in wealth management tto review our numbers was really helpful. She essentially did the Monte Carlo analysis FIRECal does with different assumptions. We did our retirement planning in 2010 when everything still looked pretty scary. At the time our taxable account was with USAA and their financial planner was really helpful. Check to see if you have access to a planner via your retirement accts. Even if you DIY everything having a second pair of eyes is comforting. Good luck!
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Rukh O'Rorke
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Post by Rukh O'Rorke on Mar 6, 2021 11:40:05 GMT -5
For retirement, I have SS (I’d like to plan as if I wouldn’t need it, but that makes me feel kind of hopeless) I also tried to plan without SS too - but that would have me working way too long and yes for me also it was a tough realization.
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buystoys
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Post by buystoys on Mar 6, 2021 12:39:54 GMT -5
I always used 65% of our SS in my planning stages. I figured we would get a haircut on it in 2030ish time frame. It's nice to know we'll be OK with the haircut. We'll just need to cut back on some discretionary spending, which we can do pretty easily.
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haapai
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Post by haapai on Mar 6, 2021 16:05:52 GMT -5
If it makes you feel any better, last week I bought Retirement Planning for Dummies and Social Security for Dummies and both are still in pristine condition. This stuff is scary to approach, loaded with details, and we both need to get cracking on it.
I'll tell you if I find the books helpful.
I'm 52 and I usually love math and spreadsheets, so I'm pretty sure that my resistance to tackling this project is all about "feelings" and "pride" and not about the mountains of detail.
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saveinla
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Post by saveinla on Mar 6, 2021 17:25:22 GMT -5
buystoys - Thanks for the links to both planners. I finally put the numbers in both tools with different contribution amounts and both tools say we are good to go to retire at 60 even if we don't contribute any more to our 401K. This is completely unexpected and it is also a big relief. We will have no pensions or healthcare at retirement, so this makes it easier to keep going for the next few years. haapai & @pinkcshmere - I would suggest overcoming your reluctance and try to put your numbers in - even though they may not be the actual values. It will help to solidify any future plans. Good luck.
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Deleted
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Post by Deleted on Mar 6, 2021 18:56:17 GMT -5
TinyI will sign up at SSA.gov. My employer doesn’t give us updates concerning our pension. I do know how it works though, and my number for that monthly amount is pretty accurate. Any salary increases over the next 10 years, will increase the monthly amount I receive from my pension. You mentioned healthcare expenses, I will have the same options for health insurance in retirement as I do now. I’ve had conversations with retirees that also have Medicare and for them, between the health insurance benefits from the job and Medicare, their OOP costs are minimal. If disaster strikes, the max annual OOP costs with my insurance is currently $6k, then everything is covered 100%. Those are the only 2 things I’m pretty sure of regarding my retirement. I’m aware that things can change between now and 2031. If they do, I’ll just have to cross those bridges when I get to them. My employer’s retiree benefits are fully funded for farther in the future than I could hope to live, but future changes might come about during contract negotiations, as I’m union. I don’t necessarily feel like it’s all doom and gloom, it’s just kind of scary and overwhelming, I guess. The pension and health insurance are both a big relief, even though the pension is not enough to live off of. And the fact that I’ll own my house free and clear by then (except for taxes and insurance, of course, which currently total about $2400/year) is also a relief. I can live in it for minimal costs if I ever need to, I can rent it out and have a little extra income in retirement, or worst case scenario, I can sell it if I’m in desperate need of cash and that’s my only solution. Thank you for chiming in!
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Deleted
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Post by Deleted on Mar 6, 2021 19:39:36 GMT -5
There are a couple of good modeling programs that can help you. FIRECalc and i-ORP can both help you find out how much you'll need to retire. I agree with Tiny that it will be helpful to have real numbers to crunch. I'd also start really tracking spending. I had years of spending information to use when we retired. That was especially helpful as we both had to retire due to disability. I knew we could cover our expenses without needing to touch our portfolios if necessary. That made a big difference in my comfort factor.
Keep us informed of your numbers, please! I always love to hear how people work to their goals.
I do track my spending. I use Quicken to keep track of my finances. I’m not really a fan, I’d used Microsoft Money for about 10 years, and wish I still could. Quicken for Mac doesn’t have all the features and capabilities of Quicken for Windows (ugh!) or my old Microsoft Money, especially for budgeting and planning, but I can at least track my spending. I don’t have to track my expenses though, to know that I spend a lot of the $45k I live on now, on unnecessary stuff. My main concerns for retirement are making sure I have somewhere decent and safe to live, transportation, and food options that don’t include varieties of cat food. Without a mortgage payment, I guess I could maybe technically cover those basic needs just on my pension, but that wouldn’t be much fun. I know seniors that manage to survive on less than that, and although it’s far from ideal, it’s doable in our LCOLA. I’m also deliberately excluding Mister from my planning, just because I prefer to always be able to take care of myself no matter what, and regardless of my relationship status.... including married. But the facts are that he’s younger than me and will still have more working years ahead of him when I retire, his income is much more than mine, and will be even after he retires too. My life has shown me that shit will and does happen, so I need to know that I’ll still be ok financially by myself, Mister or no Mister. I’ll get a better number from SSA and check out those links you provided. Thank you!
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Deleted
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Post by Deleted on Mar 6, 2021 19:57:54 GMT -5
For retirement, I have SS (I’d like to plan as if I wouldn’t need it, but that makes me feel kind of hopeless) I also tried to plan without SS too - but that would have me working way too long and yes for me also it was a tough realization. My biggest worry is making sure I have somewhere decent to lay my head. That worry hasincreased over the last few years, probably because of the mess that my Mom has made of her life and finances. If not for me, she would literally be homeless, and still might be at some point because she refuses to act right. But that’s another story. Anyway, I would never expect or try to demand that my children house me just because I’m irresponsible.... and the way my sense of independence is set up, despite me not living there anymore, knowing I will have a paid off house before I retire gives me a bit of peace of mind. I know you’re more “seasoned” than I am and your house cost and is worth a lot more than mine. Will it be paid for before you retire? Or do you have plans that don’t require that?
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Deleted
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Post by Deleted on Mar 6, 2021 20:09:03 GMT -5
If it makes you feel any better, last week I bought Retirement Planning for Dummies and Social Security for Dummies and both are still in pristine condition. This stuff is scary to approach, loaded with details, and we both need to get cracking on it.
I'll tell you if I find the books helpful.
I'm 52 and I usually love math and spreadsheets, so I'm pretty sure that my resistance to tackling this project is all about "feelings" and "pride" and not about the mountains of detail.
I’m glad you understand. Please do let me know if you find those books helpful. I’m 49, and you very accurately described the true source of my resistance too. Pride is part of the thinking I mentioned in a prior post, about needing to know I can take care of myself no matter what. I don’t love math, but I am a planner and will do the math when necessary. But something about planning for retirement “feels” overwhelming to me, and it’s not really because of the math that’s involved. I guess that’s why I wanted someone else, that doesn’t have feelings involved, to do the math for me lol.
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Deleted
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Post by Deleted on Mar 6, 2021 20:18:44 GMT -5
Having responded to most of the replies now, let me say that until I figure it all out, I’ll just keep saving money. I can’t go wrong with that, right?
I’ve been saving 10% of my salary in my retirement account, my employer contributes 5%. I’m going to up my contribution to 15%. We have a Roth option that we can contribute to, but so far I haven’t. I don’t know how much I should be putting in there. I guess I need to figure that out too, since the bulk of my savings earmarked for retirement is pre-tax. I have regular savings accounts, but the balances are nowhere near the balance of my retirement account, and it’s my understanding that I should have a mix of taxed and non taxed money going into retirement. Please correct me if I’m wrong.
Anyhoo, I sincerely appreciate everyone that has shared their thoughts and opinions so far!
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Post by minnesotapaintlady on Mar 6, 2021 20:46:49 GMT -5
There sure seems to be a lot of us on this board around age 52 looking to retire in 10 years judging by the recent posts. I'm also feeling a bit discombobulated lately. I feel like I should be doing more to get my ducks in a row...or changing my asset allocation or something.
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giramomma
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Post by giramomma on Mar 6, 2021 21:06:20 GMT -5
Re: Everything is covered with your insurance... I would really take some time to figure out what that means. I'm sort of suspect of insurance that covers things like, say experiment cancer drugs, no questions asked...if that's a route you want to go on.
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CCL
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Post by CCL on Mar 6, 2021 21:45:24 GMT -5
There sure seems to be a lot of us on this board around age 52 looking to retire in 10 years judging by the recent posts. I'm also feeling a bit discombobulated lately. I feel like I should be doing more to get my ducks in a row...or changing my asset allocation or something. Haha. Based on my own experience, once you hit 50 you start to get tired of going to work every day.
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tallguy
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Post by tallguy on Mar 6, 2021 21:52:41 GMT -5
Having responded to most of the replies now, let me say that until I figure it all out, I’ll just keep saving money. I can’t go wrong with that, right? I’ve been saving 10% of my salary in my retirement account, my employer contributes 5%. I’m going to up my contribution to 15%. We have a Roth option that we can contribute to, but so far I haven’t. I don’t know how much I should be putting in there. I guess I need to figure that out too, since the bulk of my savings earmarked for retirement is pre-tax. I have regular savings accounts, but the balances are nowhere near the balance of my retirement account, and it’s my understanding that I should have a mix of taxed and non taxed money going into retirement. Please correct me if I’m wrong. Anyhoo, I sincerely appreciate everyone that has shared their thoughts and opinions so far! No, you can't go wrong with just continuing to save money, and yes, you probably should up your percentage. I would look further into using the Roth option. I just kept saving myself, and ended up in good shape, but I had too much in tax-deferred and not enough in Roth. Because I planned to limit my income in retirement, I had to do a large Roth conversion (after a few smaller ones) to free up money I never would have spent otherwise. Even with that I still did not get my tax-deferred balance down as low as I wanted. Yes, you absolutely do want to have a mix of assets in retirement and to learn how to withdraw from each in the most efficient manner. My Roth money is the most important I have, since I can withdraw it whenever I want with no tax consequences. I will likely never touch my taxable accounts and will let them pass forward with a stepped-up basis. Well over half and perhaps two-thirds of my investments now will escape tax completely. That is a nice position to be in.
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tallguy
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Post by tallguy on Mar 6, 2021 21:53:51 GMT -5
There sure seems to be a lot of us on this board around age 52 looking to retire in 10 years judging by the recent posts. I'm also feeling a bit discombobulated lately. I feel like I should be doing more to get my ducks in a row...or changing my asset allocation or something. Haha. Based on my own experience, once you hit 50 you start to get tired of going to work every day. Yeah, I decided that the whole "five days a week" thing just didn't work for me....
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CCL
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Post by CCL on Mar 6, 2021 21:55:57 GMT -5
Pink, what kind of funds are you invested in? I'm sure you know, that can make a difference in your returns over time. I usually kept about 50% in a balanced fund and 50% in higher risk (hopefully higher return) mutual fund.
Will your pension provide cost-of-living adjustments? Ours does not, so I always keep that in mind when planning future expenses.
Keep in mind your health insurance may change substantially. Ours was supposed to be the same as when working, but, of course, it isn't. It changes every few years.
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CCL
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Post by CCL on Mar 6, 2021 22:07:10 GMT -5
Yeah. I had a lot more in the 401k than in Roths. I'm doing conversions now to reverse that. I don't plan to do any huge one-time conversions. I'm spreading them out as much as I can while staying in the 12% tax bracket, before they raise it on me. Most of those years we were contributing, we were in the 25%-28% brackets, so I'm ahead, so far. It's not easy coming up with the $$$ to pay the taxes. I usually have to take it from the 401k, which means I owe even more taxes lol.
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Post by Deleted on Mar 6, 2021 22:35:48 GMT -5
Re: Everything is covered with your insurance... I would really take some time to figure out what that means. I'm sort of suspect of insurance that covers things like, say experiment cancer drugs, no questions asked...if that's a route you want to go on. I’m not sure what you mean. I didn’t say everything is covered by my insurance. If I implied that, it’s not what I meant.
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Deleted
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Post by Deleted on Mar 6, 2021 22:51:15 GMT -5
Pink, what kind of funds are you invested in? I'm sure you know, that can make a difference in your returns over time. I usually kept about 50% in a balanced fund and 50% in higher risk (hopefully higher return) mutual fund. Will your pension provide cost-of-living adjustments? Ours does not, so I always keep that in mind when planning future expenses. Keep in mind your health insurance may change substantially. Ours was supposed to be the same as when working, but, of course, it isn't. It changes every few years. What kind of funds am I invested in..... Idk. We have several to choose from, but I don’t know how to tell you exactly what they are. I have a little money in one that’s “safe”, you won’t lose it, but you don’t make much either. The rest of it is in a fund that has historically been a money-maker. I know the wisdom is that as you get closer to retirement, focus should shift toward “safer” investments. That’s something else to figure out, and I don’t know how many years beforehand I should start moving toward preservation instead of higher returns and risks. Yes, I know my health insurance benefit can change. If it does, that would change everything for me.
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tallguy
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Post by tallguy on Mar 6, 2021 23:12:06 GMT -5
Pink, what kind of funds are you invested in? I'm sure you know, that can make a difference in your returns over time. I usually kept about 50% in a balanced fund and 50% in higher risk (hopefully higher return) mutual fund. Will your pension provide cost-of-living adjustments? Ours does not, so I always keep that in mind when planning future expenses. Keep in mind your health insurance may change substantially. Ours was supposed to be the same as when working, but, of course, it isn't. It changes every few years. What kind of funds am I invested in..... Idk. We have several to choose from, but I don’t know how to tell you exactly what they are. I have a little money in one that’s “safe”, you won’t lose it, but you don’t make much either. The rest of it is in a fund that has historically been a money-maker. I know the wisdom is that as you get closer to retirement, focus should shift toward “safer” investments. That’s something else to figure out, and I don’t know how many years beforehand I should start moving toward preservation instead of higher returns and risks. Yes, I know my health insurance benefit can change. If it does, that would change everything for me. Just remember that "rules" are not really rules. Do what is right for you and your situation, but learn enough to know what that is. I, for example, am not capable of investing in or holding bonds or bond funds. I tried to force myself once and could never actually pull the trigger on the purchase. I've been retired for a few years now and am still 99+ % equities. I also don't see that changing. It's just not right for me. Figure out what is right for you. If that involves bonds or fixed income, great. If it doesn't, that can work too.
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CCL
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Post by CCL on Mar 7, 2021 0:05:44 GMT -5
Pink you should take a closer look at your mutual funds in your retirement account to be sure they are still what you want and still working for you. I know it's kinda scary to think you might lose your hard-earned dollars, but investing too conservatively can hurt you, too.
I've never been very interested in bond funds either, although I have bonds in my Fidelity Balanced Fund. I do like that it pays some dividends and capital gains, especially during the years when returns were down. At least I was reinvesting at the lower prices.
I agree you have to figure out what works for you. For myself, I have no interest in paying my house off. I know that's a priority for many people by the time they retire. I don't see any reason to. The payment is manageable.
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tallguy
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Post by tallguy on Mar 7, 2021 0:31:37 GMT -5
Pink you should take a closer look at your mutual funds in your retirement account to be sure they are still what you want and still working for you. I know it's kinda scary to think you might lose your hard-earned dollars, but investing too conservatively can hurt you, too. I've never been very interested in bond funds either, although I have bonds in my Fidelity Balanced Fund. I do like that it pays some dividends and capital gains, especially during the years when returns were down. At least I was reinvesting at the lower prices. I agree you have to figure out what works for you. For myself, I have no interest in paying my house off. I know that's a priority for many people by the time they retire. I don't see any reason to. The payment is manageable. That's nice, but it shows why personal finance is...personal. Paying off my house was the right thing to do for me for a couple reasons. In addition, having it paid off is a large part of my planning now. Because I don't have to cover a mortgage payment, I can limit my income. Doing that will save me a small fortune in taxes. Not only will I not have to make my SS payments taxable and pay income tax, but I will probably save around $8000 on property taxes as well. If I can save more in taxes than I currently withdraw from my IRA each year, I'm good with that!
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CCL
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Post by CCL on Mar 7, 2021 0:51:04 GMT -5
How does paying your house off save $8000 on property taxes?
That's not much income if you can avoid paying any taxes on SS income.
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tallguy
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Post by tallguy on Mar 7, 2021 1:19:34 GMT -5
How does paying your house off save $8000 on property taxes? That's not much income if you can avoid paying any taxes on SS income. I am finally old enough to apply for the property tax exemption. By limiting my income enough to hit the tier of largest exemption (which I am able to do because my house is paid off), I should save that much on my property tax. It also means I will cut my necessary expenses that much more. I claimed survivor's benefits when I hit 60, and my SS covered all of my necessary spending from the moment I took it. I can take about $10,000 or more for now from my IRA and still be income tax free, and that is just extra money. It will cover travel and minor home expenses, and if I need more I can take it from my Roths with no tax consequences.
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justme
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Post by justme on Mar 7, 2021 2:14:46 GMT -5
With admitting I've only invested in them in the last 6 months or so I would look into CEF. They're not for growth in the share price (though currently mine have been over 10%) but the biggest part is their goal in dividends - I clued into them after seeing an article about how 100k will get you around 1000 a month without touching principal.
In the last 6 months it's been just over 10% but I'm also reinvesting dividends. It's not a huge part of my plan as I'm far away from retiring, but it's definitely been made a part of it now.
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Lizard Queen
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Post by Lizard Queen on Mar 7, 2021 9:13:05 GMT -5
There sure seems to be a lot of us on this board around age 52 looking to retire in 10 years judging by the recent posts. I'm also feeling a bit discombobulated lately. I feel like I should be doing more to get my ducks in a row...or changing my asset allocation or something. Haha. Based on my own experience, once you hit 50 you start to get tired of going to work every day. I hit that at 40. No actually 30's. You know, I think I felt that way in my 20's, too, working through college. My husband is at that point now, at 47. I told him let's see how my job goes for a few years, and maybe he can retire earlier. It's the least I can do for the 6-7 year break he gave me.
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buystoys
Junior Associate
Joined: Mar 30, 2012 4:58:12 GMT -5
Posts: 5,650
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Post by buystoys on Mar 7, 2021 9:37:15 GMT -5
I was 100% in equities until I hit 50. Then I started to roll over funds into a total bond fund at Vanguard. Right now, we're 65/30/5 and we sleep well with this AA. DH would be fine if we were 100% equities still but I feel like we have to be a bit more "stable" with the way the stock market has been acting. I keep expecting to have a big pull back. If it's too big, we can skip our annual withdrawal for that year. What's too big? That's a question I don't have an answer for yet.
Take a look at what your 401(k) is invested in. You may be paying some higher fees than necessary. Those fees can eat you alive on the returns you're looking for. I always kept it in simple S&P 500 funds or total equity funds when I was investing for retirement. Those tended to have lower costs than the balanced or managed funds.
ETA: Moving your investment to 15% is a good thing to do. If you can, I'd also open a self managed Roth at Vanguard, Fidelity or Schwab. You can put $5500 (I think) in that every year and the returns will be tax free if you wait until 59 1/2 to take a withdrawal from those returns. You can withdraw from your original investment without a penalty as those are post tax dollars. Having a Roth and taxable investments helped us get through the couple of years we had before DH turned 59 1/2.
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