quote:

Originally posted by mrvmax:
I'm not worried about preserving my principle so I'm different than most. I have one heir and I told her not to plan on inheriting a lot of money, I'm spending it all. She will get my physical assets but not a large sum of money.

So, I'll pull out money as I need from my 401 regardless of how it's performing. I also have two small pensions to live off for primary expenses, my 401 nest egg will cover the rest. My house has been paid for and I can pay off my vehicle loans any time I want with cash (interest rates are low on the loans so I'd rather invest my money than pay off vehicles). Spending my money will not be a problem.

I think that's a good principle to have. Before, I didn't think I'd be able to leave anyone anything so I wasn't worried about it. Then I realized I have something substantial that if my wife and I were to die tomorrow, someone's going to have a windfall.

Then the "human nature" of wanting to leave a legacy starts to kick in and I can't help consider that when making my financial decisions. In the end, somebody else will get my money - either my heirs or the nursing home I'll probably end up in. I don't like the idea of my money going to a nursing home for my care so I'm hoping to die long before then while I'm still enjoying my life and my money.

quote:

Originally posted by Pal:
Some people may want to go to calculator.net. Click on the retirement link. There is a feature that lets you plug in your funds saved and how long you expect to live and spits out how much you can take per month. Of course it is not fool prove, there will be drops in the market etc. But it may give you an idea.

One thing that we have found hard, and we are still not there, is that all our lives we have been saving to build a nest egg and now we should not worry if it starts to drop some.

Jim

Right, exactly right. But as the article points out. Why do we save and invest most of our lives for the future. Then when the future arrives we are weary of spending it?

If and that is a big if, people don’t pull as much as they could out it’s probably for a very good reason. They don’t want it to run out before they die. I know that sounds flippant but I don’t mean it that way. Once you retire the die is mostly cast. It’s too late to make any significant amount of money if you miscalculated.

I’m guessing here but I bet I’m right that individuals who put away significant retirement sums on their own are fairly savvy people on the broad scale of American retirees. My fil didn’t put away dick for retirement. Lives off SS and a small county pension. I suspect if he did have savings put away he would be the outlier according to this article. He would blast through that money.

My point is that people who haven’t saved their whole lives as a rule would likely blow through any money they did save. Conversely those who carefully and consistently put away money know just how much time, effort, and sacrifice it required to do so and are subsequently very careful in pulling it out. That is a good thing contrary to the idea of this article. What’s the old saying about asking a guy how much he needs for retirement? “Well what day am I going to die?” Without that tidbit it’s better to be conservative in your expenditures. Not cheap, not tight, but careful.

quote:

One thing that we have found hard, and we are still not there, is that all our lives we have been saving to build a nest egg and now we should not worry if it starts to drop some.

^^^^^^^^^^^^^
My big worry is the IRS and what silliness they may contrive to tax my retirement account. The penalties are draconian for errors. I have no control over tax legislation.

quote:

Originally posted by pedropcola:
. Not cheap, not tight, but careful.

Nobody is suggesting blowing through your retirement funds. But being willing to use those funds as intended. Without remorse or guilt should lend itself to a good retirement. Imho.

Lets say you retire at 62. No pension. You have $500k in your 401k. Own your own home. Have $75k in cash. Your combined ss is $2500a month. If you do the 4% percent rule. You receive another $2500 month. That $500k should easily last a life time. And for the vast majority of folks could live very comfortable on that scenario.Quite a few could get by with a fair amount less.

Orc I agree. My mom is a multi millionaire and lives on peanuts. Course, she just doesn’t do much anymore hence the peanuts. I just didn’t like the tone of that article. I think being careful is way smarter than, as the article suggests, spend your money and make a course correction if you find you are coming up short. That is in that article as casually as spitting out chewing gum. Horrible advice to me.

I agree with you, I don’t agree with that article. If you have to do a mid course correction because you overshot early the article implies “just correct” your course. That’s ludicrously over simplified. If you overshoot early you are likely fucked with a capital F. Even the title is flippant, spend without worry in retirement. Ugh.

Slow and steady wins the race. It’s worked for me so far and I will continue that trend in retirement. Maybe it’s just semantics but I think that article inferred a low level of spending that they certainly didn’t prove is actually true and they encourage spending more because even if you mess up you can just correct, just with a lot less of your nut to do that very thing. The tone and content is misleading at best. Just my opinion but it’s easier to increase spending if you were too conservative then it is to decrease spending if you weren’t.

Ped, I thinking you are bit to sensitive on the subject or reading more into the article than is there.
Course corrections are a necessary component to a successful retirement.

You should spend more in the first half of your retirement than the second half.

So if you are to conservative early on. You have missed out. You could of spent more and enjoyed your retirement more. But obviously the sword cuts both directions. If you spend to much. Than you might have issues. But for most. SS will provide to meet most peoples needs by in large towards the end.

So I feel like being short on the end is better than being long, theoretically any ways.

Gotcha. I respectfully disagree. My in-laws did exactly what you are suggesting. Live off SS and small pensions. I wouldn’t trade my life for theirs with a gold plated wand.

Coming up short sucks. There is no way to candy coat that. Course corrections are obviously vital and necessary part of life in retirement. Correcting because you have too much money and correcting because you don’t aren't even in the same category.

I’m not sensitive but I’ve seen not having enough and not spending as much as you could in real life application. That article doesn’t seem to acknowledge the very real risk they are encouraging.

Anyway, not my money. Everyone gets to do whatever they want with their money. That’s the good news.

Wasn’t trying to be argumentative I just disagree.

No problem Ped. Me either. You brought up an important point. We do agree more than we disagree.
I think most of us worry about having enough. That is a natural thing.
Coming to the realization early enough. That there should more than enough can make for a happy retirement.
Versus going through retirement always fearful there won't be enough. That is not the best way to go through retirement.

I think a lot of us don't know for sure. But hope we have what we will need.

quote:

Originally posted by Rey HRH:

quote:

Originally posted by mrvmax:
I'm not worried about preserving my principle so I'm different than most. I have one heir and I told her not to plan on inheriting a lot of money, I'm spending it all. She will get my physical assets but not a large sum of money.

So, I'll pull out money as I need from my 401 regardless of how it's performing. I also have two small pensions to live off for primary expenses, my 401 nest egg will cover the rest. My house has been paid for and I can pay off my vehicle loans any time I want with cash (interest rates are low on the loans so I'd rather invest my money than pay off vehicles). Spending my money will not be a problem.

I think that's a good principle to have. Before, I didn't think I'd be able to leave anyone anything so I wasn't worried about it. Then I realized I have something substantial that if my wife and I were to die tomorrow, someone's going to have a windfall.

Then the "human nature" of wanting to leave a legacy starts to kick in and I can't help consider that when making my financial decisions. In the end, somebody else will get my money - either my heirs or the nursing home I'll probably end up in. I don't like the idea of my money going to a nursing home for my care so I'm hoping to die long before then while I'm still enjoying my life and my money.

I think leaving my child a lump of money would cause more harm than good. My wife and I grew up very poor, I know what it's like to live with hunger pangs, I know what it's like to live without a/c in southern climates and I know what it's like to live without electricity. My wife and I struggled to get where we are and I'm not going out that way. I'm not going to live extravagant but I'm not going to be a miser either. For some reason people think they need to leave their kids a fortune. I inherited bills when my parents died. I would like to pass down land but I doubt my child would appreciate that.

quote:

Originally posted by Rey HRH:
I'm neutral on the spending money. But one thing I learned recently is that you have to be on top of the Required Minimum Distribution law on your tax deferred retirement plans.

After 70 or 72, you may be forced to withdraw more money than you need; worse, the required minimum withdrawals may trigger more onerous tax liabilities such as having to pay more for medicare on top of getting you into a higher tax bracket.

One solution is to get ahead by withdrawing ahead of the requirements and converting it into a Roth IRA.

I'm in the process of creating an Excel file to model the decision points for myself.

My first year without income....likely next year, I'm going to look into converting part or all of my traditional IRA into my Roth.

quote:

Originally posted by 6guns:


My first year without income....likely next year, I'm going to look into converting part or all of my traditional IRA into my Roth.

I'm in my third year of no salary income. I don't know if you're in the same boat as I am.

I've had to minimize my IRA withdrawals to limit my income in order to maximize my Obamacare premium subsidies. But I found out withdrawing from my IRA wasn't the best tax strategy.

I had investments outside of my IRA and cashing those out would have been a better strategy. The first $80,800 of long term capital gains is 0% Federal income tax. That means $100 of a long term asset sold to get cash is taxed close to zero compared to $100 withdrawn from an IRA.

This was going to be my strategy to delay withdrawing from my IRA until I learned about the RMD.

This is the analysis I'm waiting to do - whether it's better to just cash out my investments outside the IRA to allow my IRA to grow longer while enjoying paying nothing in taxes or if I have to pay taxes because of IRA withdrawals to convert to Roth IRA in order to get ahead of the RMDs schedule in order to minimize taxes overall.

I could spend more, but there is nothing I want. No new cars or trucks interest me. Travel is no longer enjoyable. I want a Kubota, but really have no need for it. Been everywhere I wanted to go and have no reason to go back. Usually return trips don't live up to the original memory

quote:

Originally posted by oldbill123:
I could spend more, but there is nothing I want. No new cars or trucks interest me. Travel is no longer enjoyable. I want a Kubota, but really have no need for it. Been everywhere I wanted to go and have no reason to go back. Usually return trips don't live up to the original memory

It sounds like you have done it about right to me then. I think the article is more about the people who skrimp and save their whole life for retirement and then have a major problem changing those habits to try and start enjoying the fruits of their labor. It's hard to change direction if you have been saving like there's an avalanche right around the corner.

Basically don't wait so long that you are physically incapable of doing what you have been saving for all these years because almost 85% of the savers end up doing just that.

That is the point.

quote:

Originally posted by oldbill123:
I could spend more, but there is nothing I want.

Ha! I have an almost limitless ability to discover new toys I'd like to have Luckily, my wife is more fiscally responsible than I, and reins me in when I start getting out-of-control.

Keep in mind that as you approach Medicare, your income for the past two years is how they determine your cost/share of Medicare expenses. So be a little frugal when you hit 63.

My wife starts on Medicare in November and we’ve found this stuff out the hard way. The amounts are reviewed annually after 65.

^^^^^^^^^^
yes. Medicare is automatically deducted from your social security check before you even see it. If you do well you pay a surcharge.

quote:

Originally posted by ZSMICHAEL:

quote:

I guess I'm SOL - i have neither the WSJ nor a CPA.

^^^^^^^^^^^^
I am paying four dollars per month for the WSJ. They have those deals for Black Friday. It is worth it.

WSJ is offering digital access package $4/mo for a year introductory subscription now.

And the WSJ has regular articles on how to prepare for retirement. Like awareness of this RMD stuff and associated strategies, how to prepare for enrolling into medicare, etc? Or is this something i should have been reading for the past 20 years. If it’s helpful even if i just start reading now then I'm in.

These aren’t just news articles, right? They are educational articles? I need education. Then i can understand the news and how it may affect me.

And thanks for the tip.