Retirement thread

[cowgirl836]

I'll just use myself as an example. The 2017 HSA contribution limits for a family is $6750. My employer puts in $1200, so I can put in up to $5550 of my own money. Conservatively, if I assume a 15% tax rate, that saves me $832.50 a year in taxes. So, even though the HSA has a higher deductible and OOPM, it has lower premiums (I save $572/yr in premiums), plus $1200 HSA money, plus $832.50 in tax savings assuming I max it out.

All those benefits add up to about $2600 in funds that I have because I went with the HSA plan. The HSA plan has a deductible that is $900 higher and an OOPM that is $2,000 higher. Based on my math, the HSA works for me. At worst, if I max out through in a given year, I'm only $300 behind the other plan.

Again, not saying the HSA is the way to go for everyone. This is just the exercise I went through to decide. I haven't looked into it much, but my expectation is that HSAs are somehow better for the employer than "traditional plans" so they seem to incentivize the HSA plan.

I'd have to look closer to see if it adds up similarly for me. Right now, spouse and I are separate plans. For just me, company will put in $400, $800 for family which doesn't sound as generous as yours. But right now spouse's plan has better everything so it's more likely that I'd move to his if mine goes up much more.

 

[cycloneworld]

I am not much of a planner but have a decent chunk of money in my 401(k) and my previous employer's ESOP account (which will be "cashed out" and merged with my new IRA retirement account at my new employer in next June). But I've been almost 100% focused on plugging money into real estate over the past 5 years. A buddy and I co-own 20 units of rental property (mixture of single and multi-family units). It's work but will ultimately return much more than they 6-8% in index funds. But I've been thinking of diversifying more as I feel we are getting closer and closer to a real estate bubble again.

I'm 35 and ultimately want to "retire" in my early 50s (or earlier if possible) to do other non-engineering things. At the end of this year, I'll have no debt outside of our mortgage and only a small amount left on my wife's student loans.

 

[2forISU]

I am not much of a planner but have a decent chunk of money in my 401(k) and my previous employer's ESOP account (which will be "cashed out" and merged with my new IRA retirement account at my new employer in next June). But I've been almost 100% focused on plugging money into real estate over the past 5 years. A buddy and I co-own 20 units of rental property (mixture of single and multi-family units). It's work but will ultimately return much more than they 6-8% in index funds. But I've been thinking of diversifying more as I feel we are getting closer and closer to a real estate bubble again.

I feel we are getting closer and closer to a real estate bubble again...Why? Investors gobbled up many of the properties from the previous downturn and they are making the market expensive. Plus, rent keeps going up which only helps these investors and keeps the market solid. In return, majority of investors are paying premiums on properties because they are still seeing strong returns.

 

[fsanford]

I feel we are getting closer and closer to a real estate bubble again...Why? Investors gobbled up many of the properties from the previous downturn and they are making the market expensive. Plus, rent keeps going up which only helps these investors and keeps the market solid. In return, majority of investors are paying premiums on properties because they are still seeing strong returns.

It will be a more controlled bubble this time, if and when it does happen.

The housing bubble was exasperated by horrible banking practices, and no money down policies, which created the overvaluation situation, which fed over funded 2nd mortgates etc ect.

For a housing market to be stable, people need skin in the game, i.e. money out of their own pocket.


Property historically has been a solid investment, and I have made it part of my overall portfolio.

 

[2forISU]

I am not much of a planner but have a decent chunk of money in my 401(k) and my previous employer's ESOP account (which will be "cashed out" and merged with my new IRA retirement account at my new employer in next June). But I've been almost 100% focused on plugging money into real estate over the past 5 years. A buddy and I co-own 20 units of rental property (mixture of single and multi-family units). It's work but will ultimately return much more than they 6-8% in index funds. But I've been thinking of diversifying more as I feel we are getting closer and closer to a real estate bubble again.

I'm 35 and ultimately want to "retire" in my early 50s (or earlier if possible) to do other non-engineering things. At the end of this year, I'll have no debt outside of our mortgage and only a small amount left on my wife's student loans.

Canada is going to be the next big bubble. There is no way Toronto and Vancouver can keep up with the current trends. I'm ready to buy waterfront property in Vancouver if this this happens.

 

[YeahBuddy]

I believe you can transfer money out of a 401k to a personal IRA account whenever you want (i.e. yearly) if the options are really that bad. It doesn't count against any contribution limits

No you cant.

The only exceptions would be if you had rolled money into your 401k account that money is always eligible to be taken out without separating from employment or you would have to be at least age 59 1/2 and the plan that you are participating in has to allow for age 59 1/2 withdrawals.

 

[CprE84]

Your article is probably a good gauge and easy to understand but somewhat simplistic and linear. It is probably aimed at the average middle class retirement investor.

About 5 years ago, JPMorgan Asset Management published an informative “Guide to Retirement” which contained an age-based benchmark. The JPMorgan model shows different retirement savings levels needed at age 65 for the following salaries:

$50,000 – 5.7x salary
$75,000 – 7.1x
$100,000 – 8.6x
$150,000 – 11.6x
$200,000 – 13.2x
$250,000 – 14.1x
$300,000 – 15.0x
$400,000 – 16.6x

I presume the increased savings required for the higher salaries reflect the higher standard of living to be maintained and the decreased impact of social security for highly compensated individuals.

Here is a link to a recent version of the Retirement Guide:

https://www.jpmorganfunds.com/cm/Sa...RL=gtrbrowseslides&pagename=jpmfVanityWrapper

I do not believe the current version provides an estimated retirement savings analysis based on age and income. Too bad. It would be interesting to see if the multipliers changed over 5 years, especially with increased healthcare costs and people living longer.

I think the table in your post highlights a fallacy in these retirement calculators - that is, income does not necessarily correlate with standard of living. For the average American, standard of living > income (and therefore reliance on debt). For successful wealth builders, standard of living << income. For this type of person, it is unlikely that they will suddenly begin spending wildly when they get to retirement. Therefore, the expectation that they need 13-16X of their pre-retirement income is not really valid. The way to really build wealth is to push up the income curve while maintaining a more modest standard of living, thus increasing your savings rate. This is not easy, because Uncle Sam takes a bigger and bigger piece of the pie every year as your income rises, but it can be done.

I agree with others who have said it is much easier if you start early (like in your 20s).

 

[JY07]

No you cant.

The only exceptions would be if you had rolled money into your 401k account that money is always eligible to be taken out without separating from employment or you would have to be at least age 59 1/2 and the plan that you are participating in has to allow for age 59 1/2 withdrawals.

In-service distributions are not excluded in the IRS's list of non-transferable distributions:
https://www.irs.gov/retirement-plan...-plan-participants-general-distribution-rules
(scroll to "Rollovers from your 401(k) plan").

Any limitations on allowing you to transfer money out is entirely on your provider:
http://www.anthonycap.com/blog/service-withdrawals-401k-plans-law-and-plan-rules

 

[Thefullmonte]

1. I am SUPER into finances. A hobby of mine. I'm kind of obsessed, actually.

I'm trying to get into this more. I'd love to hear some of the stuff that you read or some of the strategies you've implemented in your life that you've found beneficial.

I see you recently got some flooring paid off. I have a decent sized loan for some IKEA bedroom furniture that I'd like to retire. Dressers and nightstands aren't flooring, but I feel like the methods you used could apply to furniture, too. Maybe it's different. I don't know.

Anyway, thanks in advance!!

 

[YeahBuddy]

In-service distributions are not excluded in the IRS's list of non-transferable distributions:
https://www.irs.gov/retirement-plan...-plan-participants-general-distribution-rules
(scroll to "Rollovers from your 401(k) plan").

Any limitations on allowing you to transfer money out is entirely on your provider:
http://www.anthonycap.com/blog/service-withdrawals-401k-plans-law-and-plan-rules

But you are not eligible for a distribution until you reach one of the following (from the same article):

• You die, become disabled, or otherwise have a severance from employment.
• The plan terminates and no successor defined contribution plan is established or maintained by the employer.
• You reach age 59½ or incur a financial hardship.

If you are an active employee, you have to separate employment in order to take money out of the plan unless you qualify for a hardship withdrawal, rollover withdrawal or have reached age 59 1/2. Hardship withdrawals have to be taken as cash and cannot be rolled.

 

[ImJustKCClone]

But you are not eligible for a distribution until you reach one of the following (from the same article):

• You die, become disabled, or otherwise have a severance from employment.
• The plan terminates and no successor defined contribution plan is established or maintained by the employer.
• You reach age 59½ or incur a financial hardship.

If you are an active employee, you have to separate employment in order to take money out of the plan unless you qualify for a hardship withdrawal, rollover withdrawal or have reached age 59 1/2. Hardship withdrawals have to be taken as cash and cannot be rolled.

Cool - so all I have to do is die to get my money? Sounds like a great plan!

 

[YeahBuddy]

Cool - so all I have to do is die to get my money? Sounds like a great plan!

No, any type of severance form employment (resignation, retirement, termination, etc.) will give you access to your vested account balance in an employer sponsored retirement plan.

 

[Gossamer]

So many assumptions are made in retirement discussions that surround inflation, rate of return, elections...

I save a modest amount but spend fairly freely. I have had, and have seen, too many people in my family and surrounding me, die early. They were the same people who were going to retire early and be millionaires.

There is a balance between trying to enjoy life and take pleasure in what you earn now and the risk that you may not make it to the age where you'll get all that you've saved.

 

[ImJustKCClone]

No, any type of severance form employment (resignation, retirement, termination, etc.) will give you access to your vested account balance in an employer sponsored retirement plan.

(psssst...it was a joke, son...)

 

[VeloClone]

(psssst...it was a joke, son...)

 

[CloneGuy8]

Upped my 401k contribution another 1% today. Usually do 1% every Spring, but going to try and do it twice a year now.

 

[JY07]

But you are not eligible for a distribution until you reach one of the following (from the same article)

But did you read the 2nd link? I highly doubt a random article on the internet would be inaccurate

 

[isuno1fan]

Just consolidated all my investments under a single firm. Hoping to hang it up in 9 years at the age of 55. Pretty sure I'm on good track as I have zero debt so it's all gravy right now.
Seems simple but I highly advise creating a budget and living within it as much as possible. Have annual financial goals. With discipline, it is not hard to accumulate a fair nest egg relatively quickly.

 

[agardini]

I'm lucky that my company still has a pension and has a very generous 401k match. I've been there 6 years and have accumulated almost 120k in my 401k. I put in 6% and they put in 10%. I also put 1% to buying company stock. I know some people say not to do this, but i dont think they are going bankrupt anytime soon. They are still raking in the profits every year.

 

[Thefullmonte]

$120k in 6 years is great, but you could be doing more than 6%, I'm guessing. Don't let the very generous 10% from your company make you lazy on your contribution.

No one says don't buy your company's stock.They say don't have it make up an idiotic % of your portfolio. 1% doesn't ring that bell.

I'm still interested in what Chris Williams is into. He said he's obsessed with finances. He gave us that website to invest spare nickels/dimes, but I assume he has more cooking than a virtual coin purse.

If I could get this bedroom furniture paid off early, my wife would be PUMPED!!