Using pretax accounts in retirement

[Rukh O'Rorke]

Was thinking we got a little off track on qofcc's thread, so moving some thoughts over here for further discussion..

[Rukh O'Rorke]

Feb 17, 2024 20:43:14 GMT -5 minnesotapaintlady said:

Feb 17, 2024 19:27:54 GMT -5 Rukh O'Rorke said:

Those rmds keep growing! need to be careful in the begining years.

Yes, but assuming you're giving yourself a COL raise every year you should be withdrawing more every year anyhow.  I worked it out figuring drawing 45K year one with a 3% COL increase every year and the portfolio making an annualized 6% and it doesn't ever really seem to be an issue.  Now SS getting tossed in there at 70 will be over and above and if I have a lot larger return than expected maybe, but everything will be indexed up for inflation so that 132K income at 95 is the same as 45K at 59. 

There's always the option to use the extra RMD money for QCDs if they start causing problems as you don't need to itemize to take advantage of that. Of course, tax laws could (and probably will) be completely different in 40 years. I can only plan off what I know to be true right now.

[Rukh O'Rorke]

So - I built a spreadsheet to mimic what MPL had posted, and then played around with some things! Of course I did!

The discussion was on using the 401k/making roth conversions/minimizing the impact of RMDs, etc. As that conversation developed, I was thinking about rather than doing roth conversions if I just took all expenses out of the 401k and let my existing roth grow. How would that look. 

What I found was that if I paid off a few debts - not even all, I think I could retire this year, take 6% from my 401k until 70, and then collect my plumply delayed pia monies. At that point, I could switch to a 3% WR on the 401k to maintain the same living standard/income. Assuming only a 2% increase in expenses year to year vs a 7% market increase for the 401k, I would get to 70 at about the same amount of 401k money as I start with this year. This would leave my Roth money, HSA money, and Ibonds untouched unless needed for larger irregular expenses that I couldn't accommodate....Or I might just pull more from the 401k for it - depending on where the market was and tax rates, etc. 

It is a tempting thought to me right now!

Under this scenario, When the RMDs kick in, I would need to start pulling more than the 3% strictly needed, but since I have to pay the taxes on that money anyway - could just transfer whatever coupld of thousand into the roth for safe keeping.

Am I quitting tomorrow? Not sure.....check back later!

[minnesotapaintlady]

Feb 18, 2024 14:04:39 GMT -5 Rukh O'Rorke said:

Am I quitting tomorrow? Not sure.....check back later!

Well?

[Rukh O'Rorke]

Feb 19, 2024 12:24:20 GMT -5 minnesotapaintlady said:

Feb 18, 2024 14:04:39 GMT -5 Rukh O'Rorke said:

Am I quitting tomorrow? Not sure.....check back later!

Well?

The market is closed today, lol! So will have to wait until tomorrow at least!

I have been looking at my spread sheet with a bit of a side eye these days, thinking - I could really retire right now and be 99% prob ok. What am I thinking? Why am I still working?

But then I also think - right now - this could be make or break it on my long term finances. If I pull the plug too quickly - and the market drops a lot early on I may never recover, I might run out of money in my 80's just when I need it most.

But when I log in to accounts and see I am up 2% I am like yeah! quit now! why wait??

When it is even -1% I'm like - the sky is falling! work til 70! there isn't any security to be found!!

But I am putting 100% of my 401k and match into cash equivalents right now. So every payday, I am getting more conservative. At some point, I might stop dripping in my rollover IRAs, butI do like getting a little bit into the market here and there whil I put everything else into cash.

My focus needs to be on the house right now anyway. No quitting til I know where that is going and what the price tag may be! 

Someday, I will resign! Could be this year, looking at you Mr. Market......but today you are just dead eyed!!

[Rukh O'Rorke]

well.....that date is receeding into the mist today, lol!

Back to work

[Rukh O'Rorke]

and inching.....just a wee bit farther down the road today.....





It is like the market heard my wishpers of "is this enough? I think this is enough!"



...yanked that rug out from under me laughing like a fiend.....

[minnesotapaintlady]

I'm going to go out on a limb and say if the small market fluctuations influence your decision that much, you probably aren't ready.

[CCL]

The key is to keep your expenses low. Then the fluctuations really don't matter much at all. I don't even notice anymore.

[tallguy]

Feb 21, 2024 11:23:46 GMT -5 Rukh O'Rorke said:

and inching.....just a wee bit farther down the road today.....





It is like the market heard my wishpers of "is this enough? I think this is enough!"



...yanked that rug out from under me laughing like a fiend.....

Perhaps, but then Nvidia crushed earnings after close.  Stock jumped 10% in about an hour, making up everything from the week before.  It'll take everything else with it again.  

Be bold!  Be defiant!  Say, "I ain't skeered!" and just do it.  Laugh right back at him!  

[Rukh O'Rorke]

Feb 21, 2024 20:50:29 GMT -5 tallguy said:

Feb 21, 2024 11:23:46 GMT -5 Rukh O'Rorke said:

and inching.....just a wee bit farther down the road today.....





It is like the market heard my wishpers of "is this enough? I think this is enough!"



...yanked that rug out from under me laughing like a fiend.....

Perhaps, but then Nvidia crushed earnings after close.  Stock jumped 10% in about an hour, making up everything from the week before.  It'll take everything else with it again.  

Be bold!  Be defiant!  Say, "I ain't skeered!" and just do it.  Laugh right back at him!  

Holy crap! will look forward to tomorrow, lol!

[Rukh O'Rorke]

Feb 21, 2024 16:34:54 GMT -5 minnesotapaintlady said:

I'm going to go out on a limb and say if the small market fluctuations influence your decision that much, you probably aren't ready.

Someday, I'm going to have to be ready....and it will still bother me!!

[resolution]

Looks like you are back in business today! 

[Rukh O'Rorke]

Feb 22, 2024 9:42:43 GMT -5 resolution said:

Looks like you are back in business today! 

Yep! Nice to see such a big bump!

Hope every is seeing the love in their balances.

[minnesotapaintlady]

Yeah, everything is up except the ONE individual stock I own which is down 4.5%.    It's all good.  It's still up 4.5% since I bought it a couple weeks ago.

[The Walk of the Penguin Mich]

Dang!  My Ulta stock is on a tear right now.  It's approaching the highest it's been.  I'm tempted to sell it all and wait until it drops and get on this ride again.  So far, I've doubled my money.

[tallguy]

Feb 22, 2024 11:19:20 GMT -5 Rukh O'Rorke said:

Feb 22, 2024 9:42:43 GMT -5 resolution said:

Looks like you are back in business today! 

Yep! Nice to see such a big bump!

Hope every is seeing the love in their balances.

Well, a new all-time high, and my biggest individual day ever.  I'd say yeah.  

[CCL]

Feb 22, 2024 16:32:47 GMT -5 minnesotapaintlady said:

Yeah, everything is up except the ONE individual stock I own which is down 4.5%.    It's all good.  It's still up 4.5% since I bought it a couple weeks ago.

Do you mind sharing which stock?

[minnesotapaintlady]

Feb 22, 2024 22:10:48 GMT -5 CCL said:

Feb 22, 2024 16:32:47 GMT -5 minnesotapaintlady said:

Yeah, everything is up except the ONE individual stock I own which is down 4.5%.    It's all good.  It's still up 4.5% since I bought it a couple weeks ago.

Do you mind sharing which stock?

Rocket Lab (RKLB).  I owned it once before, and sold it last summer after I doubled my money in 6 months, then I saw it was down to what I bought it for before and got in again.