Bogleheads.org

JDave wrote: ↑Mon Aug 15, 2022 4:35 pm Pfau is wrong - the only REAL safe withdrawal rate is 0.00000022%.

If we have an extinction-level event like a meteor strike then your plan will fail.

Thanks David. One of my concerns for the Spousal Roth IRA is the verbiage around them. My understanding is that you can only contribute to an IRA if you have over $6000 in earned income. My spouse has some earned income but it is generally under $6000 so I have wondered if we could only contribute a max contribution of that spouses earned income throughout the year, or if that is irrelevant as long as the total income between both spouses meets that requirement. It is household income. If between the two of you there is $12,000 of taxable compensation then each of you can contribute $6000 to their respective Roth accounts (household income must be less than $206K). If, in the future, your income is approaching $206K, look into the backdoor...

You are doing well and are making good moves as you learn.

I believe you still qualify for a spousal Roth. I would fully fund that every year before putting money into taxable. Remember, all contributions to a Roth can be distributed without tax consequence (earnings are taxed before 59.5 and 5 years of account aging). So everything you put in can be taken out.

If you decide to go this route, please keep good records and benchmark your performance. When I first came to BH, I was a stock-picker with a portion of my portfolio. I was doing well, making good returns. Someone here asked how I was doing against the SP500. I checked and I was underperforming the SP500 by about 1% per year but I wasn't aware of it because the great overall returns of the period "masked" my underperformance. I the same kind of analysis. I pretty much matched the market, so I went the mutual fund route...less risk and same result. However, I do value the learning experience from studying individual stocks. Like you, I don't regret what I learned. On the other hand, in my case I would be ahead financially if I had...

OhBoyUhoh wrote: ↑Sun Aug 14, 2022 9:00 pm

grabiner wrote: ↑Sun Aug 14, 2022 4:26 pm Also, if you leave your job after age 55, you can withdraw from the 401(k) at that age with no penalty, just regular tax. (If you roll the 401(k) into an IRA, you lose that benefit; you can only withdraw penalty-free at 59-1/2.)

Isn't that plan dependent? I think my 401k only allows a one time distribution. If I'm right I fail to see how I can do Roth conversions before SS kicks in to reduce a high 401k balance. (Just saying, maybe don't count on ability to take multiple distributions from 401k.)

Cheers

You are correct, it is plan dependent. The one-time distribution makes the age 55 plan impractical, but SEPP is available.

delamer wrote: ↑Sat Aug 13, 2022 6:01 pm

Herekittykitty wrote: ↑Sat Aug 13, 2022 5:16 pm immediateannuities.com is showing $100,000 gets $1,024 a month for life starting in one month for an 82 year old woman living in Virginia.

Not inflation indexed.

This is an excellent suggestion. She could even cut the annuity back to $50,000, still get a significant bump-up in her standard-of-living, and have $210,000 for potential assisted living costs.

Let me be the third to echo this sentiment. Not only does it afford her the increase in standard of living that she desires but it also puts a monthly "limit" on her spending. She gets a check every month and that is what she is free to spend.

Age: Dad - 65 (in October), Mom - 61 Dad's SS benefit: $598/mo at 66.5 yrs Mom's SS benefit: $957/mo at 67 yrs My parents receive $4780/mo installment payments from sale of property. This is their only source of income but currently there is no shortfall as their expenses are fairly low. We are wondering when they should take social security to maximize the benefit. The OpenSocialSecurity calculator is suggesting the following: - You file for your retirement benefit to begin 4/2023, at age 65 and 6 months. - Your spouse files for his/her retirement benefit to begin 3/2031, at age 70 and 0 months Given the info you have provided, that looks to me like the optimal SS withdrawal schedule accoding to guidelines in the book "Get What's You...

If you decide to go this route, please keep good records and benchmark your performance.

When I first came to BH, I was a stock-picker with a portion of my portfolio. I was doing well, making good returns. Someone here asked how I was doing against the SP500.

I checked and I was underperforming the SP500 by about 1% per year but I wasn't aware of it because the great overall returns of the period "masked" my underperformance.

jeffyscott wrote: ↑Sat Aug 13, 2022 2:49 pm

David Jay wrote: ↑Sat Aug 13, 2022 2:11 pm

alex_686 wrote: ↑Tue Aug 09, 2022 10:19 amI acknowledge the pain of people having to transitioning to 21st century technology.

Late 20th century.

I have been with Vanguard for about 25 years and never had a MF account, only brokerage.

I thought that it was not even possible to own Vanguard mutual funds on their brokerage account until about 15 years ago, when they broke-up with Pershing and started their own brokerage?

I'd have to check the date I first transferred my Roth account to Vanguard, but I have never had a mutual fund account.

alex_686 wrote: ↑Tue Aug 09, 2022 10:19 amI acknowledge the pain of people having to transitioning to 21st century technology.

Late 20th century.

I have been with Vanguard for about 25 years and never had a MF account, only brokerage.

retiredjg wrote: ↑Sat Aug 13, 2022 9:29 amMy guess is $250k to $500k is a good target.

It's pretty easy to deal with $500,000 in tax-deferred without a "tax bomb" when the first spouse passes.

That is pretty close to our level of tax deferred. Between gifting (to adult children) and QCDs my spreadsheet says that the surviving spouse will be staying in the 12% / 15% bracket.

the_wiki wrote: ↑Fri Aug 12, 2022 10:43 am Cutoff for tax deduction is $129k for joint filers with a 401k, etc. at work for making deductible contributions.

There is no income limit for making contributions, only for deducting the contribution. May I suggest looking at the “backdoor Roth”. Wiki page here to see if it would work for you: https://www.bogleheads.org/wiki/Backdoor_Roth

Why the hard limit @ 2 lbs?

It seems like you are shutting out a whole range of great options that are a few ounces over 2 lb, like the LG Gram mentioned above. Does 3 ounces really affect anything in your daily use?

...delaying his SS could be correct. ...husband to claim earlier.... Yes, either way might be better. :? bluesky50, you'll know in hindsight. :wink: I'm not sure about the "either way", in that the benefit amount of the spouse with the larger benefit (typically the higher earning spouse) will become the amount of survivor's benefit regardless of which spouse passes first. This means that the larger benefit is evaluated on the basis of "second-to-pass" whereas the smaller benefit is evaluated on the basis of "first-to-pass". Actuarially, this makes a huge difference because there is a good likelihood that one spouse will live into their late 90s or beyond. Delaying the "first-to-pass" benefit is rarel...

FiveK wrote: ↑Sat Aug 06, 2022 1:59 am

bluesky50 wrote: ↑Fri Aug 05, 2022 9:50 pm When I run https://opensocialsecurity.com/, it recommends that husband starts SSA at age 67 and 10 months, wife starts at age 70 and 0 months. That is what we would plan to do.

Also look at the "color-coded graph" OSS generates. It may show that husband delaying a year or two or more years doesn't affect things much from only the SS perspective, so if Roth conversions will be important for you delaying his SS could be correct.

I agree with this. Many people use opensocialsecurity but fail to scroll down to the color coded graph. Note the 99% range for example. It may well make only a tiny difference in lifetime benefits for your husband to claim earlier and you end up with a lot of cash flow during those years.

I found "7 habits" beneficial, especially the need, as a leader, to schedule "Quadrant 2" time in my week. It is so easy to let the "urgent" dominate your life.

Mike Scott wrote: ↑Sun Aug 07, 2022 11:35 amDon't exceed your targeted marginal tax bracket range.

This is true if your heirs are also in the same (or higher) tax bracket. If they are likely to be in a lower tax bracket then it may make sense to convert less.

You should also evaluate your IRMMA threshold, that is a "one dollar over" penalty.

Sorry, it is forum policy not to talk about any pending legislation. Only the Senate has acted.

We can come back to this discussion after the House also passes it and the President signs it (which is likely, but not certain).

LoveTheBogle wrote: ↑Fri Aug 05, 2022 11:33 amWhether in cash or reinvest, the dividends are still reportable and taxable income. I would rather, all being equal, not get a dividend and avoid the tax drag.

Yeah, but the law says you can't.

So take the next best thing, VTI in taxable and pay only long term capital gains tax rate on the dividends.

Interest rates are going up!

VMFXX (Vanguard settlement account) is paying over 2%, no minimum. Direct ACH to our Credit Union checking account when needed.

Da5id wrote: ↑Fri Aug 05, 2022 8:30 am Maybe your allocation is fine but you are just antsy. You want to "do something" because of market volatility. One useful thing could be to have manual rebalancing in your plan. When things are bad, you could well have hit a rebalancing point. Rebalancing to your target allocation may scratch your itch to "do something" in a way that isn't harmful.

I agree completely, most of investing is behavioral, not math (see the first quote in my signature).

When this happened to me in a downturn, I remember being so relieved to hit my rebalancing band and was able to “do something”.

saverman wrote: ↑Wed Aug 03, 2022 9:22 pm Fellow BHs, I am currently 66 and have deferred collecting Social Security until I hit 70.

The 8% rate begins at Full Retirement Age (FRA), which is 66 years 2 months if your birth year is 1955 and 66 years 4 months if your birth year is 1956. At age 70 you will receive either 30.66% or 29.33% (depending on birth year) more than your Primary Insurance Amount (PIA), the amount you would have received at FRA, plus a COLA (if any) for each calendar year.

antiqueman wrote: ↑Wed Aug 03, 2022 9:27 pmYes, the deferred credits for delaying SS to 70 is approximately 8% per year.

The deferred credits are actually calculated monthly, every month you delay after Full Retirement Age gets you an additional 8/12 of 1%. Your account is also credited with the COLA for each year. I am deferring, but I can see the increase in my PIA (primary insurance amount) each year in January by going to my "MySocialSecurity" account. Last year the COLA was 5.9%

The 208K is easy, it is both the old loan and the new loan. The old loan will "go away" next month.

The issue is showing the 208K outstanding for each of you.

For US retirees, delay SS to age 70. Only for unmarried individuals. For married individuals, the spouse with the higher benefit should normally delay to 70, but often the lower earning spouse should claim earlier. This is due the the difference in longevity calculation (lower benefit spouse return is calculated on first-to-pass age, higher benefit spouse return is calculated on second-to-pass age). There are exceptions (large age differences, etc.) but the above is commonly optimum. How would this work for the person who takes SS early if they divorce? Looking it up in my copy of "Social Security Made Simple" (Mike Piper's book) *flip* *flip* *flip* (actually it's on my kindle): Surviving Divorced Spouse - for marriages that las...

Cruiser wrote: ↑Wed Aug 03, 2022 8:08 pmWhile listening to The Money Guy Show today, they mentioned that 98% of employers offer some sort of 401k match.

I don't know what kind of qualification they put on that statement (Tech companies? Fortune 500 companies? Publicly traded companies?) but that number is much, much too high for "all US employers". I would be surprised if 85% or 90% of employers (by company count, not employee count) even offer a 401k. Many small companies do not.

Welcome to the forum! Each of the funds has its own expense ratios (Yes, I know how you all feel about expense ratios and advisors), many of which exceed 1.5%. For example, one portfolio is "Ocean Park Balanced" which hold SIIRX, a fund of funds with an ER of 2.22%. That's just one of dozens and that's not including the advisor's 1.2% fee. This is just evil, the financial advisor has been ripping your father off for years. An advisor fee of 1.0 or 1.2 should be enough and the advisor should be using low-expense funds. No excuse for this "double dipping" with high expense fees on top of the advisor fee. I would not wait, I would move immediately as follows: 1. Select a major, low cost brokerage, often mentioned here are F...

OpenMinded1 wrote: ↑Wed Aug 03, 2022 7:44 amThat's sort of a "catch." I'd rather get money back that I can use however I want to.

Sure, I'd rather have cash (if wishes were horses...), but the other stores don't even provide in-store credit.

moneywise3 wrote: ↑Wed Aug 03, 2022 10:36 amI wouldn't know what to change to!

Humility is a key feature of a mature investor. For me, I don't know how to successfully exploit theoretical advantages in my personal portfolio.

nigel_ht wrote: ↑Wed Aug 03, 2022 12:47 pmFor US retirees, delay SS to age 70.

Only for unmarried individuals.

For married individuals, the spouse with the higher benefit should normally delay to 70, but often the lower earning spouse should claim earlier. This is due the the difference in longevity calculation (lower benefit spouse return is calculated on first-to-pass age, higher benefit spouse return is calculated on second-to-pass age).

There are exceptions (large age differences, etc.) but the above is commonly optimum.

ETFs move much of the account management cost to the brokerage house. But in the case of Vanguard, isn't the brokerage house and the fund's managing company the same? If a Vanguard ETF is held at Vanguard, they are essentially the same. But many people hold Vanguard ETFs at other brokerage houses (Fidelity, Schwab, eTrade, etc.) and that lowers Vanguard's cost allowing their ETF to be priced lower. While occasional larger differences show up from time to time (like Total International right now), the common Vanguard difference is 1 or 2 basis points. For instance, VTI to VTSAX (Total US) is only 1 basis point. I expect the Total International spread will narrow over time. The difference is so small that I believe one should choose based on...

ETFs move much of the account management cost to the brokerage house.

Capsu78 wrote: ↑Wed Aug 03, 2022 10:41 amI think I understand now- COLA and "inflation indexed" are 2 separate things. I'm FRA next Feb and am trying to figure out if taking it earlier would give me a COLA bump for next year.

The COLA is applied to your account at the first of the year. It does not matter when you claim (after age 62), you will get every COLA since age 62.

I am 65, I see the increased benefit amount for the COLA in my online SS account each year. The increase percentage matches my wife's COLA (she has started her SS benefit) exactly.

Welcome to the forum! Itching to put around 300K+ in QYLD to get that attractive yield of 10%+. You are looking at only one metric - yield - and that is misleading you. I recommend you look at total return (the total of yield plus growth). The 5 year total return is currently 6.3% , which means that the fund value is dropping in order to pay out the high yield. This is sometimes referred to as "return of principal" - just giving you some of your own money back. I know, it's risky, although don't fully understand the reasoning behind it. Reading the Morningstar description, the fund is designed to provide covered call income, so an individual doesn't need to do options trading themselves (saving a busy person the time and effort). ...

Capsu78 wrote: ↑Tue Aug 02, 2022 3:46 pm Is the COLA included in the base projections if one has yet to start SS? Is that what the "indexed for inflation" comments above referencing.
I have not "earned" income in last several years and my baseline #'s have pretty much remained flat.

What is your age? There is no "COLA" until age 62. Then my projected SS benefits change every year based on the annual COLA.

vineviz wrote: ↑Tue Aug 02, 2022 5:34 pm

DeathofEquities wrote: ↑Tue Aug 02, 2022 3:38 pm 3) Should a TDF have any place here?

Yes, IMHO. I'd choose Fidelity Freedom® Index 2055 Fund (FDEWX) or something similar and move on.

Given her age and the amount of money involved, anything more than a TDF is superfluous.

One upside of this approach is that you can get this Roth re-allocation "off your plate", as it were. Come back and re-examine at your leisure. The TDF will be 90% equities, which is probably good enough.


Personally, I still lean towards 100% stocks in a Roth.

Welcome to the forum! It would be useful to know what other accounts the two of you have. One should look at all the family retirement accounts when setting a 75/25 asset allocation and not treat each account separately. There are some priority suggestions about tax-efficient fund placement, Wiki here: https://www.bogleheads.org/wiki/Tax-efficient_fund_placement In general, a Roth should hold growth assets if the family has any tax-deferred accounts (401K, traditional IRA, 403b, etc). The reason is that there will be no taxes on the Roth assets if held to age 59.5. The tax-deferred accounts give a nice benefit now, but Uncle Sam owns a portion of the account. If we put the low earning assets in tax-deferred then the lower growth rate means ...

You are likely to get a lot of references to Mike Piper's program: http://opensocialsecurity.com

The most important thing to understand is that the surviving spouse receives a benefit equal to the higher of the two personal benefits, regardless of which spouse passes. In the vast majority of cases (a large age difference between spouses can affect this calculation), it is useful for the spouse with the higher benefit (the spouse who has the higher earnings record) to delay claiming.

I would definitely use the tIRA funds for living expenses, that is exactly what we are doing (age 65, spouse claimed at 62, I am deferring).

In my opinion, a never married female in good general health who can afford to delay should delay. If she's collecting only on her own record, that's probably good advice. However, if one person in a couple earned a lot more than the other, then the lower-earning person should generally collect on their own record at 62 and have the higher-earning spouse defer to 70. This maximizes the lower earner's benefits, since once the higher-earning spouse starts collecting, the lower earner gets spousal benefits if higher than the benefit on their own record. And it maximizes the benefit for whichever of the couple lives longer. Or you could plug into opensocialsecurity, it will say pretty much the same thing. Agree completely, should have added “n...

In my opinion, a female in good general health who can afford to delay should delay.

[edit] I say this because SS benefits are nominally based on overall life expectancy, but females live longer than males on average, so females have an actuarial advantage.

fingoals wrote: ↑Sat Jul 30, 2022 10:34 pmBy the way, what is the difference between "company provided after-tax space" (I assume you meant After-Tax 401k option) and Roth 401k option above?

Yes, those two have similar attributes.

The way this works, the year you turn 60 they index all past wages to the AWI (average wage index) from the year the wages were earned. My early wages (part time college employment) we’re indexed up more than 500%.

syc21 wrote: ↑Sat Jul 30, 2022 10:31 pmCould I get some help on choosing ETF, such as some kind of ETF equivalent with the same diversification as VTSAX, VTIAX, and VBTLX?

The equivalent Vanguard ETFs are VTI, VXUS and BND.

They are literally the same funds, these Vanguard ETFs are alternate share classes of the same funds

The only way to know is to ask HR at the old company. The SPD (Summary Plan Description) should say.

Typically this is not allowed.

Questions : 1. What do you think about my investment plan (in general, regarding AA, and regarding decision to prefer the Bogleheads multi-fund approach to the TDF one - the main rationale for the latter is to have an ability to control and fine-tune AA, considering taxation and the fact that I have several types of investment accounts and will likely have more in the future)? I would not recommend TSLA, HFEA or BTC in your portfolio. Keep it simple. 2. My employer's 401(k) plan at Fidelity offers the following types of contributions: Pre-Tax (0%-75%), Pre-Tax Bonus (0%-75%), Roth, Roth Bonus, After-Tax, Pre-Tax Catch-Up, Roth Catch-Up. What, in your opinion, would be the optimal contribution structure across these options in my situation?...

You have a great selection of low cost 401K funds: SP500, extended market, total international and Total Bond. From those you can build anything you need to complement your holdings in other accounts.

CommonsensePete wrote: ↑Sat Jul 30, 2022 7:31 pm Q1 dividend yield = 1.7%, buyback yield =2.57%, combined dividend and buyback yield = 3.94%. Buybacks shrink the number of outstanding shares.

But of course that is not "total shareholder return". Total shareholder return includes capital appreciation.

I would wait until the end of the calendar year to verify income and confirm eligibility. Then make the Roth contribution early next year. For simplicity, make the contribution before you file your taxes so the contribution is recorded without the need for a separate filing.

And "yes", backdoor Roth is a good plan for 2023 assuming you have no traditional IRA accounts.

fingoals wrote: ↑Sat Jul 30, 2022 7:51 pmIs eligibility to contribute to a Roth IRA in a particular year is based on income levels of the previous year or the year of the contribution?

Eligibility is based on the tax year. Earnings are from Jan through Dec, but the contribution can be made until April 15 (tax filing day) the following year.

For example, earnings in 2022 determine eligibility for a 2022 Roth contribution, but the actual contribution can be made until April 15, 2023.

Yes, you should do this if you are transferring to another broker. ETFs are the easier asset to hold/move at third-party brokers.