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by Bill M
Tue May 19, 2015 6:56 am
Forum: Personal Finance (Not Investing)
Topic: How do Bogleheads (in general) plan to finance their healthcare for later life?
Replies: 34
Views: 3505

Re: How do Bogleheads (in general) plan to finance their healthcare for later life?

Getting the HSA over $300K before 65 is tough. At $7K/yr, it just doesn't accumulate fast enough, and once you're 65 you can't add any more to it. So I figure the HSA is one small part of funding healthcare, with sizable balances in other accounts dedicated for healthcare too.
by Bill M
Mon May 18, 2015 8:31 am
Forum: Personal Finance (Not Investing)
Topic: How much does social security factor into your retirement income?
Replies: 161
Views: 9762

Re: How much does social security factor into your retirement income?

Retired two years ago, but delaying SocSec for another ~8 years. No doubt the amount will be a significant percentage of our total income, but there are so many assumptions built into the exact amount of that calculation... For planning purposes, I assume (1) cut 10% off the initial benefit that Soc...
by Bill M
Wed Apr 15, 2015 10:30 pm
Forum: Personal Finance (Not Investing)
Topic: Poll: Effective average Adjusted Livesoft tax rate?
Replies: 67
Views: 5252

Re: Poll: Effective average Adjusted Livesoft tax rate?

I understand what you are trying to calculate with the ALI; my in-plan Roth conversion in my 401k distorts the values, since 16a and 16b report the gross and taxable amount of the conversion (neither was spendable income). So I adjusted the ALI before responding. It made the effective tax rate 26.7%...
by Bill M
Wed Apr 15, 2015 12:32 pm
Forum: Personal Finance (Not Investing)
Topic: How Many Credit Cards Do You Have Open?
Replies: 25
Views: 1631

Re: How Many Credit Cards Do You Have Open?

One for everyday use. One backup for the times that one gets hacked/stolen/etc. One separate one for everything on the web, which frequently gets hacked/stolen/etc (usually once/year, typically through PayPal). And one just to collect the airline miles signup bonus (charged their min amount to get t...
by Bill M
Wed Apr 15, 2015 8:00 am
Forum: Personal Finance (Not Investing)
Topic: Can nursing homes evict Medicaid patients?
Replies: 19
Views: 2525

Re: Can nursing homes evict Medicaid patients?

Some experience with this with my grandmother in the 1980s and 1990s. When she first entered the nursing home, there was a financial qualification test she needed to pass, i.e. sufficient assets to pay for some number of years of care. And there were restrictions on wealth transfer (no surprise). Ni...
by Bill M
Wed Apr 15, 2015 7:39 am
Forum: Personal Finance (Not Investing)
Topic: How do you value a pension?
Replies: 18
Views: 1655

Re: How do you valuate a pension?

The value certainly depends on the reason you are determining the value. For job comparison, I'd ignore the pension until it becomes a "golden handcuff" (I'd place this somewhere around 25 years of service to a company). Recognize that the pension formula is inherently non-linear; negligib...
by Bill M
Mon Apr 13, 2015 10:24 am
Forum: Investing - Theory, News & General
Topic: Record keeping with Excel
Replies: 19
Views: 1615

Re: Record keeping with Excel

Excel is a very powerful tool. Start by creating a workbook with investment account values; but you can do so much more. Add summary pages (aka net worth) with the quarterly (or monthly) figures, and add a graph of them over time. For taxable accounts, also record purchase dates and basis values; yo...
by Bill M
Thu Apr 09, 2015 1:30 pm
Forum: Personal Finance (Not Investing)
Topic: 401k failed non-discrimination test - already rolled over
Replies: 5
Views: 760

Re: 401k failed non-discrimination test - already rolled ove

Its their problem, not yours. But if they send you a refund check, I'd sit on it for a while before cashing it, expecting them to demand its return.
by Bill M
Thu Apr 09, 2015 1:25 pm
Forum: Personal Finance (Not Investing)
Topic: Named Beneficiary for IRA and other property vs. will/trust
Replies: 6
Views: 662

Re: Named Beneficiary for IRA and other property vs. will/tr

If the beneficiary is a named person, there is no need for probate. If the beneficiary is "the person I am married to at the time of my death" then the executor of the estate will have to tell Vanguard who that person is. So someone will still need to file the will with the Probate Court, ...
by Bill M
Tue Apr 07, 2015 10:15 pm
Forum: Personal Finance (Not Investing)
Topic: Social Security Spousal Benefit Question
Replies: 4
Views: 579

Re: Social Security Spousal Benefit Question

My wife and I are in same situation, and I plan to do the file&suspend so she can get the spousal benefit. I have one of those nit-picking detail questions that I can't seem to find an answer: Do I start the file&suspend paperwork a few months prior to my 66th birthday (and hope that they do...
by Bill M
Tue Apr 07, 2015 1:39 pm
Forum: Personal Finance (Not Investing)
Topic: Roth Conversion and Taxes
Replies: 6
Views: 654

Re: Roth Conversion and Taxes

You made two non-deductible contributions in 2014, each $5500, one for 2013 and one for 2014; total basis is $11,000. Of that, $5500 was converted to Roth in 2014, and $5500 was left in tIRA. So on form 8606, Line 1: 11000 Line 2: 0 Line 3: 11000 Line 5: 11000 Line 6: 5500 Line 8: 5500 Line 9: 11000...
by Bill M
Tue Apr 07, 2015 10:16 am
Forum: Personal Finance (Not Investing)
Topic: Roth Conversion and Taxes
Replies: 10
Views: 670

Re: Roth Conversion and Taxes

At $80.8K you're nearly at the top of the 15% marginal tax bracket; the Roth conversion put you well into the 25% marginal bracket. Plugging your numbers into my tax program (assuming MFJ, 2 exemptions) I figure the first $1,200 of Roth conversion topped off the 15% bracket. Is a Roth conversion at ...
by Bill M
Tue Apr 07, 2015 9:08 am
Forum: Personal Finance (Not Investing)
Topic: Lump sum pension vs future annuity
Replies: 7
Views: 1034

Re: Lump sum pension vs future annuity

What is the present value, at age 31, of an annual annuity of $1 starting at age 65? My actuarial spreadsheet says $5.047, based on the 2008 GAAT mortality table and 3% interest rate. So for your $1112/mo that comes to $67,355. Alternatively, what would an insurance company charge to provide such a ...
by Bill M
Mon Apr 06, 2015 7:16 am
Forum: Investing - Theory, News & General
Topic: Bored -- wondering about day trading for fun
Replies: 61
Views: 5936

Re: Bored -- wondering about day trading for fun

Day trading of stocks will also seem boring. For excitement, go with low-priced index options -- +500% to -100% in 30 minutes isn't uncommon. Taxes are relatively simple: they are "Section 1256 contracts" and you don't itemize the individual trades, just report a total net gain/loss figure...
by Bill M
Mon Apr 06, 2015 7:01 am
Forum: Personal Finance (Not Investing)
Topic: When to start taking pension payments?
Replies: 11
Views: 1087

Re: When to start taking pension payments?

The best strategy depends on lots of tiny details of your pension plan, and how it calculates your monthly benefit. I've seen two basic approaches: (1) based on employment history, calculate a lump sum amount and then convert it to a monthly annuity, and (2) based on employment history, calculate a ...
by Bill M
Sat Apr 04, 2015 9:25 am
Forum: Investing - Theory, News & General
Topic: Do CPI-Indexed Single-Premium Deferred Annuities exist?
Replies: 27
Views: 2212

Re: Do CPI-Indexed Single-Premium Deferred Annuities exist?

Sure wish they did. If anyone has pointers, I'd love to hear about it too. Closest I've found, and bought, is one that quotes the nominal payment for first year, and then does CPI-adjustments for subsequent years. I worked backwards to figure the amount, assuming 3.5% inflation between now and start...
by Bill M
Sat Apr 04, 2015 7:11 am
Forum: Personal Finance (Not Investing)
Topic: Occasional big expenses after retirement
Replies: 32
Views: 2747

Re: Occasional big expenses after retirement

OP here. Thanks to all for the interesting responses. As several have pointed out, the planning process has to include these big occasionals to make sure enough is saved. But I never appreciated how much it throws off the withdrawal planning. It seems every one of the methods I had considered is bei...
by Bill M
Fri Apr 03, 2015 3:53 pm
Forum: Personal Finance (Not Investing)
Topic: Unexpected Car Expenses
Replies: 21
Views: 2563

Re: Unexpected Car Expenses

We have two cars; the younger one (13 years) has over 200K miles, and the older one (15 years) has only 135K. We budget $2400/yr for car repairs. Your repair bill sounds typical.

If you had the repair done at Midas, its the last Cat your car will need. They guarantee them.
by Bill M
Fri Apr 03, 2015 3:41 pm
Forum: Personal Finance (Not Investing)
Topic: Occasional big expenses after retirement
Replies: 32
Views: 2747

Occasional big expenses after retirement

For all the usual expenses it is rather easy to estimate some kind of annual spending amount, and deal with the retirement "budget". Granted lots are unknown, like amount of travel and entertainment, but we can make guesses for annual amounts. But there are some occasional big expenses tha...
by Bill M
Fri Apr 03, 2015 8:11 am
Forum: Investing - Theory, News & General
Topic: How to find the true value of a stock
Replies: 17
Views: 1541

Re: How to find the true value of a stock

John Cochrane recently ran a MOOC on this subject, http://coursera.org/course/assetpricing. His stochastic calculus formula, P=E(mx), depends on (1) your personal utility function, (2) your personal discount rate, etc. So everyone's "true value" is different. But the best indication of &qu...
by Bill M
Wed Apr 01, 2015 10:53 am
Forum: Personal Finance (Not Investing)
Topic: Corporate Finance vs Personal Finance
Replies: 9
Views: 899

Re: Corporate Finance vs Personal Finance

Depreciation is the one big one that comes to mind. Personal finance tends to value the home at market value, not at a depreciated purchase price. But there are aspects of personal finance that don't seem to apply to corporate finance. How would a corporation value a pension benefit (that it is rece...
by Bill M
Mon Mar 30, 2015 6:59 am
Forum: Investing - Theory, News & General
Topic: Should a BH investor never use futures/options?
Replies: 70
Views: 4865

Re: Should a BH investor never use futures/options?

Writing covered calls is a simple process and limited downside risk. But what is the upside gain? My experience says very little. (FWIW, I'm approved at Level 5) A simple comparison --- If you go to the racetrack, and for each race bet on the favored horse to "show" - out of 10 races you'l...
by Bill M
Fri Mar 27, 2015 3:06 pm
Forum: Investing - Theory, News & General
Topic: My evil plan backfired
Replies: 53
Views: 7005

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 9:11 am
Forum: Personal Finance (Not Investing)
Topic: Two Legged Stool [Figuring out when to take Social Security]
Replies: 26
Views: 3153

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
Thu Mar 19, 2015 2:25 pm
Forum: Personal Finance (Not Investing)
Topic: Exceeding the $53k contribution limit. Options?
Replies: 18
Views: 3209

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 9:34 am
Forum: Personal Finance (Not Investing)
Topic: Market-timing an SPIA purchase
Replies: 18
Views: 1717

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
Wed Mar 18, 2015 9:22 pm
Forum: Investing - Theory, News & General
Topic: Questions about options
Replies: 5
Views: 393

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 9:13 pm
Forum: Personal Finance (Not Investing)
Topic: Really confused about Roths
Replies: 16
Views: 2593

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 8:53 pm
Forum: Personal Finance (Not Investing)
Topic: Market-timing an SPIA purchase
Replies: 18
Views: 1717

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
Mon Mar 16, 2015 7:08 am
Forum: Personal Finance (Not Investing)
Topic: Annuity -SPIA
Replies: 9
Views: 757

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 6:19 am
Forum: Personal Finance (Not Investing)
Topic: Should I change Asset Allocation to a more conservative mix
Replies: 20
Views: 2071

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
Sun Mar 15, 2015 8:36 pm
Forum: Personal Finance (Not Investing)
Topic: Yet Another Roth/Trad 401K Thread
Replies: 15
Views: 1437

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
Thu Mar 12, 2015 3:09 pm
Forum: Personal Finance (Not Investing)
Topic: Why not use inflation-adjusted SPIA?
Replies: 117
Views: 5375

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 6:58 am
Forum: Personal Finance (Not Investing)
Topic: Why not use inflation-adjusted SPIA?
Replies: 117
Views: 5375

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
Fri Mar 06, 2015 9:11 am
Forum: Personal Finance (Not Investing)
Topic: Social Security statements after age 62
Replies: 0
Views: 213

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
Thu Mar 05, 2015 12:45 pm
Forum: Personal Finance (Not Investing)
Topic: Spousal Responsibility for Nursing Home Care
Replies: 6
Views: 1011

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 12:39 pm
Forum: Personal Finance (Not Investing)
Topic: Question about Beneficiaries on IRA's
Replies: 7
Views: 569

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
Sun Mar 01, 2015 11:59 pm
Forum: Investing - Help with Personal Investments
Topic: retiement calcultor
Replies: 2
Views: 537

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
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: 2006

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
Thu Feb 19, 2015 12:20 pm
Forum: Investing - Theory, News & General
Topic: Inherited tIRA Considerations
Replies: 4
Views: 465

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
Tue Feb 17, 2015 12:25 pm
Forum: Personal Finance (Not Investing)
Topic: TIAA-CREF After Tax Annuity
Replies: 8
Views: 539

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 12:19 pm
Forum: Personal Finance (Not Investing)
Topic: retirement income estimate-reality check
Replies: 13
Views: 1605

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
Thu Feb 12, 2015 10:29 pm
Forum: Personal Finance (Not Investing)
Topic: How do you figure out your W4 withholding?
Replies: 20
Views: 2150

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 10:18 pm
Forum: Personal Finance (Not Investing)
Topic: Better to leave qualified or non-qualified money to kids?
Replies: 14
Views: 1506

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
Tue Feb 10, 2015 10:35 am
Forum: Personal Finance (Not Investing)
Topic: Retirees and estimated tax payments
Replies: 31
Views: 1756

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
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: 2860

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
Tue Feb 03, 2015 8:35 am
Forum: Personal Finance (Not Investing)
Topic: Mega backdoor Roth or Taxable account
Replies: 1
Views: 353

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 8:30 am
Forum: Personal Finance (Not Investing)
Topic: Do retired Bogleheads have rising net assets?
Replies: 42
Views: 4708

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
Sat Jan 31, 2015 2:41 pm
Forum: Personal Finance (Not Investing)
Topic: POLL: How Will You Complete Your 2014 Taxes?
Replies: 69
Views: 5094

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

freefilefillableforms.com
fillable pdf seemed closest response in the poll

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