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Boglehead1967

Hi, you did not indicate your ages or time horizon to retirement.

As no one beats the market in the long run, lowest cost index options are the most recommended options, after all this is Bogleheads forum. You have those in Vanguard S&P500 trust and the total market bond funds.

I personally came to conclusion at 55 that having multiple funds in your portfolio does not change the outcome substantially enough to justify it for long term. In my own 401k I moved 4 other funds into S&P500 index fund FXAIX with 0.015% expense ratio. That’s after I fired my financial advisor who recommended 5 fund allocation.

But of course this advice is considered in isolation from the rest of your assets.

Boglehead1967

Hi all, just read through and have a really hard time understanding the logic here. First, do you have income and what is your marginal tax bracket? Second, to realize loss in your taxable account, are these short term or long term losses? Losses go against gains like to like or you only have 3k to use against regular income for federal taxes. I have losses from 2009 that I still carry in my tax returns, getting 3k deduction every year. It was a sizable loss so few more years to go. You must be selling something else to offset these losses with gains. Or is it about getting the 3K deduction? Also, in tax deferred accounts the choice of low cost funds is very different for different people, I only have 1 low cost S&P500 option with Fidel...

Boglehead1967

I have a similar set of options. I chose Fidelity S&P500 Index fund for 100% of my 401k investments.
I also invest into VTSAX weekly in my taxable.
You might want to add Small Cap and International with best track record and lowest expense ratio.
But that’s a personal choice of course. I decided to stay away from international based on everything I read about US energy, share of export economy and the size of internal market.

Boglehead1967

Hi, at 25 you are making all the right decisions except for this 9.75% loan, as everyone else pointed out. Markets fluctuate especially over long term but this loan is a drag, there is no way around it. The interest is too high to justify having the loan. As to the rest of your questions - life has a tendency to introduce changes to your plan. For instance you might get married and your partner may have a very different perspective on retirement. If you are on your own and continue exactly as is now, you will have enough at 45 to pull the plug. Especially since you have access to a pension. If you reach a maximum wage for social security contributions you will earn full 40 credits and will have full SS benefit waiting for you too. But again...

Boglehead1967

Hi Thisishard, few suggestions based on your outline: In this climate dollar cost averaging works better because of really high swings and fluctuations Register with Personal Capital and get a full picture of your overall asset allocation, it's fast and easy once you add your accounts. Being 38 and with 300K portfolio is a long way to and in terms of saving as much as you can, you are on a great path towards FI. You already have exposure to international stock. Overall, Asset Allocation is something that everyone chooses for themselves based on their risk tolerance. I personally do not invest into anything international even though it's recommended by many. VTSAX does a good job in overall diversification. The fact that you have Vanguard as...

Boglehead1967

A month is a bit excessive. Two weeks is more reasonable, even with year end pressures. Did they actually confirm they have your check? I moved some funds to Vanguard at one point, it took a while to get reflected but they did confirm they received the funds via the phone.

Boglehead1967

To optimize long-term tax strategy, you may want to consider tweaking your 401k withdrawal strategy. For example, in the low(er)-income years before SS, it sounds like your plan is to withdraw from your 401k and put the money into taxable in order to reduce future RMD. Instead, consider using existing money in your taxable accounts for expenses before 70, then reduce your 401k (and future RMD) by doing Roth conversions. As time goes on your taxable account will get smaller as you use it for expenses, so the (taxable) income from it will decrease with time. Meanwhile, your Roth account will be growing from the Roth conversions and (untaxed) dividends/gains. Specks But we only have maybe 12 years before getting into 25% tax rate zone again. ...

Boglehead1967

I built a plan till 2040 with WR between 2.7 and 3.5%. The tax part is the trickiest. I used Taxact to play with numbers a bit, at the planned level of expenses using unqualified income I get to 10-12k in federal taxes and 4-5k of MA. Is there a better way to test scenarios? I am not sure my excel skills are that good…. I don’t believe the impact of income taxes will change the conclusion that you have more than enough in your portfolio and retirement income to fund your planned retirement expenses. You also have a lot of discretionary travel expenses built in that could be adjusted, if necessary. Your portfolio (estimated to be $4.3 million at retirement in 2 years) needs only support you for 12 years in retirement before your full retire...

Boglehead1967

To optimize long-term tax strategy, you may want to consider tweaking your 401k withdrawal strategy. For example, in the low(er)-income years before SS, it sounds like your plan is to withdraw from your 401k and put the money into taxable in order to reduce future RMD. Instead, consider using existing money in your taxable accounts for expenses before 70, then reduce your 401k (and future RMD) by doing Roth conversions. As time goes on your taxable account will get smaller as you use it for expenses, so the (taxable) income from it will decrease with time. Meanwhile, your Roth account will be growing from the Roth conversions and (untaxed) dividends/gains. Specks But we only have maybe 12 years before getting into 25% tax rate zone again. ...

Boglehead1967

It's good to see that you are on-board with the points/credit card idea. For some it is just too much work and planning, and they would prefer a 2% back CC. Yes, this year we save around $33k using points, but that is due to MANY international cancellations from 2020+21. We had a ton of points/miles saved from COVID times. $10k per year is closer to a normal saving unless you go CC crazy. Slow travel means different things to different people. Many friends would say less than 30 days at any location is not slow. We might spend 30 days at 3 different cities, with 5 days followed by 7 days followed by 10-20+ days at our final (primary) destination. That is slow enough for us, but not for others. But one requirement is that we have some type ...

Boglehead1967

aristotelian wrote: ↑Sat Jan 07, 2023 10:14 pm I hope to travel extensively in retirement. Not quite there yet. I would do it the opposite way and determine the itinerary based on the budget. Then you are more or less guaranteed not to go over. If 50k is your budget, make sure you don't go over. If you happen to go over, then no more travel until next year, etc.

Budget is more of a guidance, not really set in stone. I am just trying to learn to get some reference points from fellow slow travelers.

Boglehead1967

TXJeff wrote: ↑Mon Jan 09, 2023 7:24 am Longtime slow traveler, mostly in Europe these days.

what is the budget for you?

Boglehead1967

whodidntante wrote: ↑Sat Jan 07, 2023 10:39 pm Not retired, but have traveled extensively. Much depends on the standard you keep and where you go. It can be as cheap as a trip to Mississippi if you'd like. Travel hacking and flexibility in plans helps.

Totally agree. At some point you realize your back needs a really good mattress and a quiet night, leading to higher class hotels, more expensive flights, better cars etc. For us, this would be doing things without the rush of back to work calendar. And we did enough of group travel and cruises to know what works for us, which is why Europe is the key destination to come back to.

Boglehead1967

Longtime slow traveler, mostly in Europe these days. You've received good, thoughtful advice here. I'd just add that if you'll be traveling mostly in Europe, keep in mind that with a US passport, you're limited to 90 days in 180 days in the Schengen area. (Map and list: https://home-affairs.ec.europa.eu/schengen-visa_en ) In the past, it was possible to overstay a bit without serious repercussions, especially if exiting via one of the more "lax" Schengen borders. But that will change in 2023, with the introduction of the Schengen ETIAS, a new, required, electronic Schengen travel pre-authorization. https://home-affairs.ec.europa.eu/policies/schengen-borders-and-visa/smart-borders/european-travel-information-authorisation-system_e...

Boglehead1967

I am budgeting around 50K for around 6 months of travel a year, we love traveling in Europe and do not see ourselves spending a lot of time in South Asia or really cheap countries. Compared to a lot of posters here I do pretty budget level travel in Europe but I do not travel anywhere near that long. Here is how I would look at your numbers. Airfare to Europe, roundtrip coach for 2 people, $2,500 Spend a month each in 5 different places, take a train between major destinations, $150 each(probably less) x 2 people x 5 destinations. = $1,500 Combined your major transportation would be $4,000 so the rest of your budget would be $46,000. For 180 days that would allow you to spend $255 a day for place to stay, food, activities, local travel, et...

Boglehead1967

CloseEnough wrote: ↑Sun Jan 08, 2023 9:03 am
JDCarpenter wrote: ↑Sat Jan 07, 2023 8:24 pm
307068304 wrote: ↑Sat Jan 07, 2023 3:03 pm ...

[/quote

I have been invited to join a one week trip that would probably end up just under $20K for the week. I don't plan to join, as it seems excessive putting aside the question of whether I'd want to blow my travel budget (and just for me, no family involved) in a week. Seeing this thread and budgets confirms my thinking. Congrats on living out adventures!
This is very excessive, 20k a week. Helicopter rides from a yacht every day while eating caviar? You can spend 3 months traveling in Spain staying in pretty good hotels and eating and drinking well for 20k. Someone is pushing your buttons?

Boglehead1967

Tag - not retired yet. $40k was a high water mark for travel (not slow). This past 12 months has blown that out of the water. We’re now averaging 20k for an intl 2-3 week trip. That includes some part of it being covered by miles/points. Seems extravagant, even to me. 2-3 of these trips in a year and we’re up to $50-60k a year! Only live once peeps. A friends wife just passed away at the tender age of 47 :( Man plans, Nature Laughs. What did you end up spending the most on? Flights? Hotels? Experiences? We don’t really budget, my most expensive trip so far is 11K for 2 weeks in the UK earlier this year for 2. Included 4 nights in London on points, lots of great food. Place like rural Scotland has a very limited supply of hotels, most 2-3 s...

Boglehead1967

We have been traveling extensively since I retired 21 years ago. Comparing budgets is pretty much useless. Where do you go? How do you travel? 1st class air or economy? High-end hotel/resort or budget apartment? Expensive private tours or giant 60-person bus or do-it-yourself? Opera, ballet, symphony tickets or simple walk in the park? Gourmet dining or eat-in room? Only you can answer these questions. But the more one travels, the cheaper it can be (per day). And with lots of time, you can save by finding the right day to travel (often a Tuesday or Wednesday) as well as using stopovers. But most useful is playing the points and credit card game. Make sure you join the frequent flyer program of all the major airlines and large hotel chains...

Boglehead1967

With a large portfolio plus retirement income at age 70 exceeding your retirement expenses (including taxes), you are in a great position to retire. Regarding your portfolio withdrawal plan to bridge your early retirement years before full retirement income is received… Consider creating a spreadsheet by year from age 58 (year after retirement) to age 69 (year before full retirement income). Model your planned withdrawals in your original post from tax deferred/Taxable accounts to come up with the plan that best smooths your Federal and MA tax liabilities over each year while maximizing your after-tax monies. It may also help you decide on best claiming ages for SS and pension benefits. The calculator at opensocialsecurity.com may be helpf...

Boglehead1967

I am 55 working full time (turn 70 in 2037), my wife is 57 (turn 70 in 2035) and retired 2 years ago. I plan on stopping work in mid 2025, the first year we can touch 401K . You've verified that "Rule of 55" doesn't apply to either 401k? Starfury, are you asking to see if we can start withdrawing earlier than 59.5? It would likely apply but I would not be comfortable stopping accumulating before we add at least another $1M. If the market goes significantly up, this will become a relevant question. But having enough cash to start helps not thinking about it. My key concern is an overall approach around taxes. That’s why we want to deplete tax deferred accounts to a minimum, while this is the only key income before we start SS.

Boglehead1967

JoeRetire wrote: ↑Sun Jan 08, 2023 8:15 am
307068304 wrote: ↑Sat Jan 07, 2023 2:13 pm Your thoughts are very much appreciated.
Seems reasonable.

Are the social security benefits calculated based on stopping work at 57?
Does your wife's pension have any survivor benefits?

SS - yes, based on what MySS.gov shows
Survival benefits from pension - yes, but this plan is not based on that. If I am by myself, the whole thing will change drastically.

Boglehead1967

We also retired 5.5 years ago and travel around 6 months of the year (a little less in 2020, but more than that in '21 and '22). Our projected budget for retirement planning was about double what you are planning, and it varies each year (basically it is our allowed portfolio withdrawal, less all other expenses). But, with even a little effort/planning, you definitely can do it for a lot less than DW does for us. We really don't slow travel yet; still frantically trying to do all the physically demanding destinations while we can. Although our real international trips tend to be from 1 to 3 months in length, we do a lot of moving within and around our destinations, oftentimes by international air (for example, 3 month south pacific dive tr...

Boglehead1967

I am 55 working full time (turn 70 in 2037), my wife is 57 (turn 70 in 2035) and retired 2 years ago. I plan on stopping work in mid 2025, the first year we can touch 401K. We spend around 65-85K a year net after taxes, 25-30K on travel, 12K on real estate/insurance. Paid house, 1 paid for car, no foreseeable large purchases, no legacy plan. Current marginal federal income tax rate is 35%. We plan on traveling a lot more starting in 2025, like 6 months a year. Portfolio: Current tax deferred accounts (2 401Ks and 2 tIRAs) balance - 1.6M, mostly low cost mutual funds, adding 40K a year, hopefully to be around 1.8M at retirement. Current taxable account balance - 1M, 500K in low cost vanguard mutual funds and 500K in stocks, adding 150-200K c...

Boglehead1967

Hi all,

I have a financial planning question for retirees that love international slow travel and kept the primary residence - is your overall spending in line with what you planned? How much did you end up spending a year on travel, if you do not mind sharing.
I am budgeting around 50K for around 6 months of travel a year, we love traveling in Europe and do not see ourselves spending a lot of time in South Asia or really cheap countries.

Boglehead1967

If you are at 37% federal tax bracket, you will also pay state income tax, which makes the tax a big consideration, especially in a short term capital gains scenario. Even with long term capital gains, the tax can get to 20 plus 3.8 plus state tax. So when you bought the stocks did you plan to sell while still working? If yes, take your gains with all the taxes. If not, keep the stocks until you have no regular income. At that point long term capital gains may be 0 if you watch your overall AGI. But it all makes sense only if you think these companies are here to stay.

Boglehead1967

The ordinary income event occurs whether you same-day-sell or hold Perhaps I was operating under a major misconception as to how ESPPs operate. I thought the ordinary income tax would only be incurred on the 15% discount if the stock was sold immediately, and if we didn’t touch the stock for more than a year, all we would owe is long-term capital gains on the total gain (the initial 15% + whatever else it may have gained during that time) when we sell. But if ordinary income tax will be incurred at the time of the discounted purchase regardless, that changes the equation quite a bit--and takes some (all?) of the appeal off of holding the stock. In fact, if I understand things correctly, once the initial discounted purchase is made, there i...

Boglehead1967

Hi, You could roll over to 2 IRA account, after you stop your employment this is allowed. The issue is that often simple rollover does not work and you will need to rebalance via rollover. If you move to Vanguard you will have their choices, I moved 10 different funds into one VTSAX investment after leaving my financial advisor. And there is no tax liability given it’s all happening in the tax deferred account. Once your wife retires you can move hers under the same brokerage like Vanguard to have an easier management of the funds. I agree with above comments on RMDs. You want to withdraw from your 401k first to reduce the tax burden after RMDs kick in. These are fairly high balances in tax deferred accounts, did you also invest into taxabl...

Boglehead1967

I agree with her - take it at the earliest date. Clearly, all else being equal, the breakeven point will be at about age 75. Taking SS early means that less can be converted early, if you want to stay in the same tax bracket. And Roth conversions will make more of the SS be taxed (up to 85% of it). Aside from that, we really don't know when we'll kick the bucket. If it happens to be sooner rather than later and she's chosen to wait on taking the pension, she may receive nothing. That’s true for everyone who dies before 62. But once you’ve died, you don’t need SS. Maybe OP/wife would rather have more tax-free money to leave to her heirs instead. In particular, when one of them dies, the survivor will have to start filing again as Single. Bu...

Boglehead1967

Hi, we have a very similar situation except I plan on retiring earlier (54 now) and my wife already quit at 55 this year. One thing you did not mention is the split between taxable and tax deferred accounts but if you are not planning to use any of these funds it’s less relevant. Pension - I look at the pension as an available annuity that can you pull the trigger on at any time. The longer you wait the higher it will get. But then there is a question of taxes and RMDs. If you have high potential RMDs I would start withdrawing from taxable accounts first because unlike with pension the rules are not set by you and flexibility is limited. In our case we plan on drawing from tax deferred 401k/IRA accounts between our 58-60 and the need to sta...

Boglehead1967

I do not see anyone mentioning https://www.newretirement.com. It has a free version with login, you can build a plan and see the variations. It has a paid version that goes into whole lots of details, you can connect accounts and use it for both cash flow management and portfolio management needs.

Boglehead1967

Can you point me to the IRS guidelines for after tax contributions? I am not sure at our income level it is actually possible. Really appreciate the suggestion. Did you get a chance to read the BH wiki pages linked in my prior post for backdoor Roth and after-tax 401k contributions? In the “References” section there are citations to the Internal Revenue Code sections and other sources. Your income level in and of itself doesn’t preclude you from doing a mega backdoor (i.e., after-tax contributions converted/rolled over to Roth) if your qualified benefit plan (401k) allows it. - You need sufficient “compensation” to contribute up to the IRS limit noted in my prior post. - if you and/or spouse are a “Highly Compensated Employee” for your 401...

Boglehead1967

Thank you so much, I will research and report back. Much appreciated!

Boglehead1967

HomeStretch wrote: ↑Mon Feb 08, 2021 7:38 am 2. Mega backdoor for you and spouse if your 401k plans allow employee after-tax (non Roth) contributions that can be rolled over in-plan to Roth 401k or distributed in-service to a Roth IRA. The 2021 IRS limit with age 50+ catch-up for each of you is $64,500. $64,500 = $26,000 employee deferral with catchup + employer contributions + employee after-tax contributions.
https://www.bogleheads.org/wiki/After-tax_401(k)

Can you point me to the IRS guidelines for after tax contributions? I am not sure at our income level it is actually possible. Really appreciate the suggestion.

Boglehead1967

You are contributing a lot to Taxable. Have you considered instead annually contributing ~$76,000 to Roth accounts which grow tax free via: 1. Backdoor Roth for you and spouse ($7k each). In order to avoid pro-rated taxes for His backdoor Roth, you would need to rollover the pretax balance in your IRA into your 401k if it accepts rollovers in and has low ER fund choices. https://www.bogleheads.org/wiki/Backdoor_Roth 2. Mega backdoor for you and spouse if your 401k plans allow employee after-tax (non Roth) contributions that can be rolled over in-plan to Roth 401k or distributed in-service to a Roth IRA. The 2021 IRS limit with age 50+ catch-up for each of you is $64,500. $64,500 = $26,000 employee deferral with catchup + employer contribut...

Boglehead1967

Hi Chassis, thanks so much for your input.

My original idea was to continue adding to VIGAX and VWUAX, both tech heavy US Growth funds, and maybe add VGT or VOOG for lump sum investments. I have a nagging feeling that maybe looking at longer term this is not diversified enough based on the rest of my portfolio. We will end up with about 25% in stocks and 75% in US Growth. As I am not a big fan of bonds, I wanted to see what further stock diversification might mean, which is why I brought up VTSAX, which we already have at about 10% of the portfolio.

Another alternative is to invest either in international or small cap Vanguard growth funds.

Boglehead1967

Hi all, just joined the forum, been on FI road for a few years. Background: we want to retire in about 5 years, with the goal of doubling the current portfolio by then. Plan living expenses as 3.5% of the total. Emergency funds: 2 years with plan to get it to 5 years. Debt: no debt Tax Filing Status: Married Filing Jointly Tax Rate: 32-35% Federal depending on a year, 5.6% State State of Residence: MA Age:53 me, 55 my wife Desired Asset allocation: 100% stocks, except for cash reserves Desired International allocation: not sure Size of your current total portfolio – 2M plus. Current retirement assets - all buy and hold type, with reinvested dividends as default Taxable accounts Plan on not touching these until we reach Social Security age o...

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