Good for you, 911Boss. Just make sure you consider holding an emergency fund back in savings, even if it's not really earning anything. I understand the desire to put your savings to work, but it'd be a shame for the market to nosedive and wipe out a big chunk of your emergency fund just as a major unexpected expense rears its ugly mug.

If you really want to invest all your savings, consider investing some of it in something like a Money Market Mutual Fund through your standard investment account. It's not quite as safe as a savings account, but is much safer than other investments, and will still typically earn you 1%-4%, which is many times what a savings account would. Plus, certain Money Market Funds let you avoid some/all of the taxes on these returns, if they invest in government securities.

quote:

With a Traditional IRA, the gains are taxed as income when you withdraw them. But you don't pay capital gains taxes.

^^^^^^^^^
Not withstanding future governmental legislation.

quote:

Originally posted by RogueJSK:
Good for you, 911Boss. Just make sure you consider keeping an emergency fund back in savings, even if it's not really earning anything. I understand the desire to put your savings to work, but it'd be a shame for the market to nosedive and wipe out a chunk of your emergency fund just as a major unexpected expense rears its ugly mug.

If you really want to invest all your savings, consider investing it in something like a Money Market Mutual Fund through your standard investment account. It's not quite as safe as a savings account, but is much safer than other investments, and will still earn you 1%-4% which is many times what a savings account would.

Between the Roth’s and the investment account, moved about 50% of the savings. Still have enough in savings to cover an easy 6mo of living expenses. Fantastic job security and no debt other than mortgage, so realistically it is just a chunk of cash that is readily available on a moments notice.


Figured instead of adding to the Roth’s monthly, max the contributions now so they can earn all year. Monthly “savings” will build savings balance until January when I can again dump into the Roth.

I am planning to retire next year at 59.5 years old but plan to continue Roth contributions without any withdrawals into 2025. My other retirement income from gubbermint work and side gig (real estate photography) should cover the bills until then.

The Roth contributions after retirement will come mostly from savings and the IRA rollover if needed. I plan to make the max contribution each year. Even if I have to pull from the rollover to put in the Roth and pay income tax on it, putting in the Roth means it will build money I won’t pay tax on down the road.

I also plan to keep a 6-8 month living expenses “reserve” in savings after retirement to ease any impact of market fluctuations.


In 2025 I’ll turn 62 and start drawing Social Security. At that point, between Roth earnings, Social Security, Defined benefit work retirement, and earnings on Defined Contribution 401K rollover I should be getting about 70-75% of current income.

We currently put about 15-20% of take home pay into savings. I don’t expect to continue doing so after retiring, so between that and reduced monthly expenses, I expect to be 95%+ of pre-retired income after retiring.

So long as earnings on the IRA’s stay above 8-9%, income will exceed expenses and balances should continue to grow on those accounts.

quote:

Originally posted by 911Boss:
Figured instead of adding to the Roth’s monthly, max the contributions now so they can earn all year. Monthly “savings” will build savings balance until January when I can again dump into the Roth.

That's a solid strategy, especially consider you're only a few years from retirement, so every bit of time counts even more.

The "lump sum/time-in-market" vs. "incremental/dollar-cost-averaging" debate has strong proponents on either side. Research has shown that lump sum investing typically holds a very slight lead in long term returns. But dollar cost averaging can help blunt short term volatility in especially uncertain markets.

Plus, lump sum IRA contributions require someone to have an entire year's contributions up front to get started, which many people do not, especially if just starting with retirement investing. And even if they had the lump sum to get rolling, incremental contributions directly from paycheck to IRA is a habit with which the average person is more likely to be successful, removing the temptation to raid next year's accumulating lump sum for the short term gratification of that vacation or bigger TV. (People, on average, suck at saving.)

There are Roth IRA contribution limitations. Best to know and abide by them.

I want to say $7k per person for tax year 2020 and this year as well. Might be wrong though. So make sure you verify.

Total IRA contribution limits for 2020 and 2021 are currently $6000 per person per year if under 50, or $7000 if 50+. As mentioned in my earlier post, that's a total cap on all of one person's IRA accounts, so you can't open multiple IRAs and sock away $6k/$7k in each one. (But you and your spouse can double up by pooling your contributions, so a married couple could contribute $12k/$14k per year to a jointly held IRA.)

And you can continue to contribute to the prior year's limit until April 15th, effectively giving you an extra 3.5 months to "catch up" on the prior years' contributions. So there's still another month to contribute to a 2020 IRA if you haven't hit the limit yet, while still leaving your entire 2021 contribution limit untouched.

You'll want to keep an eye out in the coming years too, because those limits do go up every so often, so they will likely increase at some point in the future. They just went up from $5500/$6500 in 2019. Prior increases ranged from every 3 years to 20 years, and from $500 to $1000 at a time.

quote:

Why two different places, and not just one?

I opened Vanguard Roth with $1000 and put another $3000 in a brokerage account. I go back to add funds to the Roth and there is a problem, they say it's internal, give us few days to straighten it out. I call back a week later, they same the names are a little different on my bank account vs what I submitted, they say I need to fill out a " one in the same" form online. Done, they say give us a few days to get it fixe. Call back a week later because I still can't add funds, they say now I need to fill out some other form and mail it in. I'm pretty pissed by now, so I opened the Wells. Adding funds is a lot easier, the wife and I have a joint account there I can pull from. Wanted to try and max 2020 contributions before the cutoff. BTW, I have no problem adding to my VG brokerage, assholes

Yes I am aware that $7k is the max yearly, I'm 51

Wow, that sucks. Hopefully Vanguard can get it straightened out. I've been very happy with Vanguard, even though their website isn't the most intuitive.

There was a problem with every brokerage account I had. People make mistakes. If they fixed the problem quickly I stuck with them. Some were very complicated.

I went with Fidelity based on input on an earlier thread I started. Good website and app.

Note - It was a little glitchy getting accounts opened on my iPad. Doing it on a real computer was easy peasy and didn’t take more than a few minutes. Once accounts got opened, no problems transferring money in from my regular bank or doing transactions to buy mutual funds using the iPad.

I have a numbers spreadsheet that tracks investments, it’s math jives with Fidelity’s math so its all good. Spreadsheet actually updates faster of market info after closing than Fidelity does.


Happy as the second mouse at the trap now as I have seen gains everyday since opening. Some individual funds up, others down but overall gains. At some point I am sure it will go the other way, but all of this money is on a 5-year minimum timeline so playing the long game.

My goal is average 9% a year over 5 years, anything more is gravy.

quote:

Originally posted by RogueJSK:
Wow, that sucks. Hopefully Vanguard can get it straightened out. I've been very happy with Vanguard, even though their website isn't the most intuitive.

Rogue, Vanguard has managed to upset me enough that I will not be using them. What is a another trusted place to use for brokerage and IRA's???

quote:

Originally posted by kz1000:
My rent is cheap for the area I live in. It includes heat water garbage & sewage. Plus if something breaks I call the landlord and it gets fixed. I have no desire to own a home.

So let me show you why you should buy instead of rent.

I paid off my mortgage in 1994 and when I moved here I used some of the money from that house to buy this one for cash.

So I haven't had rent or a house payment for 25 years or so.

Let's do the math. Rent is at least $1,000.00 even for a dive, so $12,000.00/year.

$12,000 x 25 years = $300,000.00

Plus I invest the money I didn't spend on rent/mortage in the market the whole time at a minimum of 8% return, so let's calculate what I have now:

https://www.investor.gov/finan...-interest-calculator

The Results Are In
In 25 years, you will have $877,271.28

Whereas if you continue to rent, you'll have....rent receipts.

The choice is yours.

quote:

Originally posted by BigSwede:
Rogue, Vanguard has managed to upset me enough that I will not be using them. What is a another trusted place to use for brokerage and IRA's???

Fidelity is the primary counterpart/competitor to Vanguard. Very similar model of low cost brokerage plus offering a wide variety of inexpensive in-house mutual funds. Lots of folks here on the forum, and even in this thread, are very happy with Fidelity.

You should be able to "roll over" (not just withdraw and then deposit) the existing money from your Vanguard account into whatever new IRA account you open at Fidelity or otherwise, without penalty. Same with your Wells IRA, if you want to consolidate that as well.

Or, if you're happy with Wells Fargo, and they offer the type of investments you want (I don't know about Wells specifically but many banks only offer very limited investment options), you could just consolidate the Vanguard IRA into that one.

quote:

Originally posted by Flash-LB:

quote:

Originally posted by kz1000:
My rent is cheap for the area I live in. It includes heat water garbage & sewage. Plus if something breaks I call the landlord and it gets fixed. I have no desire to own a home.

So let me show you why you should buy instead of rent.

I paid off my mortgage in 1994 and when I moved here I used some of the money from that house to buy this one for cash.

So I haven't had rent or a house payment for 25 years or so.

Let's do the math. Rent is at least $1,000.00 even for a dive, so $12,000.00/year.

$12,000 x 25 years = $300,000.00

Plus I invest the money I didn't spend on rent/mortage in the market the whole time at a minimum of 8% return, so let's calculate what I have now:

https://www.investor.gov/finan...-interest-calculator

The Results Are In
In 25 years, you will have $877,271.28

Whereas if you continue to rent, you'll have....rent receipts.

The choice is yours.

Yes it is. I pay $625/mo. Don't want the responsibilities of ownership.

Owning a home is generally the more financially optimal choice in the long run. Renting a home is generally the more convenient choice.

Each has pros and cons. Owning isn't for everyone, even if it's the "better" option in pure dollars and cents.

Same with buying vs. leasing a car. And there are plenty of other ways that just about everyone is willing to pay more for greater convenience in various different aspects of their life, even if it's on a lesser scale. Just because it isn't "optimal", and it isn't what you would choose, doesn't make it necessarily "wrong" for someone else.

Ultimately, you do you.

Thanks Rogue, signed up with Fidelity. I will rollover the Vanguard into it and keep Wells for spousal unit reasons