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Re: My evil plan backfired

One percent?!!!??? On behalf of husbands everywhere, please let your husband have some fun. Leave him alone. +1 It seems to me that you've set the table stakes, and he has won the first hand. The game is still young. If the amount you've staked him is less than the cost of a college education, he'l...
by Bill M
Fri Mar 27, 2015 3:06 pm
 
Forum: Investing - Theory, News & General
Topic: My evil plan backfired
Replies: 53
Views: 6448

Re: Two Legged Stool

Excel is a good tool for quick comparisons of strategies. If you delay SocSec until 66, you'll be pulling more from savings for the first four years, then pulling less from then onward. Likewise if you delay until 70 (doing the file&suspend at 66). Excel can give you a quick estimate of when the...
by Bill M
Fri Mar 27, 2015 9:11 am
 
Forum: Personal Finance (Not Investing)
Topic: Two Legged Stool [Figuring out when to take Social Security]
Replies: 18
Views: 1909

Re: Exceeding the $53k contribution limit. Options?

My experience with this limit; just FYI, as it may or not apply in your case. Every year I exceeded the 415(c) limit, somewhat intentionally due extremely low expense ratios within the 401k plan. As I approached the limit, I watched for payroll dept to turn off the contributions. When they did, I tu...
by Bill M
Thu Mar 19, 2015 2:25 pm
 
Forum: Personal Finance (Not Investing)
Topic: Exceeding the $53k contribution limit. Options?
Replies: 18
Views: 3025

Re: Market-timing an SPIA purchase

.... up with increasing starting age, where is that factor included in this equation? If the 3.6% includes the effects of both mortality credits and return of principal, it cannot be a constant. It goes up with increasing starting age. The chart that started this thread (see first posting for link)...
by Bill M
Thu Mar 19, 2015 9:34 am
 
Forum: Personal Finance (Not Investing)
Topic: Market-timing an SPIA purchase
Replies: 18
Views: 1639

Re: Questions about options

Deep in the money options don't trade frequently. You're probably looking at the last trade information; that says nothing about the current bid/ask spread. I can guarantee that you'll never buy at the "ask" price, exercise the option, sell the stock, and come out ahead.
by Bill M
Wed Mar 18, 2015 9:22 pm
 
Forum: Investing - Theory, News & General
Topic: Questions about options
Replies: 5
Views: 353

Re: Really confused about Roths

Welcome to the forum. One more point to add to the confusion--there is this crazy five-year rule with Roth accounts. One of the requirements for a tax-free distribution from a Roth account is that the account exist for five years prior to the distribution. When you move funds from the 401k (or TSP) ...
by Bill M
Wed Mar 18, 2015 9:13 pm
 
Forum: Personal Finance (Not Investing)
Topic: Really confused about Roths
Replies: 16
Views: 2461

Re: Market-timing an SPIA purchase

The payout from a SPIA increases as you get older. That part is easy to do some market timing (but whether its useful is another matter entirely). SPIA yield (yearly % of original payment) = 0.64*(bond yield in %) + 3.6% For a fixed age, payout rates over time vary with bond yields. So if you can pr...
by Bill M
Wed Mar 18, 2015 8:53 pm
 
Forum: Personal Finance (Not Investing)
Topic: Market-timing an SPIA purchase
Replies: 18
Views: 1639

Re: Annuity -SPIA

Hersh Stern (immediateannuities.com) does a monthly report of annuity rates. The most recent issue of his "Comparative Annuity Report" is available at: https://www.immediateannuities.com/comparative-annuity-reports/ (look at right margin, at bottom of page for historical issues). The page ...
by Bill M
Mon Mar 16, 2015 7:08 am
 
Forum: Personal Finance (Not Investing)
Topic: Annuity -SPIA
Replies: 9
Views: 716

Re: Should I change Asset Allocation to a more conservative

If it were me, I wouldn't pay capital gains tax to be more conservative, but if I wanted to reduce risk faster, I would start redirecting stock dividends and all my fresh savings to bonds. +1 You didn't mention whether investments are in tax-deferred accounts. That would be another easy way to adju...
by Bill M
Mon Mar 16, 2015 6:19 am
 
Forum: Personal Finance (Not Investing)
Topic: Should I change Asset Allocation to a more conservative mix
Replies: 20
Views: 1933

Re: Yet Another Roth/Trad 401K Thread

The rational way to decide is to look at your current tax bracket, and guess at future tax bracket. But, I go irrational on this one. With interest/dividends in a taxable account, part of the earnings each year gets withdrawn to pay the taxes. But its not that way with withdrawals from pre-tax quali...
by Bill M
Sun Mar 15, 2015 8:36 pm
 
Forum: Personal Finance (Not Investing)
Topic: Yet Another Roth/Trad 401K Thread
Replies: 15
Views: 1333

Re: Why not use inflation-adjusted SPIA?

They may not be actuarially fair, and they may not be competitive, and they may be overpriced....but (in my case) they are offering a joint-100% survivor initial payout rate of 3.65%. Without any of the risks that go with the "safe" withdrawal rate, like sequence of return risk, market ri...
by Bill M
Thu Mar 12, 2015 3:09 pm
 
Forum: Personal Finance (Not Investing)
Topic: Why not use inflation-adjusted SPIA?
Replies: 117
Views: 4750

Re: Why not use inflation-adjusted SPIA?

They may not be actuarially fair, and they may not be competitive, and they may be overpriced....but (in my case) they are offering a joint-100% survivor initial payout rate of 3.65%. Without any of the risks that go with the "safe" withdrawal rate, like sequence of return risk, market ris...
by Bill M
Thu Mar 12, 2015 6:58 am
 
Forum: Personal Finance (Not Investing)
Topic: Why not use inflation-adjusted SPIA?
Replies: 117
Views: 4750

Social Security statements after age 62

The annual statements produced by Social Security have one line that says "if you continue working until age 62, your benefit will be about..." Once you are past age 62 this doesn't make much sense, especially since they know you have not yet applied for benefits. This line would better be...
by Bill M
Fri Mar 06, 2015 9:11 am
 
Forum: Personal Finance (Not Investing)
Topic: Social Security statements after age 62
Replies: 0
Views: 190

Re: Spousal Responsibility for Nursing Home Care

In our case, the top reason for long-term-care insurance was to protect enough of our savings from the Nursing Home, so the health spouse can sill live somewhere. What Medicaid lets you keep isn't much....
by Bill M
Thu Mar 05, 2015 12:45 pm
 
Forum: Personal Finance (Not Investing)
Topic: Spousal Responsibility for Nursing Home Care
Replies: 6
Views: 962

Re: Question about Beneficiaries on IRA's

One additional consideration -- while IRAs pass to the beneficiary without going through probate, if your beneficiary is not given as an easily-identified person (such as, instead of a full name, beneficiary is given as some variant on "my spouse", or "descendents per stirpees"),...
by Bill M
Thu Mar 05, 2015 12:39 pm
 
Forum: Personal Finance (Not Investing)
Topic: Question about Beneficiaries on IRA's
Replies: 7
Views: 541

Re: retiement calcultor

Darrow Kirkpatrick did a survey of online calculators a little while ago; his blog post is at http://www.caniretireyet.com/the-best-r ... lculators/
by Bill M
Sun Mar 01, 2015 11:59 pm
 
Forum: Investing - Help with Personal Investments
Topic: retiement calcultor
Replies: 2
Views: 508

Re: POD accounts only so how to pay deceased expenses?

IANAL, but dealt with almost exactly same POD situation with my Mom. My sister and I split the expenses out of the amounts we were paid by the banks. There's the legal solution (pound sand, as stated in another response), and there's the "do what's right" solution (split expenses four ways...
by Bill M
Fri Feb 20, 2015 9:10 pm
 
Forum: Personal Finance (Not Investing)
Topic: POD accounts only so how to pay deceased expenses?
Replies: 24
Views: 1888

Re: Inherited tIRA Considerations

The thinking is that since the inherited tIRA is generating RMDs right now, that it should have the lowest return allocations (TBM and TIBM) so as to reduce how much taxable income I generate from those RMDs. Since those RMDs are taxed as income (28% + 5% bracket), I thought it would make the most ...
by Bill M
Thu Feb 19, 2015 12:20 pm
 
Forum: Investing - Theory, News & General
Topic: Inherited tIRA Considerations
Replies: 4
Views: 440

Re: TIAA-CREF After Tax Annuity

You should consider qualified funds to be valuable. At a certain point you can't contribute to those accounts, so don't close them just "for simplicity".
by Bill M
Tue Feb 17, 2015 12:25 pm
 
Forum: Personal Finance (Not Investing)
Topic: TIAA-CREF After Tax Annuity
Replies: 8
Views: 505

Re: retirement income estimate-reality check

Simple sanity check-- You need $62K/yr, pension provides 32568 and SocSec provides 22656, leaving 6776+taxes to come from 401k. 2.5% looks about right. But don't be surprised if spending goes up (especially T&E) for the first few years of retirement. You should also look at a few alternative pla...
by Bill M
Tue Feb 17, 2015 12:19 pm
 
Forum: Personal Finance (Not Investing)
Topic: retirement income estimate-reality check
Replies: 13
Views: 1550

Re: How do you figure out your W4 withholding?

There is a field on the W4 for "additional withholding", which is added to the calculation based on marital status and exemptions. It is easy to adjust, and has a direct (and easily calculatable effect) on the paycheck. Beyond that, the key is to check frequently, and adjust frequently. No...
by Bill M
Thu Feb 12, 2015 10:29 pm
 
Forum: Personal Finance (Not Investing)
Topic: How do you figure out your W4 withholding?
Replies: 20
Views: 2054

Re: Better to leave qualified or non-qualified money to kids

For the qualified assets, the answer depends whether they are pre-tax, after-tax, or Roth. Inherited a Roth account means the entire balance can be withdrawn tax-free, so 100% to the kids. A traditional IRA with basis means some portion is withdrawn tax-free, and the remainder is withdrawn as you st...
by Bill M
Thu Feb 12, 2015 10:18 pm
 
Forum: Personal Finance (Not Investing)
Topic: Better to leave qualified or non-qualified money to kids?
Replies: 14
Views: 1450

Re: Retirees and estimated tax payments

I have found it a hassle to change the withholding rate for SocSec or for a pension (had to do this for my Mom several times, not for me yet). It was much easier to do the quarterly estimated payments -- each 25% of the safe harbor amount.
by Bill M
Tue Feb 10, 2015 10:35 am
 
Forum: Personal Finance (Not Investing)
Topic: Retirees and estimated tax payments
Replies: 31
Views: 1699

Re: What was your financial situation before having first ch

This was back in late 1970s, the years of very high inflation. We were late 20s, income as a first-year Professor was $4k/yr, trying to start a consulting business (as all Professors had to do then to get above water), no home, no mortgage. At the time I often pointed out that there was very little ...
by Bill M
Wed Feb 04, 2015 9:28 am
 
Forum: Personal Finance (Not Investing)
Topic: What was your financial situation before having first child?
Replies: 34
Views: 2686

Re: Mega backdoor Roth or Taxable account

I once had a financial planner tell me, "Don't do anything with everything." I think it was very very good advice.
by Bill M
Tue Feb 03, 2015 8:35 am
 
Forum: Personal Finance (Not Investing)
Topic: Mega backdoor Roth or Taxable account
Replies: 1
Views: 338

Re: Do retired Bogleheads have rising net assets?

jvclark02 wrote:Retired last year and assets still rising but trying to learn to spend more :oops:

ditto - two years and still learning.

If my net assets were not rising, and projected to continue rising, I'd be buying a SPIA to make sure they did.
by Bill M
Tue Feb 03, 2015 8:30 am
 
Forum: Personal Finance (Not Investing)
Topic: Do retired Bogleheads have rising net assets?
Replies: 42
Views: 4495

Re: POLL: How Will You Complete Your 2014 Taxes?

freefilefillableforms.com
fillable pdf seemed closest response in the poll
by Bill M
Sat Jan 31, 2015 2:41 pm
 
Forum: Personal Finance (Not Investing)
Topic: POLL: How Will You Complete Your 2014 Taxes?
Replies: 69
Views: 4898

Re: Any other investors with 70/30 portfolio?

I'm 62, retired, and follow a floor/upside strategy. The floor is 100% bonds, and the upside is 70/30. As the floor is consumed over the years, and the upside stays 70/30, it will lead to what Wade Pfau calls a "rising equity glidepath."
by Bill M
Fri Jan 30, 2015 1:34 pm
 
Forum: Investing - Theory, News & General
Topic: Any other investors with 70/30 portfolio?
Replies: 60
Views: 6810

Re: Is it time to give-up on TIPS?

Why do Bogleheads love TIPS so much? I don't get it. The fed tries its best to control inflation (is it not their mandate?) and we haven't seen much unexpected inflation in decades. Why not just hold Total Bond Market or Intermediate-Term Munis? Won't those, over the long run, keep up with inflatio...
by Bill M
Fri Jan 30, 2015 1:25 pm
 
Forum: Investing - Theory, News & General
Topic: Is it time to give-up on TIPS?
Replies: 104
Views: 13077

Re: File FAFSA with 7 figure non-retirement portfolio?

I believe that some scholarships that are merit or income-based might require fafsa on file, and possibly some college employment opportunities might as well, so I'm not seeing the advantage to not filing. +1 Both our kids got merit scholarships, but the college wouldn't consider the applications w...
by Bill M
Tue Jan 27, 2015 7:53 am
 
Forum: Personal Finance (Not Investing)
Topic: File FAFSA with 7 figure non-retirement portfolio?
Replies: 42
Views: 5473

Re: Refund from the IRS? Why?

Refund from the IRS? Why? For the IBonds, of course. (1) Meet the safe harbor for withholding through the year, (2) calculate your taxes, (3) file a 4868 with the amount due plus $5K, then (4) file the return requesting the refund be issued in IBonds. This year I plan to skip the 4868, just use EFTP...
by Bill M
Tue Jan 27, 2015 7:37 am
 
Forum: Personal Finance (Not Investing)
Topic: Refund from the IRS? Why?
Replies: 51
Views: 5117

Re: Is it time to give-up on TIPS?

One risk in retirement that I'd rather not think about is inflation. TIPS let me totally ignore the potential problem. Like all insurance, it isn't free; but its a good tradeoff. For me, its Stay the course.
by Bill M
Mon Jan 26, 2015 9:47 am
 
Forum: Investing - Theory, News & General
Topic: Is it time to give-up on TIPS?
Replies: 104
Views: 13077

Re: When to take a HSA distribution for past medical costs

Once you turn 65 and are covered by Medicare, you can't contribute any more to the HSA. So the account is "frozen" at that point. But the premiums for Medicare B and D are allowable reimbursements. Also long-term-care premiums. The HSA is a tax-free account, just like a Roth IRA. My withdr...
by Bill M
Mon Jan 26, 2015 9:42 am
 
Forum: Personal Finance (Not Investing)
Topic: When to take a HSA distribution for past medical costs
Replies: 25
Views: 1888

Re: Poll: Locating deceased person's assets

I have needed to do it (for my Mom). It was easy. For over 20 years I have been the one to maintain the computer file with an up-to-date organized list of ALL her assets. This solution doesn't carry over to the next generation, but I have full faith that my kids are more computer savvy than I am and...
by Bill M
Mon Jan 26, 2015 9:26 am
 
Forum: Personal Finance (Not Investing)
Topic: Poll: Locating deceased person's assets
Replies: 33
Views: 2332

Re: Would maxing a Roth and 401k each year be enough?

I think that anyone that has done the calculations and projections realizes pretty quickly that they need to save more each year than Uncle Sam subsidizes. The incentives of tax-deferred accounts might be enough to get people to save some; anyone who has looked at numbers has far more motivation. If...
by Bill M
Fri Jan 23, 2015 9:50 pm
 
Forum: Investing - Theory, News & General
Topic: Would maxing a Roth and 401k each year be enough?
Replies: 17
Views: 2967

Re: when did Backdoor Roth first become available?

Prior to 2010 Roth conversions could only be done by people with AGI under $100K. The "Tax Increase Prevention and Reconciliation Act of 2005" removed that limit, effective 2010. So you could say 2010. But there was a lot of early discussion about whether the IRS would consider the "s...
by Bill M
Thu Jan 22, 2015 10:50 pm
 
Forum: Investing - Theory, News & General
Topic: when did Backdoor Roth first become available?
Replies: 6
Views: 1039

Re: Estimate lump sum from monthly pension

I would like to double check my company's lump sum calculation. I have the monthly annuity amount and I know the PV formula. To do the PV of annuity, I think the company is required to use the interest rates and mortality table by IRS. I went to the IRS website and found these numbers: immediate in...
by Bill M
Thu Jan 22, 2015 6:45 pm
 
Forum: Personal Finance (Not Investing)
Topic: Estimate lump sum from monthly pension
Replies: 4
Views: 340

Re: Poll: What Percent of TIPS in Taxable Account

Don't you have to recalculate each year the principal appreciation and declare it as interest? Seems like a major PIA to have to recalculate it, especially if you are holding it in a Treasury Direct account. Not a PIA. You get a 1099-OID from your broker. I would assume that Treasury Direct also ha...
by Bill M
Thu Jan 22, 2015 11:35 am
 
Forum: Investing - Theory, News & General
Topic: Poll: What Percent of TIPS in Taxable Account
Replies: 27
Views: 1742

Re: Poll: What Percent of TIPS in Taxable Account

Right now about 45% in taxable accounts, and that's the poll response I entered. But, ...those are dedicated to providing the income to delay SocSec to 70. Meanwhile I'm accumulating a TIPS ladder in my Roth IRA. So in about 7-8 years, 100% will be in Roth accounts. Different purposes, different tax...
by Bill M
Thu Jan 22, 2015 11:32 am
 
Forum: Investing - Theory, News & General
Topic: Poll: What Percent of TIPS in Taxable Account
Replies: 27
Views: 1742

Re: AMT............Total Tax Same w/ Std. Deduction/Itemize

Then why are you paying AMT? Take a look at your Form 6251 and see which other deductions you are losing, and to make sure that your tax software filled out the forms correctly. CA state taxes are high, but it's rare for state taxes alone to cause you to pay AMT, unless you paid an unusually large ...
by Bill M
Thu Jan 22, 2015 11:16 am
 
Forum: Personal Finance (Not Investing)
Topic: AMT............Total Tax Same w/ Std. Deduction/Itemize
Replies: 11
Views: 1239

Re: Which of 7 cost-basis methods? (Poll)

Vanguard doesn't offer all 7 of the choices listed, so you end up telling them SPECID, and at time of sale deciding whether you want to sell the high-cost (minimize capital gains), or low-cost (gain harvesting), or other more complex strategy.
by Bill M
Wed Jan 21, 2015 8:22 am
 
Forum: Investing - Theory, News & General
Topic: Which of 7 cost-basis methods? (Poll)
Replies: 11
Views: 1031

Re: Feedback please: Lump Sum vs Pension

Under "Related choices" point #2: I disagree with the "not very different", (and you seem to cover these points in more detail later in the wiki). There are some significant differences between the pension and buying an annuity with the lump sum. (1) the pension is backed by PBGC...
by Bill M
Wed Jan 21, 2015 8:08 am
 
Forum: Personal Finance (Not Investing)
Topic: Feedback please: Lump Sum vs Pension
Replies: 8
Views: 805

Re: 401k understanding Trad, Roth, After Tax

Be careful about the company matching formula as you approach the $53K maximum. My MegaCo formula was 2/3 of the first 6% contributed, so I was careful to continue contributions until the end of the year (even though they went way over $53K); I then received a "return of excess contribution&quo...
by Bill M
Wed Jan 21, 2015 7:48 am
 
Forum: Personal Finance (Not Investing)
Topic: 401k understanding Trad, Roth, After Tax
Replies: 5
Views: 642

Re: Does Your 401k Allow (Non-Roth) AFTER-TAX Contributions?

Alan S. wrote:3) Plan could also allow an IRR from the after tax sub account, but the earnings would be taxable.

My plan allowed this, and I used it to convert the entire sub account to Roth with only minor tax impact.
by Bill M
Wed Jan 21, 2015 7:41 am
 
Forum: Personal Finance (Not Investing)
Topic: Does Your 401k Allow (Non-Roth) AFTER-TAX Contributions?
Replies: 44
Views: 6507

Re: HSA Decision/Confusion

There is no reason HSA contributions have to come through payroll deduction...you can make contributions to your account directly (limited by the total family contribution to both HSAs). I'd do that to get the balance up high enough that the account has no fees. Your total (HSA#1 + HSA#2) would have...
by Bill M
Wed Jan 21, 2015 7:34 am
 
Forum: Personal Finance (Not Investing)
Topic: HSA Decision/Confusion
Replies: 5
Views: 636

Re: AMT............Total Tax Same w/ Std. Deduction/Itemize

There are some itemized deductions that carry over to the AMT, like charity donations. Most, like state taxes and real estate taxes, don't. If all your itemized deductions are in the latter case, the total tax is the same, as you noted. Sometimes it's worthwhile to itemize deductions just to get the...
by Bill M
Wed Jan 21, 2015 7:23 am
 
Forum: Personal Finance (Not Investing)
Topic: AMT............Total Tax Same w/ Std. Deduction/Itemize
Replies: 11
Views: 1239

Re: Adjusted Livesoft Income (ALI)

As a retiree, my potential spendable "income" has nothing to do with the numbers on my tax forms. Much of what I call income is totally under my control, like withdrawals from taxable accounts or withdrawals from Roth IRAs, and is not part of AGI nor appears on 1040. Much of what the IRS c...
by Bill M
Wed Jan 21, 2015 7:17 am
 
Forum: Personal Finance (Not Investing)
Topic: Adjusted Livesoft Income (ALI)
Replies: 36
Views: 4123

Re: Bernstein article:How to tell if your nest egg is big en

A good rule of thumb is to have, at the very least, 25 years of RLE saved up to retire at 60, 20 years to retire at 65, and 17 years to retire at 70 Wonder where these figures come from in the article? He's estimating life expectancy to be 85 at age 60 and 65, and 87 at age 70. In the article RLE i...
by Bill M
Tue Jan 20, 2015 1:43 pm
 
Forum: Investing - Theory, News & General
Topic: "When you've won the game, stop playing"
Replies: 83
Views: 8700

Re: A quick poll--pension annuity vs. lump sum

Since you don't, you're really dealing with a question of risk management. Don't think of this question as choice of investment alternatives; think of it as the way to minimize risks. Take the pension annuity. Bill M, no argument with the point that many aspects of this are a risk management decisi...
by Bill M
Mon Jan 19, 2015 7:10 am
 
Forum: Personal Finance (Not Investing)
Topic: A quick poll--pension annuity vs. lump sum
Replies: 62
Views: 3960
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