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Re: After Tax 401k to Roth 401k: is this bad?

Couldn't you avoid even that just by rolling it over into a Roth IRA shortly after you turn 70? The calendar year in which I turn 70 1/2 is the first for which the 401k custodian will do the RMD calculation. It will be based on the account value on 12/31 of previous year. This first RMD doesn't hav...
by Bill M
Fri Apr 18, 2014 8:25 am
 
Forum: Personal Finance (Not Investing)
Topic: After Tax 401k to Roth 401k: is this bad?
Replies: 4
Views: 372

Re: After Tax 401k to Roth 401k: is this bad?

I also have nice institutional funds available in my 401k, and use them, particularly the Stable Value fund. Much higher return and lower risk than anything I can get myself. And I do annual in-plan Roth conversions, amount calculated each year to fill the low tax brackets. The in-plan Roth conversi...
by Bill M
Thu Apr 17, 2014 8:20 am
 
Forum: Personal Finance (Not Investing)
Topic: After Tax 401k to Roth 401k: is this bad?
Replies: 4
Views: 372

Re: SS Strategy Metric

The metric I use is final net worth. Maximizing SS benefits is useless if you go broke waiting to start receiving them. To evaluate a SS claiming strategy, I first project total worth as a function of age. I expect it to decrease between now and the age I start collecting SS benefits. I look first a...
by Bill M
Wed Apr 16, 2014 11:26 pm
 
Forum: Personal Finance (Not Investing)
Topic: SS Strategy Metric
Replies: 31
Views: 1723

Re: making your own will or trust

The real question that needs to be asked is not whether anyone has had experience in writing your own will, but whether anyone has had experience being the executor or heir of someone who wrote their own will . One can say whether one has written their own will, but not how well it worked in the en...
by Bill M
Wed Apr 16, 2014 6:59 pm
 
Forum: Personal Finance (Not Investing)
Topic: making your own will or trust
Replies: 29
Views: 1563

Re: How should I build a TIPS income ladder?

4. Is it really that simple? If so, maybe I don't need a spreadsheet. Maybe? If you are buying the ladder over time, like at successive or annual auctions, a spreadsheet is definitely helpful. The reason is that the number of bonds to purchase increases over time. As a simple example, if I want $10...
by Bill M
Mon Mar 31, 2014 7:57 am
 
Forum: Investing - Theory, News & General
Topic: How should I build a TIPS income ladder?
Replies: 30
Views: 3240

Re: Help with Estimated Taxes

One of the key things is that all taxes withheld from paychecks are deemed to have been paid equally over the year. Even if you go to the extreme of withholding 100% of pay in December, you'd get credit for 25% of that in the long-past first quarter. So the way to deal with estimated tax is differen...
by Bill M
Mon Mar 31, 2014 7:30 am
 
Forum: Personal Finance (Not Investing)
Topic: Help with Estimated Taxes
Replies: 7
Views: 443

Re: Keeping track of expenses, early retirement?

I'd be wary about ignoring/discounting all of those "one-time expenses". They have a habit of recurring. Before retiring I did annual expense-tracking for several years and found those "one-time" things accounted for about 30% of the annual total. Things like insurance premiums (...
by Bill M
Mon Mar 31, 2014 7:25 am
 
Forum: Personal Finance (Not Investing)
Topic: Keeping track of expenses, early retirement?
Replies: 32
Views: 3526

Re: Self protecting a SPIA against inflation

Here is the 4+3=7 solution: Suppose you are 66 year-old man. From http://www.immediateannuities.com/ $450K would buy annuity that pays $2,726 per month ($32,712 per year), which is 7.27% of $450,000. Suppose you expect inflation of about 3%. How about spending only $18,000 per year, which is 4%, an...
by Bill M
Mon Feb 24, 2014 9:21 am
 
Forum: Investing - Theory, News & General
Topic: Self protecting a SPIA against inflation
Replies: 47
Views: 2275

Re: Self protecting a SPIA against inflation

With an inflation-adjusted SPIA you are buying two types of insurance at once -- one against longevity risk, and the other against inflation risk. So it is difficult to compare pricing against non-inflating SPIAs. Any time you buy insurance, the insurance company keeps a cut of it; that's how they b...
by Bill M
Sun Feb 23, 2014 1:31 pm
 
Forum: Investing - Theory, News & General
Topic: Self protecting a SPIA against inflation
Replies: 47
Views: 2275

Re: How do I attach a statement when filing electronically?

I use freefilefillableforms.com. Schedule B Part I has an almost blank page, and a way to enter random text. On the first like I put "This is not additional interest, but (it seems) the only way to attach a statement to my 1040 explaining some of the entries." I'm not sure if IRS likes it,...
by Bill M
Sun Feb 23, 2014 1:15 pm
 
Forum: Personal Finance (Not Investing)
Topic: How do I attach a statement when filing electronically?
Replies: 29
Views: 1488

Re: At what age to drop term life insurance?

Technical and logical answers already given above. But you don't want to become the example insurance agents will use for decades -- the person who cancelled their insurance and got hit by a truck the next day. My wife calls this the karma effect, and you need to appease the karma gods. Strategies d...
by Bill M
Tue Feb 04, 2014 8:23 am
 
Forum: Personal Finance (Not Investing)
Topic: At what age to drop term life insurance?
Replies: 14
Views: 1598

Inflation-adjusted deferred annuity

SPIAs have been discussed here before. Also SPDAs (or Deferred Income Annuity (DIA), or longevity insurance). Also inflation-adjusted SPIAs. But never an inflation-adjusted SPDA. And I can't seem to find anyone offering one. So I'm trying to figure out how to do a home-brew inflation-adjusted SPDA. ...
by Bill M
Thu Jan 09, 2014 7:16 pm
 
Forum: Personal Finance (Not Investing)
Topic: Inflation-adjusted deferred annuity
Replies: 3
Views: 362

Re: POLL: Consumption Inflation % in Retirement

Retirement projections seem to be more stressed with higher inflation rates. That's particularly true if you have a fixed pension/annuity, as its real value decreases every year. Also if you assume a Social Security COLA will be something less than the CPI-W adjustment (for planning purposes I do th...
by Bill M
Mon Jan 06, 2014 12:06 pm
 
Forum: Personal Finance (Not Investing)
Topic: POLL: Consumption Inflation % in Retirement
Replies: 11
Views: 760

Re: free annual credit report

I used to stagger the reports, getting one every four months. But then my report became so complex that there was almost always something that needed a dispute. And if something is wrong on one report, you have to assume it will be wrong on the other two as well. So you end up getting all three at o...
by Bill M
Thu Jan 02, 2014 1:07 am
 
Forum: Personal Finance (Not Investing)
Topic: free annual credit report
Replies: 8
Views: 824

Re: Becoming a CFP . . .

It's something I've considered; I think you can be a CFP either for the satisfaction, or as a source of income, but not both. Unfortunately if you need the income, you're forced to out-sleaze all the sleazeballs, and that kills the satisfaction.
by Bill M
Thu Jan 02, 2014 12:54 am
 
Forum: Personal Finance (Not Investing)
Topic: Becoming a CFP . . .
Replies: 28
Views: 1967

Re: Withdraw from IRA before starting SS?

Generally you'd want to draw from the taxable accounts first, leaving the tax-deferred accounts to defer further. The rule of thumb is to exhaust the taxable accounts, then the tax-deferred accounts (IRA, 401k, 403b, etc), and then the tax-free accounts (Roth IRAs). But there are a few other conside...
by Bill M
Thu Jan 02, 2014 12:41 am
 
Forum: Personal Finance (Not Investing)
Topic: Withdraw from IRA before starting SS?
Replies: 14
Views: 881

Re: What are your financial goals for 2014?

Being newly retired, goals are no longer about saving targets. Main goals for 2014: 1) understand enough of Modern Portfolio Theory to put some theoretical foundation under our asset allocation strategy. 2) consider a switch to the three-fund portfolio (at least less than the current 15-fund portfol...
by Bill M
Mon Dec 30, 2013 7:13 pm
 
Forum: Personal Finance (Not Investing)
Topic: What are your financial goals for 2014?
Replies: 56
Views: 4047

Re: Records keeping questions

Paper is heavy, and takes up lots of space. Bits are compact. So paper gets scanned, and discarded. With disks being as cheap as they have become, I don't bother with trying to delete obsolete files, and just stash them away in a year-by-year folder. It also makes them more accessible; that hospital...
by Bill M
Mon Dec 16, 2013 9:41 am
 
Forum: Personal Finance (Not Investing)
Topic: Records keeping questions
Replies: 7
Views: 599

Re: Deferred Compensation Plan

I participate in one of those with my employer. Its a great deal, but you need to be careful about the company rules. Some devilish details--- Can you keep the deferral pending after leaving the company? Can you change the payout dates after salary is deferred? Are payout dates frozen when you leave...
by Bill M
Mon Dec 16, 2013 9:17 am
 
Forum: Personal Finance (Not Investing)
Topic: Deferred Compensation Plan
Replies: 27
Views: 1511

Re: 401k deferral issue

As I see it, the decision revolves around the investment choices in your 401k plan. If they are good (i.e. better than you can get in an individual account at Vanguard), make the maximum contribution every paycheck, intentionally maxing out early and often, and let them give you a refund at the end ...
by Bill M
Sun Dec 15, 2013 11:48 am
 
Forum: Personal Finance (Not Investing)
Topic: 401k deferral issue
Replies: 17
Views: 1424

Re: Credit Report Question

I've had a similar problem with Equifax, where a strange address kept appearing on my report. Every time it appeared I filed a dispute, and Equifax removed it. But it kept coming back again. The problem is not Equifax, but a bank or credit card company regularly providing bad information. I did two ...
by Bill M
Thu Oct 17, 2013 12:23 am
 
Forum: Personal Finance (Not Investing)
Topic: Credit Report Question
Replies: 11
Views: 1033

Re: Retirement consumption target-appropriate ratio to curre

We are presently aiming to accumulate assets sufficient to finance a level of consumption equal to current consumption. That's a good first approximation, assuming everything you spend today you'll continue to spend later. But, free time is expensive -- you should expect that you'll spend extra on ...
by Bill M
Sat Sep 21, 2013 3:09 pm
 
Forum: Investing - Theory, News & General
Topic: Retirement consumption target-appropriate ratio to current C
Replies: 20
Views: 1510

Re: Pension/Annuity calculator

One such calculator (for converting pension monthly payments into an actuarially equivalent lump sum) is at https://www.pensionbenefits.com/calculators/cal_main.jsp?sub_item=ppa06_lumpsum_cal With today's interest rates (Aug 2013, as published by IRS) of 1.36%, 4.60%, and 5.58%, the $11,000/yr start...
by Bill M
Thu Sep 19, 2013 7:52 am
 
Forum: Personal Finance (Not Investing)
Topic: Pension/Annuity calculator
Replies: 6
Views: 897

Re: Rolling over post-tax 401k dollars to a backdoor Roth IR

Doing this with zero taxes would be tough, but it should be possible with minimal taxes. It is likely your 401k plan limits the number of withdrawals allowed per quarter (or per year). So trying to minimize earnings within the 401k by doing a withdrawal after every contribution is not likely to work...
by Bill M
Tue Sep 17, 2013 12:29 am
 
Forum: Personal Finance (Not Investing)
Topic: Rolling over post-tax 401k dollars to a backdoor Roth IRA
Replies: 4
Views: 442

Re: Rules of Thumb Formula for Pensions and Annuities

While I don't know of any rules of thumb for these calculations, here is a calculator: https://www.pensionbenefits.com/calculators/cal_main.jsp?sub_item=ppa06_lumpsum_cal Depending on the specifics of the pension plan, the lump sum calculation may depend on your sex. The calculation will certainly d...
by Bill M
Mon Sep 16, 2013 12:38 am
 
Forum: Personal Finance (Not Investing)
Topic: Rules of Thumb Formula for Pensions and Annuities
Replies: 6
Views: 978

Re: Three common cases of bad financial advice

Granted annuities costs more when interest rates are low, as they are today. But isn't waiting for higher rates an example of the "market timing" taboo? I can buy the annuity now and do OK, or I can wait and do better. I can buy that stock now and do OK, or I can wait and do better. What's...
by Bill M
Fri Sep 13, 2013 10:02 am
 
Forum: Personal Finance (Not Investing)
Topic: Three common cases of bad financial advice
Replies: 26
Views: 3441

Re: Thoughts on an entertainment account

Just like the $2 racetrack bets, I stick with $2 options. Its fun beating those "experts" at their own game. It takes a significant amount of time and effort. But its never a significant amount of dough. That makes it a good hobby. One summer we were planning to spend a day at Atlantic Cit...
by Bill M
Wed Sep 11, 2013 11:30 pm
 
Forum: Investing - Theory, News & General
Topic: Thoughts on an entertainment account
Replies: 14
Views: 2531

Re: Social Security By The Numbers

My figures were incorrect on my original post, but I have corrected them. Thanks! Something still doesn't seem right. Assuming your full retirement age is 66, benefits at 62 would be 75% of PIA, and benefits at 70 would be 132% of PIA. With the numbers given, your PIA isn't changing, even though yo...
by Bill M
Wed Sep 11, 2013 10:59 pm
 
Forum: Personal Finance (Not Investing)
Topic: Social Security By The Numbers
Replies: 45
Views: 3018

Re: Social Security and Deferred Compensation

I've participated in my employer's deferred compensation plan for several years. I have 55% deferred; it still counts as Social Security and Medicare wages, and I pay FICA tax on it. But it doesn't count for Federal (nor State) income tax. When they pay out, I get a W-2 form with box #11 containing ...
by Bill M
Wed Sep 11, 2013 10:46 pm
 
Forum: Personal Finance (Not Investing)
Topic: Social Security and Deferred Compensation
Replies: 9
Views: 627

Re: False Promises of Annuities

Third, immediate annuities are not indexed for inflation. That's right, they aren't, except for those that are. In addition to the ones from American General and Principal (both available through Heuler's Income Solutions), there is an inflation-adjusted SPIA available from Lincoln Financial Group,...
by Bill M
Wed Sep 11, 2013 9:25 pm
 
Forum: Personal Finance (Not Investing)
Topic: False Promises of Annuities
Replies: 23
Views: 2056

Re: Pension Annuity vs Lump Sum

The annuity is actuarially equivalent to the lump sum. (My calculation says 1170/mo is equivalent to lump sum of $224K; the difference is just rounding error). So the pension plan is not cheating you. Best advise is to play with the numbers a bit. This is something that Excel excels at. A simple spr...
by Bill M
Tue Sep 10, 2013 10:57 pm
 
Forum: Personal Finance (Not Investing)
Topic: Pension Annuity vs Lump Sum
Replies: 10
Views: 773

Re: Hypothetical: Why not I-Bonds instead of TBM?

A good piece of advice I received a while ago: Don't do anything with everything.
by Bill M
Mon Sep 09, 2013 10:29 am
 
Forum: Investing - Theory, News & General
Topic: Hypothetical: Why not I-Bonds instead of TBM?
Replies: 8
Views: 1401

Re: What's wrong with deflation?

Certainly I can optimize my behavior to maximize my personal assets. Mattresses in times of deflation work just great. But I think the main point (and its a very non-intuitive point) is that what is good for the individual is not good for the economy in general. An often-quoted phrase is "your ...
by Bill M
Mon Sep 09, 2013 10:26 am
 
Forum: Investing - Theory, News & General
Topic: What's wrong with deflation?
Replies: 37
Views: 2850

Re: Soc Sec Bend Points

For those of us born in 1952, bend#1 is 180*AWI(2012)/AWI(1977). Bend#2 is 1085*AWI(2012)/AWI(1977).
AWI(1977) is 9779.44, AWI(2012) will be published in late October 2013. I have a "to-do" item to look at http://www.ssa.gov/OACT/COLA/AWI.html on 10/25/13.
by Bill M
Mon Sep 09, 2013 10:04 am
 
Forum: Personal Finance (Not Investing)
Topic: Soc Sec Bend Points
Replies: 10
Views: 1250

Re: Estimated tax payments for 2013: federal and CA

If you meet the safe harbor test, it does not matter what your actual income is in the year. Thanks jebmke. interesting - so as long as i pay enough to cover 110% of my 2012 tax liability (in 2013) it doesnt matter how how my income is - i cannot be penalized Just be aware that this doesn't work ve...
by Bill M
Sun Sep 08, 2013 4:25 pm
 
Forum: Personal Finance (Not Investing)
Topic: Estimated tax payments for 2013: federal and CA
Replies: 16
Views: 644

Re: Conversion to Roth In Retirement @ 25%

I'm in a similar situation to OP, and plan to use those low-income years before age 70 to do significant Roth conversions (up to the top of the tax bracket I'll be in once I turn 70). Retiree medical benefits from MegaCo cap the medical expenses, so I'm not likely to get a huge deduction from that r...
by Bill M
Fri Aug 30, 2013 6:10 pm
 
Forum: Personal Finance (Not Investing)
Topic: Conversion to Roth In Retirement @ 25%
Replies: 55
Views: 3664

Re: How does Social Security determine your precise benefit?

The Annual Statistical Supplement published in February each year includes an appendix (D) that gives a detailed calculation.
http://www.socialsecurity.gov/policy/do ... /apnd.html
by Bill M
Mon Aug 26, 2013 6:04 pm
 
Forum: Personal Finance (Not Investing)
Topic: How does Social Security determine your precise benefit?
Replies: 45
Views: 3528

Re: Tried to get credit report - security questions don't ma

Had this same problem getting the free annual reports mid-July. TransUnion and Experion were fine; Equifax refused. The form I was told to submit for the Equifax report said to include a copy of SocialSecurity Card and Drivers License (a couple of other choices were also available for each of these...
by Bill M
Tue Aug 20, 2013 12:40 am
 
Forum: Personal Finance (Not Investing)
Topic: Tried to get credit report - security questions don't match
Replies: 51
Views: 5616

Re: pension - survivor benefit or not?

One of those great Yogi Berra-isms -- "Two can live as cheaply as one, it just costs twice as much." I think the actual number is more like 1.5. Given that a lot of big costs are fixed (real estate taxes is a good example), I'd go with the 50% survivor benefit.
by Bill M
Sun Aug 18, 2013 8:35 am
 
Forum: Personal Finance (Not Investing)
Topic: pension - survivor benefit or not?
Replies: 22
Views: 1859

Re: Source for Correlation Data on Vanguard Funds ?

I found this one via a Google search. No idea of its accuracy. Has anyone looked at it? http://adviseronline.investorplace.com/ ... ction=form
by Bill M
Fri Aug 16, 2013 12:22 am
 
Forum: Investing - Theory, News & General
Topic: Source for Correlation Data on Vanguard Funds ?
Replies: 5
Views: 438

Re: Does your spouse know what you're worth?

All our data is kept in an excel spreadsheet. We (both of us) update it weekly. She pays the bills and collects monthly statements and I update the worksheets with balances. Without looking, my guess was 0.82; hers was 0.44. So there's a difference between knowing and "knowing".
by Bill M
Thu Aug 15, 2013 5:43 pm
 
Forum: Personal Finance (Not Investing)
Topic: Does your spouse know what you're worth?
Replies: 88
Views: 8540

Re: Inflation Bonds - Convince Me - Yes or No!

I live in a parallel universe from most Bogleheads, I guess. ... In my universe, I create a TIPS ladder with the 100% intention of holding to maturity. ... I track the par value of the TIPS, plus inflation adjustment. ... my TIPS holdings didn't soar in value over the last two years. ... my TIPS ho...
by Bill M
Wed Aug 14, 2013 9:17 am
 
Forum: Investing - Theory, News & General
Topic: Inflation Bonds - Convince Me - Yes or No!
Replies: 61
Views: 5558

Re: Dr. Wade Pfau on the 4% Rule

Currently the quoted SPIA rate for the TSP (assuming this is a reasonable number) is about 2.6%--not even close to 4% even with the "death premium". Today's quote for an inflation adjusted SPIA at Income Solutions (through Vanguard), for a 65-year-old male, is 5.07%. Far above the so-call...
by Bill M
Tue Aug 13, 2013 9:46 am
 
Forum: Investing - Theory, News & General
Topic: Dr. Wade Pfau on the 4% Rule
Replies: 124
Views: 9889

Re: Inflation Bonds - Convince Me - Yes or No!

There is a huge difference between TIPS bonds and TIPS mutual funds; I think it is a huge mistake to try to discuss them together as if they were the same beasts. I disagree. Set up your own TIPS ladder with the same weightings as the TIPS mutual fund, and the performance of the two will be virtual...
by Bill M
Mon Aug 12, 2013 10:43 am
 
Forum: Investing - Theory, News & General
Topic: Inflation Bonds - Convince Me - Yes or No!
Replies: 61
Views: 5558

Re: Inflation Bonds - Convince Me - Yes or No!

There is a huge difference between TIPS bonds and TIPS mutual funds; I think it is a huge mistake to try to discuss them together as if they were the same beasts. The mutual funds are subject to interest rate risk and fluctuate, and have no guaranteed payout on a particular future date. They are som...
by Bill M
Mon Aug 12, 2013 7:49 am
 
Forum: Investing - Theory, News & General
Topic: Inflation Bonds - Convince Me - Yes or No!
Replies: 61
Views: 5558

Re: $2700 for Advisor??

Paid $3K for a financial plan five years ago, and it was worth every cent. Got two other free ones (new firm opening a new office, and trying to attract clients), and they were worthless. Sort of reinforces the notion that you get what you pay for. ... posting all of your questions here to get start...
by Bill M
Sun Aug 11, 2013 8:54 am
 
Forum: Personal Finance (Not Investing)
Topic: $2700 for Advisor??
Replies: 43
Views: 3128

Re: college savings for kids - how much?

There's one plan I would definitely recommend AGAINST. CEEB puts out an annual survey of college costs, and we used the "4-year private university average cost" as a target. It was a big mistake. It's a bi-modal distribution, and the average is useless. Instead, pick a specific college (or...
by Bill M
Thu Aug 08, 2013 9:31 am
 
Forum: Personal Finance (Not Investing)
Topic: college savings for kids - how much?
Replies: 20
Views: 1901

Re: poll; what % of your bond allocation is in I-bonds?

Percentage is miniscule; wish it wasn't. But USTreasury limits us to only $25K/yr, and to get that we have to jump through lots of hoops. Takes quite a while to build up a decent quantity.
by Bill M
Tue Aug 06, 2013 6:13 pm
 
Forum: Investing - Theory, News & General
Topic: poll; what % of your bond allocation is in I-bonds?
Replies: 36
Views: 2563

Re: HSA Tax Free Withdrawals

I'm letting my HSA grow, and paying out-of-pocket for all current medical expenses. As for recordkeeping, I don't see it as much of a burden. I already scan all the doctor office statements, and archive the images --- no additional paper to store/misplace. The spreadsheet I already use to track medi...
by Bill M
Thu Aug 01, 2013 8:02 am
 
Forum: Personal Finance (Not Investing)
Topic: HSA Tax Free Withdrawals
Replies: 15
Views: 924

Re: Tried to get credit report - security questions don't ma

Had this same problem getting the free annual reports mid-July. TransUnion and Experion were fine; Equifax refused. The form I was told to submit for the Equifax report said to include a copy of SocialSecurity Card and Drivers License (a couple of other choices were also available for each of these)...
by Bill M
Wed Jul 31, 2013 2:45 pm
 
Forum: Personal Finance (Not Investing)
Topic: Tried to get credit report - security questions don't match
Replies: 51
Views: 5616
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