Search found 201 matches

by ER2023
Sat Feb 03, 2024 3:34 am
Forum: Personal Investments
Topic: Help withdrawing indexed annuity
Replies: 9
Views: 1019

Re: Help withdrawing indexed annuity

Thank you for the clarification. Yes she is single (widow) and takes the standard deduction. I did talk to her about the partial withdrawal plan that Stinky mentioned above (which sounds like the right thing to do), but she wants out of this company. So we will be doing a full surrender on Monday morning, taking the default 10% tax withholding. I did let her know she would be paying more in taxes, and I worry if she will have a shock come tax time next year. She might be able to model out how much in taxes she’ll pay on the surrender. If she’s completed her 2023 return, she could just plop in another $30,000 of ordinary income and see how much taxes increase. That is, if she uses tax software of some type. If she hasn’t completed her 2023 ...
by ER2023
Fri Feb 02, 2024 6:04 pm
Forum: Personal Investments
Topic: Help withdrawing indexed annuity
Replies: 9
Views: 1019

Re: Help withdrawing indexed annuity

One other thing to point out is that the increase in value of the annuity will be taxed as ordinary income, not at the capital gains tax rate. It might make sense to break the transaction up across years as Stinky suggests so that she stays in the 12% tax bracket - in the low $60,000 range assuming she is single and takes the standard deduction. Thank you for the clarification. Yes she is single (widow) and takes the standard deduction. I did talk to her about the partial withdrawal plan that Stinky mentioned above (which sounds like the right thing to do), but she wants out of this company. So we will be doing a full surrender on Monday morning, taking the default 10% tax withholding. I did let her know she would be paying more in taxes, ...
by ER2023
Fri Feb 02, 2024 5:56 pm
Forum: Personal Investments
Topic: Help withdrawing indexed annuity
Replies: 9
Views: 1019

Re: Help withdrawing SPIA and transferring to VG

Stinky wrote: Fri Feb 02, 2024 1:51 pm
ER2023 wrote: Fri Feb 02, 2024 1:21 pm
Many thanks for your detailed response.
Glad that my response was useful.

Please do post back if your sister in law has questions as she moves through the process.

Best to you.
Yes, your response was incredibly helpful and I am so appreciative. Thank you.
by ER2023
Fri Feb 02, 2024 1:21 pm
Forum: Personal Investments
Topic: Help withdrawing indexed annuity
Replies: 9
Views: 1019

Re: Help withdrawing SPIA and transferring to VG

[/quote] I’m glad that you’re helping out your sister in law with this annuity. If it’s grown from $60k to $90k over the past seven or eight years, it’s earned somewhere in the range of 5.5% per year - a decent rate of earnings. First, let me correct your terminology. From the product name you gave, it sounds like she has a Shield annuity from Brighthouse. Is that right? If so, she has an indexed annuity, not a single premium immediate annuity (SPIA). Yes, that is correct. I wasn't sure if it was appropriate to state the company name. Thank you for the clarification. You might consider editing the title of your post to make clear this is an indexed annuity, not a SPIA. Done, thank you. Now, to your questions. She can certainly surrender the...
by ER2023
Fri Feb 02, 2024 7:21 am
Forum: Personal Investments
Topic: Help withdrawing indexed annuity
Replies: 9
Views: 1019

Help withdrawing indexed annuity

My 77-year old sister-in-law purchased a Shield Level Selector 3-Year Annuity for $60k in 2016. It is a Single Premium index-linked annuity now worth $90k: Contract Death Benefit Amount: Remaining Annual Free Withdrawal Amount: $88,859.51 Total Free Withdrawal Amount: $88,859.51 Surrender Value: $90,379.54 Tax Market: Non Qualified Cost Basis Pre-Tefra Principal: $0 Cost Basis - Post Tefra Principal: $60,000 Current Death Benefit: 90,379.54 Total Income from SS and Pension: $37,476/yr SS: $1402/mo = $16,824/yr Pension: $1721/mo = $20,652/yr She also has $60k in a VG MM account right now. The short story - she is upset with the service she has been receiving with a simple bene request that still is not completed from over a month ago. She as...
by ER2023
Mon Jan 22, 2024 5:52 am
Forum: Personal Finance (Not Investing)
Topic: How would you project taxes in retirement
Replies: 38
Views: 3642

Re: How would you project taxes in retirement

Thanks for the very helpful responses. You have given me a lot to think about.
by ER2023
Fri Jan 19, 2024 6:42 pm
Forum: Personal Finance (Not Investing)
Topic: How would you project taxes in retirement
Replies: 38
Views: 3642

Re: How would you project taxes in retirement

Thanks for all your responses. Do any BHs just do a simple % increase for projection purposes? For example, if my taxes would be $11,144 today, is it reasonable/conservative to simply project a 50% increase ($5,572) = $16,716?
by ER2023
Fri Jan 19, 2024 6:39 pm
Forum: Personal Finance (Not Investing)
Topic: How would you project taxes in retirement
Replies: 38
Views: 3642

Re: How would you project taxes in retirement

Based on marital status you would fall possibly into 1 of 2 tax brackets - 12% or 22% (2024). from what I've heard those will go up to 15% and 24% in 2026 but that may be inaccurate. SS is taxed on how much income you have. It could be 0%, 50% or 85%. Looks like you would be taxed on 85% of your SS or 50,938 which may drop you to 12% Based on 2024 married filing jointly 12% tax bracket - for a total income of $131,000 you are probably in the 22% tax bracket. Below is what I'm basing 2024's taxes. Max income for 12% is $126,400 (-3100 (65 YO) -29200 (Standard Ded)=94,100 (taxable income)). If you itemize and have more than the standard deduction then it would be greater. If you are not 65 YO yet take away $1550 for each person not 65. Based...
by ER2023
Fri Jan 19, 2024 6:39 pm
Forum: Personal Finance (Not Investing)
Topic: How would you project taxes in retirement
Replies: 38
Views: 3642

Re: How would you project taxes in retirement

I know this has been discussed before - and I know no one knows what will happen in 2026, but how does one project taxes in retirement - how conservative do you go? For example if I retired in 2025 with the following: Both SS with 25% reduction with all zeros moving forward: $59,928 Pension w/o Cola: 47,484 $700k 401(k) with a 4% WD = $24,000 Total income = $131,412 When I plug it into this year’s Smart Asset Retirement Calculator for the state of PA, I get $11,144. So the question is - what is a conservative way to project - again knowing that no one knows what will happen in 2026 or beyond? I have read previous responses such as “put it in your tax software” (I don’t have that), use a tax calculator like Smart Asset (but that is just for...
by ER2023
Fri Jan 19, 2024 4:24 pm
Forum: Personal Finance (Not Investing)
Topic: How would you project taxes in retirement
Replies: 38
Views: 3642

Re: How would you project taxes in retirement

livesoft wrote: Fri Jan 19, 2024 4:09 pm Since you claim to not have tax software, I suggest get some and learn how to use it.

25% would be ridiculous I think. We are retired and our effective tax rate is about 4.3% with about $150,000 income. Many people do not even pay Federal income tax.
Thanks livesoft. I guess I am looking for thoughts on how BHs project their taxes when planning for retirement and not necessarily how to calculate taxes in the current year with tax software (if I'm understanding that correctly).
by ER2023
Fri Jan 19, 2024 4:02 pm
Forum: Personal Finance (Not Investing)
Topic: How would you project taxes in retirement
Replies: 38
Views: 3642

How would you project taxes in retirement

I know this has been discussed before - and I know no one knows what will happen in 2026, but how does one project taxes in retirement - how conservative do you go? For example if I retired in 2025 with the following: Both SS with 25% reduction with all zeros moving forward: $59,928 Pension w/o Cola: 47,484 $700k 401(k) with a 4% WD = $24,000 Total income = $131,412 When I plug it into this year’s Smart Asset Retirement Calculator for the state of PA, I get $11,144. So the question is - what is a conservative way to project - again knowing that no one knows what will happen in 2026 or beyond? I have read previous responses such as “put it in your tax software” (I don’t have that), use a tax calculator like Smart Asset (but that is just for ...
by ER2023
Sat Dec 30, 2023 7:39 am
Forum: Personal Finance (Not Investing)
Topic: What was your largest annual expense in 2023?
Replies: 21
Views: 1720

Re: What was your largest annual expense in 2023?

A new septic system for $45k. I had $25k budgeted for this expense in my EF, per a contractor several years ago. I had my moment of "ugh" and then wrote the check and moved on.
by ER2023
Tue Dec 05, 2023 1:10 pm
Forum: Personal Consumer Issues
Topic: Converting small bedroom into master bath?
Replies: 21
Views: 2743

Re: Converting small bedroom into master bath?

Over 20 years ago, we converted a small bedroom into a master bathroom. We didn't think about resale value at the time. We did everything ourselves except the tiling. We don't regret the decision.
by ER2023
Mon Nov 06, 2023 11:37 am
Forum: Personal Finance (Not Investing)
Topic: For those retired or FI, how much do you spend annually?
Replies: 499
Views: 80217

Re: For those retired or FI, how much do you spend annually?

I am 66 & DW is 61, both retired, total spending in 2022 was $189,260, which was under 3% of the total savings, all from our investments, no other source of income.
Taxes including for last quarter 2021 taxes + estimated taxes for 3 quarters of 2022, we paid $ 57945



Would someone be able to help me understand how one would pay almost $60k in taxes. When I calculate (just using the Smart Asset Taxes in Retirement calculator), I plug in $189k all from investments (even though this is his income WITH taxes), and I am getting a fraction of that amount. I even used high tax states and get about $35k. I appreciate the clarification, as this is a headache for me to accurately project my taxes in retirement.
by ER2023
Wed Mar 15, 2023 3:04 pm
Forum: Personal Finance (Not Investing)
Topic: Minor Stroke - “Early” Retirement Withdrawal - Risky? Complicated?
Replies: 19
Views: 3316

Re: Minor Stroke - “Early” Retirement Withdrawal - Risky? Complicated?

Watty, I always appreciate reading your posts, so thank you for the time you spent replying. Some more information/clarifications would be helpful. 1) Is the pension adjusted for inflation and are your pension numbers correct assuming that you retire today? The inflation part can be tricky since I have seen pensions that are adjusted for inflation after they start but not in the gap between when you stop working and when you start the pension. For example if you retire now and start the pension at 65 then there could be five years without an inflation adjustment. The pension is not adjusted for inflation. I left the company several years ago and the pension fund is now frozen for all current employees. This is the amount I was given direct...
by ER2023
Wed Mar 15, 2023 9:46 am
Forum: Personal Finance (Not Investing)
Topic: Minor Stroke - “Early” Retirement Withdrawal - Risky? Complicated?
Replies: 19
Views: 3316

Re: Minor Stroke - “Early” Retirement Withdrawal - Risky? Complicated?

I’m not mathing very well, so I’ll leave that to someone else, but you say you had a stroke and have some permanent damage. Is it possible you might qualify for SSDI? Actually never thought of SSDI. Probably won't pursue at this time, as I am able to work and would like to continue as long as possible - even if PT. Thanks for the food for thought. I brought it up because the oncology social worker caught me off guard by suggesting it for me. The main advantage, besides getting more income sooner, is you qualify for Medicare after 2 years on SSDI, and Medicare is a lot cheaper than the ACA plan I’m on now. Thanks for the follow-up, as I was not aware of the specifics with SSDI. I do wish you all the best with your health as well.
by ER2023
Wed Mar 15, 2023 9:44 am
Forum: Personal Finance (Not Investing)
Topic: Minor Stroke - “Early” Retirement Withdrawal - Risky? Complicated?
Replies: 19
Views: 3316

Re: Minor Stroke - “Early” Retirement Withdrawal - Risky? Complicated?

suemarkp wrote: Mon Mar 13, 2023 3:06 pm It is not clear to me if you have listed your spouse's social security projection. I see yours are 65 and 70. If you combined them, separate them out. If spouse's SS is close to yours, maybe they should delay and you take yours early. SS calculations are more complicated where there is a disparity of age between spouses. A shorter than normal lifespan projection would also tilt the balance to taking it early.
Yes, the SS projections are listed for both of us separately (taking at 70 and then 65 based on the SS website if we were to never work again) - and then reducing by 25%. Agree with you about taking earlier if health declines. Thanks for your post.
by ER2023
Wed Mar 15, 2023 9:39 am
Forum: Personal Finance (Not Investing)
Topic: Minor Stroke - “Early” Retirement Withdrawal - Risky? Complicated?
Replies: 19
Views: 3316

Re: Minor Stroke - “Early” Retirement Withdrawal - Risky? Complicated?

My reflections below... Questions: Did I do my calculations correctly based on the amount I am projecting to withdraw every month and eventually exhaust? Maybe. It seems more or less the case. For the first 9 years I just used a simple compounding calculation to estimate -see link below (entered: 9 years, 3.5% PY, $903K start balance ,-10K monthly contribution) ==> Results in -$30K at the end, pretty close so I'm guessing your calculation are accurate. I didn't check the other calculations. http://www.math.com/students/calculators/source/compound.htm Is this plan too complicated? It sure feels that way, but I can’t think of another way to withdraw the amount of money we need in the timeframe we need it. Maybe, but this is really just model...
by ER2023
Wed Mar 15, 2023 9:06 am
Forum: Personal Finance (Not Investing)
Topic: Minor Stroke - “Early” Retirement Withdrawal - Risky? Complicated?
Replies: 19
Views: 3316

Re: Minor Stroke - “Early” Retirement Withdrawal - Risky? Complicated?

You’ve done while saving and investing. You will likely be just fine even if you spend the $160,000 per year, but I recommend trying to spend less if possible. You can safely do about $100,000 per year from your portfolio, and then Social Security and pension seem to cover the rest once those kick in. It seems like you are in good shape, especially if you allow yourself some flexibility on the spending side, I wouldn’t stress if I was you. Your health is super important and you seem financially stable given the information provided. If your life expectancy has gone down in your estimation, then you are definitely solid, depending on what your spouse would spend. Enjoy your retirement. Thank you TinyHouse. We can definitely spend less if it...
by ER2023
Wed Mar 15, 2023 8:26 am
Forum: Personal Finance (Not Investing)
Topic: Minor Stroke - “Early” Retirement Withdrawal - Risky? Complicated?
Replies: 19
Views: 3316

Re: Minor Stroke - “Early” Retirement Withdrawal - Risky? Complicated?

dandinsac wrote: Sun Mar 12, 2023 8:20 pm Your plan with SS and pension dates make sense for couples with normal life expectancy. Because of health issues, it may be better for you to start the pension and/or your SS sooner. Depending on your health when you turn 62, you should run a variety of scenarios based on your best guess at longevity for you.
We did think about that, but then wonder what if we do end up living longer. So we will probably stick to 70 and 65 to start SS, but of course, will take earlier if health further declines as you recommend. Thanks for your reply.
by ER2023
Tue Mar 14, 2023 9:25 am
Forum: Personal Finance (Not Investing)
Topic: Minor Stroke - “Early” Retirement Withdrawal - Risky? Complicated?
Replies: 19
Views: 3316

Re: Minor Stroke - “Early” Retirement Withdrawal - Risky? Complicated?

quantAndHold wrote: Sun Mar 12, 2023 7:40 pm I’m not mathing very well, so I’ll leave that to someone else, but you say you had a stroke and have some permanent damage. Is it possible you might qualify for SSDI?
Actually never thought of SSDI. Probably won't pursue at this time, as I am able to work and would like to continue as long as possible - even if PT. Thanks for the food for thought.
by ER2023
Sun Mar 12, 2023 5:24 pm
Forum: Personal Finance (Not Investing)
Topic: Minor Stroke - “Early” Retirement Withdrawal - Risky? Complicated?
Replies: 19
Views: 3316

Minor Stroke - “Early” Retirement Withdrawal - Risky? Complicated?

Thanks in advance for staying with me on this one. So we had been planning a 2023 retirement, but had decided to not retire yet as we weren’t quite ready. Then out of the blue, had a minor stroke - thankfully minor - but with permanent issues (normal range BMI, low BP, 220 cholesterol, moved to low stress job a few years ago). I think there is much value in continuing to have purpose possibly through a part-time job or volunteering, but also want more time to focus on health. So I’d like to calculate based on both of us not working. This withdrawal strategy is not ideal, but I can’t figure out another way to do it. Ages: 59.5 and 53 State: PA Total Portfolio: $1.945m Current AA: 42/58 (Equities/Stable Fund at 3.5%) Expenses : Will range fro...
by ER2023
Sat Feb 18, 2023 1:47 pm
Forum: Personal Finance (Not Investing)
Topic: What is the process you follow when determining your comfort level when projecting retirement expenses?
Replies: 23
Views: 2605

Re: What is the process you follow when determining your comfort level when projecting retirement expenses?

steadyosmosis wrote: Sat Feb 18, 2023 12:54 pm
fourwheelcycle wrote: Sat Feb 18, 2023 12:32 pm No process. I thought we were probably oversaving all through our thirties and forties. Around age 55, when I did my first retirement income and cost projection, by year out to age 100, it became obvious we had oversaved.
Same here, although I did track expenses in detail for several years before early-retiring.
When the nest egg became more than 50x expenses, I bailed out of the rat race.
Did you both calculate your expenses based on what you are spending now, or did you increase based on assumptions? What age did you retire? Finally, did you reach 50x expenses because of the lack of confidence in income assumptions?
by ER2023
Sat Feb 18, 2023 1:44 pm
Forum: Personal Finance (Not Investing)
Topic: What is the process you follow when determining your comfort level when projecting retirement expenses?
Replies: 23
Views: 2605

Re: What is the process you follow when determining your comfort level when projecting retirement expenses?

I keep it very simple. I track expenses each month in a spreadsheet (takes about 2 minutes a month). I round up some and treat that as my X. I like 25X for my FI number, definitely not 50X I think simple approaches like 25X expenses minus income is likely good enough and 50X expenses less income is very likely leave large estate to heirs are valid, and no less effective than something much more complicated because nothing accurately predicts the future. Some people make a further conservative assumption by not taking income into account and using 25X-50X gross expenses. Any modeling relies on assumptions about the future that can be very wrong especially decades away. Assuming nothing changes on tax laws or retirement laws has proven time ...
by ER2023
Sat Feb 18, 2023 1:41 pm
Forum: Personal Finance (Not Investing)
Topic: What is the process you follow when determining your comfort level when projecting retirement expenses?
Replies: 23
Views: 2605

Re: What is the process you follow when determining your comfort level when projecting retirement expenses?

ThankYouJack wrote: Sat Feb 18, 2023 11:19 am I keep it very simple.

I track expenses each month in a spreadsheet (takes about 2 minutes a month). I round up some and treat that as my X. I like 25X for my FI number, definitely not 50X
Do you use any particular factor when calculating the round up? What age did you (or planning to) retire?
by ER2023
Sat Feb 18, 2023 1:39 pm
Forum: Personal Finance (Not Investing)
Topic: What is the process you follow when determining your comfort level when projecting retirement expenses?
Replies: 23
Views: 2605

Re: What is the process you follow when determining your comfort level when projecting retirement expenses?

I am far from being the sharpest tool in the shed. I am more like the tool forgotten and left out in the elements to rust :happy. But this is the approach I took to projecting retirement expenses before I retired 5 years ago. I have tracked our spending through Quicken since the late 1990s. Rather go with an"X Expenses" approach, I looked at our spending for the previous 10 and 5 years in each category as a starting base. From that, I made adjustments for: - Major expenditures that likely would not reoccur (for example, bathroom and driveway renovations performed a few years before retirement) - Major expenditures that would reoccur (for example, buying another car and replacing the existing cars, and replacing appliances) - Incr...
by ER2023
Sat Feb 18, 2023 9:42 am
Forum: Personal Finance (Not Investing)
Topic: What is the process you follow when determining your comfort level when projecting retirement expenses?
Replies: 23
Views: 2605

What is the process you follow when determining your comfort level when projecting retirement expenses?

Please share your thought process when determining your comfort level when projecting retirement expenses - and has it changed since you started planning - if so, why? For example: X expenses (25x, 33x, 50x): It seems 25x was the norm, but now see other posts that are much higher. Is your number the expenses you have NOW or are you projecting what your finances will be in the future (inflation, unexpected expenses?). If so, how much more are you projecting? One post mentioned doubling your expense projections to be confident - do you agree? I know that number should include taxes, healthcare, vacations, etc., but does it also include large expenses (roof, cars, etc.), or do you keep a separate fund for that? SS: So we know we should be redu...
by ER2023
Wed Feb 15, 2023 12:53 pm
Forum: Investing - Theory, News & General
Topic: Personal Finance "Gems" -- What's Yours?
Replies: 49
Views: 8533

Re: Personal Finance "Gems" -- What's Yours?

The quote that has resonated with me the most is also from The Simple Path to Wealth:

“There are many things money can buy, but the most valuable of all is freedom. Freedom to do what you want and to work for whom you respect.”
by ER2023
Mon Dec 26, 2022 7:36 am
Forum: Personal Investments
Topic: What are you doing with your iBonds?
Replies: 133
Views: 18844

Re: What are you doing with your iBonds?

Buying $10k more in 2 weeks. It's essentially my emergency fund. It would be better to wait to buy January 2023 I Bonds late in the month, since they will still be dated the first of the month. So why not place the $10K in a money market fund and get several weeks of interest on it before the I Bond purchase late in the month? Exactly what we do! That $20k will earn ~$65 in interest in a 4% HYSA during January, so I don’t see a need to give that up. I just want to make sure I’m not missing something since I am new to I Bonds. My question is - why wait until January to purchase, when you can purchase earlier by gifting - and then “delivering” in January. In the link below is states” Interest and the holding period start in the month of your...
by ER2023
Sun Nov 13, 2022 4:04 am
Forum: Personal Finance (Not Investing)
Topic: How to stop comparison / fomo
Replies: 105
Views: 10656

Re: How to stop comparison / fomo

Several years ago, someone on this forum recommended the book "Doing Good Better" in a thread regarding which charities to support. There is a section called "You are the 1 percent" and includes a graph of global income distribution. Just google this - you will be surprised how far up on the scale you land (if you earn $52k, you are the 1 percent globally). The author also includes some pretty sobering data regarding the large number of people who don't have access to clean/safe drinking water, don't have enough food to eat, don't have access to the most basic medicine/care, etc. Whenever I start to compare myself to others or feel envy, I am reminded of this information and I have all the perspective I need. You are amo...
by ER2023
Sun Sep 25, 2022 5:48 pm
Forum: Personal Investments
Topic: Take the early penalty on CDs for the iBonds gift box?
Replies: 12
Views: 1282

Re: Take the early penalty on CDs for the iBonds gift box?

Thank you very much for your replies. I am still learning, so this was incredibly helpful.
by ER2023
Sun Sep 25, 2022 10:32 am
Forum: Personal Investments
Topic: Take the early penalty on CDs for the iBonds gift box?
Replies: 12
Views: 1282

Take the early penalty on CDs for the iBonds gift box?

I just recently put $92,500 in CDs:

$10k - 12 mos - 2.75%
$16.5k - 24 mos - 3%
$33k - 36 mos - 3.1%
$33k - 60 mos - 3.5%

I then learned about iBond gift boxes (thanks to this forum), so I'm thinking I made a mistake. Would it make sense to pay the early penalty of $2075 :oops: to cancel the CDs and buy iBond gift boxes now? We bought each other $10k each in a gift box for 2023 delivery, so I was thinking of putting the entire $90,425 right now in gift boxes so it starts earning interest - and then from 2024 through 2027 deliver $10k to each of us and then $12,500 for 2028.

Does this make sense financially - or am I missing something?
by ER2023
Sun Sep 04, 2022 11:32 am
Forum: Personal Finance (Not Investing)
Topic: What's the favorite thing or most important thing you have learned here? [Personal finance]
Replies: 191
Views: 17273

Re: What's the favorite thing or most important thing you have learned here?

Honestly, I learned everything from this site. I don’t know where I would be financially if it weren’t for the extremely knowledgeable people who generously give their time on this forum and the outstanding moderators. I agree with all of the responses posted so far. Two in addition I will mention - the importance of having a good understanding of expenses and taxes as you prepare for retirement. I have tracked my expenses for years and now feel like I have a good understanding of what they will be like in retirement (including the lumpy ones) - and I use this calculator that asyouwish posted to project taxes: https://www.aarp.org/money/taxes/1040_tax_calculator.html Now I am learning about Roth conversions (if I should do one and when) amo...
by ER2023
Sun Jul 24, 2022 2:32 pm
Forum: Personal Investments
Topic: Wise or risky to take lump sum early to invest myself?
Replies: 15
Views: 1782

Re: Wise or risky to take lump sum early to invest myself?

If there IS an alternative monthly benefit offered you should be aware that changes in interest rates can dramatically impact the lump sum available to you. In these cases often there are (usually) 3 IRS established interest rates used in the calculation of the lump sum. There rates are changed at various intervals depending on the plan. Usually the benefit estimate letter will refer to the IRS rates that are utilized in the calculation. If there are dramatic changes in interest rates between now and age 65 (using these lump sum calculation methods) it is possible for the lump sum at age 65 to be LESS than it currently is even though the alternative monthly benefits increase by waiting. Edited to add: If the 2.5% "current" intere...
by ER2023
Sun Jul 24, 2022 1:52 pm
Forum: Personal Investments
Topic: Wise or risky to take lump sum early to invest myself?
Replies: 15
Views: 1782

Re: Wise or risky to take lump sum early to invest myself?

I guess the real question is - why would a company hold the pension lump sum paying 2.5%, when I can withdraw it now (at a reduced rate) and put into the same company's 401k stable value fund making 3.5%?
by ER2023
Sun Jul 24, 2022 1:05 pm
Forum: Personal Investments
Topic: Wise or risky to take lump sum early to invest myself?
Replies: 15
Views: 1782

Re: Wise or risky to take lump sum early to invest myself?

Is it wise or risky to take the lump sum payment early.... I thought the lump sum was better because I would like to increase spending in the “go-go” years.... "Wise" and "risky" are not mutually exclusive. ;) Your overall current and desired Asset allocation should guide the choice of what to do with the lump sum (and taking it instead of the pension is a reasonable decision). Consider providing the information suggested in Asking Portfolio Questions (or at least assembling that for your own use). Understood, and good point about wise and risky not mutually exclusive. This post was specifically about how to best manage the lump sum, not necessarily if the lump sum or annuity is the better option. I just feel better tak...
by ER2023
Sun Jul 24, 2022 12:18 pm
Forum: Personal Investments
Topic: Wise or risky to take lump sum early to invest myself?
Replies: 15
Views: 1782

Re: Wise or risky to take lump sum early to invest myself?

FiveK wrote: Sun Jul 24, 2022 11:36 am Are you forced to take a lump sum and the only question is when to take it, or do you also have the option to elect ongoing pension payments instead of the lump sum? If the latter, how much?
I thought the lump sum was better because I would like to increase spending in the “go-go” years, and then decrease in the “slow-go” and then “no-go” years. We also take care of family members and would like to use some of that money to help them. I want the flexibility to adjust spending. The current annuity projections for 100% joint are:

Now (age 59): $438,676 or $1717/mo
Year 2023 (age 60): $457,801 or $1858/m0
Year 2028 (age 65): $539,140 or $2175/mo

Appreciate your feedback.
by ER2023
Sun Jul 24, 2022 12:12 pm
Forum: Personal Investments
Topic: Wise or risky to take lump sum early to invest myself?
Replies: 15
Views: 1782

Re: Wise or risky to take lump sum early to invest myself?

willthrill81 wrote: Sun Jul 24, 2022 9:44 am You're not missing anything. It's fairly common for the lump sum to be superior.

But beyond the interest rates being used, you need to ask yourself if you want 100% of these funds to be invested at a 2.5% nominal rate that's variable. That seems like a bad choice for nearly everyone to me, but I don't know much about your situation nor your investment goals.
Thanks Will, I do think I could do better with the 3.5% stable value fund (and most likely some in VTSAX), but I’m so concerned that my former company will reduce the stable value fund interest rate. Prudential Retirement recently sold their business to Empower - not sure what this will mean - and if it makes this plan too risky.
by ER2023
Sun Jul 24, 2022 9:41 am
Forum: Personal Investments
Topic: Wise or risky to take lump sum early to invest myself?
Replies: 15
Views: 1782

Wise or risky to take lump sum early to invest myself?

I have a question about an upcoming lump sum pension distribution. The current projections as of today are: Now (age 59): $438,676 Year 2023 (age 60): $457,801 Year 2028 (age 65): $539,140 The interest rate is currently 2.5%, however the lump sum projections continue to decrease since interest rates are rising. Is it wise or risky to take the lump sum payment early (either now or next year at age 60 and put, for example, $300k into my current stable value 401k making 3.5% (with the same company by the way) and the rest ($100k+) in a Vanguard IRA - 100% VTSAX. We were planning on withdrawing the money at age 65 (2028). Even if we went conservative and put all of it into the stable value fund in 2023 at 3.5%, we would have $543,724 at age 65....
by ER2023
Thu Jun 16, 2022 6:03 am
Forum: Personal Finance (Not Investing)
Topic: Personal finance book recommendations?
Replies: 26
Views: 2156

Re: Personal finance book recommendations?

You received some great suggestions so far. I would also add Your Money or Your Life:

https://www.amazon.com/Your-Money-Life- ... 0143115766
by ER2023
Sun Jun 12, 2022 5:36 am
Forum: Personal Consumer Issues
Topic: So what are you cooking
Replies: 972
Views: 111132

Re: So what are you cooking

I haven't done much cooking worth mentioning this year so far. Just don't seem to have the time. I have made simple and typical meals, which does help hone basic cooking techniques and improve attentiveness to heat and time. Or how to pour cereal into a bowl. What I did decide to do new, is try several of the vegetarian and meat-alternative items from the freezer and deli sections of the grocery store. This is to satisfy my own curiosity, and so I can speak knowledgeably about them rather than having a knee-jerk response if they ever come up in conversation. As I suspected, most do not fit my palate or my soul, produced in factories and often of questionable ingredients. The food scientists at these companies really know how to make a quic...
by ER2023
Sat Jun 11, 2022 7:41 am
Forum: Personal Investments
Topic: First time I've ever had "dry powder!"
Replies: 16
Views: 3984

Re: First time I've ever had "dry powder!"

I always enjoy reading your posts and appreciate your insight, as we have similar ages and portfolios. You mention buckets and I have been thinking about buckets for the go-go, slow-go, and no-go years. Have you considered having these types of buckets and if so, would it impact how you calculate your 25x expenses? Or are you comfortable simply taking your projected retirement expenses x 25?
by ER2023
Sat May 07, 2022 7:52 am
Forum: Investing - Theory, News & General
Topic: Preparing for a down market
Replies: 81
Views: 9414

Re: Preparing for a down market

Burning through cash in order to avoid selling stock or bonds is market timing, plain and simple. Being a timer myself, I don't have an inherent problem with it, but I'm not sure that such a strategy is a very good one. Most such strategies I've seen did not backtest well at all; a fixed allocation has generally been superior in terms of maximizing long-term wealth. I'm not a big cash proponent, although I must admit that high-yield savings accounts aren't paying much less than TBM these days. I believe that a CD ladder and TIPS are at least as useful as short- and intermediate-term bonds. But when it comes to counter-balancing stocks, long-term Treasuries are hard to beat. Many don't like their volatility, but they have actually been bett...
by ER2023
Thu Mar 03, 2022 8:55 am
Forum: Personal Investments
Topic: Good idea to invest in a Roth IRA right now based on situation?
Replies: 21
Views: 2712

Re: Good idea to invest in a Roth IRA right now based on situation?

Wiggums wrote: Tue Mar 01, 2022 3:37 pm
ER2023 wrote: Mon Feb 28, 2022 1:15 pm I know that we lost a significant amount in gains by not investing it sooner, but there was also a significant SWAN factor involved.
Time in the market and your savings rate is your best friend. Time is one thing that you can never get back. I don’t try to predict the market direction. Last week they were sure of rate hikes. Today, people are jumping onto the zero rate hike bandwagon. There are always buyers and sellers, bulls and bears.

We are retired and still buying stock.
Agree completely with both time in the market and not timing the market. It was/is the SWAN factor for sure with the cash.
by ER2023
Thu Mar 03, 2022 8:49 am
Forum: Personal Investments
Topic: Good idea to invest in a Roth IRA right now based on situation?
Replies: 21
Views: 2712

Re: Good idea to invest in a Roth IRA right now based on situation?

We have about $200k in cash that I've been holding in a high yield savings account since 2015. We had more, but I recently put $40k in i-Bonds and more in after-tax VTSAX. I know that we lost a significant amount in gains by not investing it sooner, but there was also a significant SWAN factor involved. I really don't know exactly what we will use this cash for. We have one more year until we can tap one of our 401ks, so I'm thinking anything from paying healthcare expenses before age 65 (early retirement), possibility of purchasing a second home (that will eventually become our only retirement home), or if there is a bear market/crash. One option I have been thinking about is opening up a Roth IRA for both of us (we are 58 and 52) - so pu...
by ER2023
Thu Mar 03, 2022 8:33 am
Forum: Personal Investments
Topic: Good idea to invest in a Roth IRA right now based on situation?
Replies: 21
Views: 2712

Re: Good idea to invest in a Roth IRA right now based on situation?

If you're eligible to make direct Roth IRA contributions, it's a no-brainer to make the contributions. *Eligibility: you must have sufficient earned income (at least matches amount of contributions) and your Modified AGI must be below a certain threshold. See this IRS page for more information: link If you're eligible to make direct Roth IRA contributions, it's a no-brainer to make the contributions. *Eligibility: you must have sufficient earned income (at least matches amount of contributions) and your Modified AGI must be below a certain threshold. See this IRS page for more information: link Agree. And if they're above the income threshold, Backdoor Roth still remains an option. Make sure your annual income is below the Roth ceiling. Gr...
by ER2023
Thu Mar 03, 2022 8:32 am
Forum: Personal Investments
Topic: Good idea to invest in a Roth IRA right now based on situation?
Replies: 21
Views: 2712

Re: Good idea to invest in a Roth IRA right now?

David Jay wrote: Mon Feb 28, 2022 6:01 pm
GerryL wrote: Mon Feb 28, 2022 1:22 pm If you had adequate wage income last year you can (before April) put $7k into each Roth for 2021. And then $7k for 2022.
This. Put the first $28,000 in now.

Remember, a Roth IRA is simply a tax-free (if you meet the requirements) container, you can choose the type of investments you wish to hold inside the container.
Thanks DavidJay, I think I will be doing this today.
by ER2023
Thu Mar 03, 2022 8:31 am
Forum: Personal Investments
Topic: Good idea to invest in a Roth IRA right now based on situation?
Replies: 21
Views: 2712

Re: Good idea to invest in a Roth IRA right now based on situation?

placeholder wrote: Mon Feb 28, 2022 5:33 pm Yeah I don't see the question about funding a roth and why haven't you been doing that all along?
Yep - this is a great question and one that I torture myself with on a regular basis. The honest answer though is that the cash was SWAN - and part of it still is until we can tap our first 401k next year at 59.5. Analysis paralysis.
by ER2023
Thu Mar 03, 2022 8:29 am
Forum: Personal Investments
Topic: Good idea to invest in a Roth IRA right now based on situation?
Replies: 21
Views: 2712

Re: Good idea to invest in a Roth IRA right now based on situation?

passive101 wrote: Mon Feb 28, 2022 5:07 pm If you are well diversified the time in the market is more important then attempting to time the market usually.
Thank you passive101, we are 50/50 and would continue to keep (approximately) the same AA with the Roth IRAs.
by ER2023
Thu Mar 03, 2022 8:28 am
Forum: Personal Investments
Topic: Good idea to invest in a Roth IRA right now based on situation?
Replies: 21
Views: 2712

Re: Good idea to invest in a Roth IRA right now?

GAAP wrote: Mon Feb 28, 2022 4:45 pm I don't see how "the situation" changes the benefits of a Roth IRA. You could just invest in money market funds if you wanted to -- but the interest would be tax-free.
jimkinny wrote: Mon Feb 28, 2022 1:23 pm Here is a wiki article IRAs, including Roths.
https://www.bogleheads.org/wiki/Roth_IRA

There is no good/bad time to invest.
Thank you both - I have read the wiki (and many posts on this forum) and do understand enough about Roth IRAs - just wasn't sure if my situation warranted additional thinking about other alternatives.