I'm 37, late to the game, worth about 35k...

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Topic Author
middleWave
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Joined: Mon Oct 08, 2018 10:04 pm

I'm 37, late to the game, worth about 35k...

Post by middleWave » Tue Apr 30, 2019 4:02 pm

Late bloomer looking for advice...

I got started pretty late at age 33 with a Roth IRA. The more I look into it, the more sold I am on the Bogleheads approach (gravitating towards the 3-fund portfolio which I'm well aware of, thanks!) Here are some vital stats...

Background:
• Single, no debt, no kids.
• On average I make about 20k/year at best, working 9-10 months/year as a teacher in Asia.
• Spend a lot of time/summers travelling and surfing around the world, not willing to give that up quite yet.
• BUT I need to get responsible and start saving more...

Investments (all with Merrill):
• Roth IRA sitting at 21k
• Individual Brokerage holding 10.5k (an early "wedding fund" gift from parents). I need to keep a few K available for a potential wedding. Otherwise I want to keep it growing with the market for any future needs. Kids? Probably not.
• Collectively these are allocated at 63% US Stocks, 17% bonds, 20% cash (roughly 10k in total stock market, 5k in total bond market, 5k in Apple, 5K in cash that I need to invest, and a few 1k gambles). I'm doing ETFs, not funds...
• 16.5k investment yield in China due next April. This could vanish, but staying positive. I'll transfer this to Merrill when it comes.

Savings:
• 2k in Ally. Planning to build this up to a 5k minimum as my emergency fund. Eventual goal is 10k.
• 2k stash in Taiwan, to help me get settled/buy a car when I move back there this summer.

Questions:
• Planning to put in $500/month into my Roth to max it out by next April. However not really keen on the $6.95 trading fees with Merrill. Would it make sense to invest with Robinhood monthly then transfer over to Merrill next April? Or roll over my account to a more fee-friendly platform such as Fidelity, Vanguard, or Schwab for the free ETFs? I'll qualify for free trades after I reach 50k with Merrill. IF the China investment comes through, I should be there in a year.
• What would you do with the remaining 5K cash in my Roth? I'm looking at Total International, but tempted to stick to the Total US ETFs for more return. Guess I'm young enough to bear more risk.
• If I were to max out my Roth IRA every year, would that suffice for retirement by 70? I'm cool with retiring in a cheap country somewhere around the world.
• Any other general advice?

I come from a financially responsible/upper-middle class family, so will probably inherit a good chunk of change when I'm old, but planning as if that's not a factor. I think eventually I'll want/need to get a proper job in the US with a 401k and company match and all that good stuff. I know that I'm poor compared to most of you, but I don't have debt and I'm determined to do this right!

Thanks for your help! :sharebeer
Last edited by middleWave on Tue Apr 30, 2019 6:12 pm, edited 10 times in total.

RobLyons
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Joined: Tue Oct 31, 2017 12:55 pm

Re: I'm 37, late to the game, worth about 35k...

Post by RobLyons » Tue Apr 30, 2019 4:09 pm

I would start a Roth IRA with Vanguard. I would max auto invest, and all your ETFs are obtained free.
Adjust to your risk tolerance - VTSAX, VTIAX. Mix in BND in 20 years or so.
The remaining $5k I would keep as an EF or just buy VTSAX

Also I would check out Taylor's post here:

viewtopic.php?f=10&t=88005
"Great parenting sets the foundation for a better world"

Prahasaurus
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Joined: Fri Mar 29, 2019 1:02 am

Re: I'm 37, late to the game, worth about 35k...

Post by Prahasaurus » Tue Apr 30, 2019 4:15 pm

I'd look at VTWAX for your equity investment moving forward. You avoid the issue of having to invest in two separate funds for US and International equity coverage, and don't have to worry about what % you should keep in US markets versus international. VTWAX is a combination of both. Simple.

protagonist
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Re: I'm 37, late to the game, worth about 35k...

Post by protagonist » Tue Apr 30, 2019 4:25 pm

You are not too late to the game.
You are single , you've managed to stay out of debt, and given what you have said about your life you have probably had a great lifestyle and a lot of fun. Plus, teaching is, IMHO, a noble pursuit. There is a lot to be said for that- you are in far better shape than many 37 year olds financially.
Question: Do you intend to continue your current lifestyle for a while yet or are you looking for a change in employment to make more money? You said you want a more secure position at some point, but is that imminent? I am not advocating that you do...everybody has their priorities....just asking because it might influence your financial decisions. We all have the challenge of balancing our present happiness with our future security and everybody has a different take on that.
If you are going to go from making 20K/year to 60K/year with benefits in the immediate future, you probably could delay a lot of your financial planning to when you have a secure well-paying job, and use your time now to learn about how to best manage your money.
Paying brokerage fees at your level of investment is probably eating up too big a chunk of your earnings.
Strongly consider simplifying, managing your own finances and investing in a balanced portfolio of low cost index funds. Many here can help you with that (you can start by reading the Bogleheads wiki, or whatever it is called....). The suggestions above by others are good ones.

Cody6136
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Joined: Tue Apr 16, 2019 10:54 am

Re: I'm 37, late to the game, worth about 35k...

Post by Cody6136 » Tue Apr 30, 2019 4:41 pm

middleWave wrote:
Tue Apr 30, 2019 4:02 pm
Late bloomer looking for advice...

I got started pretty late at age 33 with a Roth IRA. The more I look into it, the more sold I am on the Bogleheads approach. Here are some vital stats...

Background:
• Single, no debt, no kids.
• On average I make about 20k/year at best, working 9-10 months/year as a teacher in Asia.
• Spend a lot of time/summers travelling and surfing around the world, not willing to give that up quite yet.
• BUT I need to get responsible and start saving more...

Investments (all with Merrill):
• Roth IRA sitting at 21k
• Individual Brokerage holding 10.5k (an early "wedding fund" gift from parents). I need to keep a few K available for a potential wedding. Otherwise I want to keep it growing with the market for any future needs. Kids? Probably not.
• Collectively these are allocated at 63% US Stocks, 17% bonds, 20% cash (roughly 10k in total stock market, 5k in total bond market, 5k in Apple, 5K in cash that I need to invest, and a few 1k gambles).
• 16.5k investment yield in China due next April. This could vanish, but staying positive. I'll transfer this to Merrill when it comes.

Savings:
• 2k in Ally. Planning to build this up to a 5k minimum as my emergency fund. Eventual goal is 10k.
• 2k stash in Taiwan, to help me get settled/buy a car when I move back there this summer.

Questions:
• Planning to put in $500/month into my Roth to max it out by next April. However not really keen on the $6.95 trading fees with Merrill. Would it make sense to invest with Robinhood monthly then transfer over to Merrill next April? Or roll over my account to a more fee-friendly platform such as Fidelity, Vanguard, or Schwab? I'll qualify for free trades after I reach 50k with Merrill. IF the China investment comes through, I should be there in a year.
• What would you do with the remaining 5K cash in my account? I'm looking at Total International Stocks, but tempted to stick to the Total US Stock funds for more return. Guess I'm young enough to bear more risk.
• If I were to max out my Roth IRA every year, would that suffice for retirement by 70? I'm cool with retiring in a cheap country somewhere around the world.
• Any other general advice?

I come from a financially responsible/upper-middle class family, so will probably inherit a good chunk of change when I'm old, but planning as if that's not a factor. I think eventually I'll want/need to get a proper job in the US with a 401k and company match and all that good stuff. I know that I'm poor compared to most of you, but I don't have debt and I'm determined to do this right!

Thanks for your help! :sharebeer

Late to the party? I beg to differ, you are Fashionably Late. I'm 58, turning 59 and just scratching the surface of the BH approach though, like you, I made some sound decisions that are bearing fruit.

Your future self is going to be thrilled with the now-you!!! You can bank on that!

TomCat96
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Re: I'm 37, late to the game, worth about 35k...

Post by TomCat96 » Tue Apr 30, 2019 4:47 pm

OP

I started with -60k net worth at the age of 31. You are doing fine.
Life isn't always smooth sailing, nor is it a race to the finish line.

UpperNwGuy
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Re: I'm 37, late to the game, worth about 35k...

Post by UpperNwGuy » Tue Apr 30, 2019 4:49 pm

You are not late to the game. Do your calculations and figure out how to make it work over the course of the next thirty years.

middistancerunner
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Re: I'm 37, late to the game, worth about 35k...

Post by middistancerunner » Tue Apr 30, 2019 4:58 pm

Are you earning social security credits under your current employment?

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Duckie
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Re: I'm 37, late to the game, worth about 35k...

Post by Duckie » Tue Apr 30, 2019 5:10 pm

middleWave wrote:On average I make about 20k/year at best, working 9-10 months/year as a teacher in Asia.
<snip>
Planning to put in $500/month into my Roth to max it out by next April.
Do you take the Foreign Earned Income Exclusion when filing US taxes? You have to have earned income over the excluded amount to contribute to an IRA.

ponyboy
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Re: I'm 37, late to the game, worth about 35k...

Post by ponyboy » Tue Apr 30, 2019 5:13 pm

with the amount youre making...its going to be hard to get anywhere. Not trying to be a debbie downer but $20k is really slow. hard to save anything with that rate.

jgt808
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Re: I'm 37, late to the game, worth about 35k...

Post by jgt808 » Tue Apr 30, 2019 5:27 pm

ponyboy wrote:
Tue Apr 30, 2019 5:13 pm
with the amount youre making...its going to be hard to get anywhere. Not trying to be a debbie downer but $20k is really slow. hard to save anything with that rate.
I taught in China 20 years ago and his salary seems pretty good to me. I had everything paid for (room,board, travel) and they paid me equivalent to $125 month stipend....you should have seen the local teachers paycheck... :-( I was in my 20's and left a 60k yr job to teach but it was rich in experience and money can be made later. When you do get a higher paying job, you will have the fundamentals of saving and investing. Enjoy surfing the world's best breaks, not as good when you are in your 50's.

student
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Re: I'm 37, late to the game, worth about 35k...

Post by student » Tue Apr 30, 2019 5:33 pm

It is not too late but I think you need to come back to the US ASAP to get a job that pays well.

lakpr
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Re: I'm 37, late to the game, worth about 35k...

Post by lakpr » Tue Apr 30, 2019 5:51 pm

Vanguard funds have a somewhat steep minimums, $1000 for IRAs if I remember correctly. Subsequent additions have to be at least $25 each.

Since your plan includes contributing small amounts to the IRA, I recommend Fidelity, they do have excellent low cost funds, and recently started their zero cost funds and they have no minimums. Presumably even $0.25 is an acceptable contribution to the fund.

Topic Author
middleWave
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Joined: Mon Oct 08, 2018 10:04 pm

Re: I'm 37, late to the game, worth about 35k...

Post by middleWave » Tue Apr 30, 2019 6:05 pm

middistancerunner wrote:
Tue Apr 30, 2019 4:58 pm
Are you earning social security credits under your current employment?
As I'm currently doing a year in the States, this is the first year since college that I've been earning credits (I'm currently at 36 of the 40 required to qualify for benefits). Which leads me to another question...

Does your SS payout depend on how much you pay in over the course of your life? I was told by someone that you could simply work the last few years before retirement age, and receive the same payout as if you'd worked your whole life. That didn't sound right to me - any idea about this?

I'd like to keep living and working overseas but not if it means killing my potential SS benefits. If that whole thing even survives.

Topic Author
middleWave
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Joined: Mon Oct 08, 2018 10:04 pm

Re: I'm 37, late to the game, worth about 35k...

Post by middleWave » Tue Apr 30, 2019 6:18 pm

protagonist wrote:
Tue Apr 30, 2019 4:25 pm
Question: Do you intend to continue your current lifestyle for a while yet or are you looking for a change in employment to make more money? You said you want a more secure position at some point, but is that imminent?
Yeah I'm definitely looking to continue this lifestyle as much as I can...but with more responsibility. I think the secure higher paying job needs to happen at some point (45 at worst?) but not necessarily imminent. A big game changer has been the past year in the US, where all my figures are plugged into Personal Capital, that I can see exactly what's happening with my monthly spend/save rate. Spawning some changes in habit. Soon I'll be back in Asia managing two separate currencies again.

Teague
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Re: I'm 37, late to the game, worth about 35k...

Post by Teague » Tue Apr 30, 2019 6:21 pm

student wrote:
Tue Apr 30, 2019 5:33 pm
It is not too late but I think you need to come back to the US ASAP to get a job that pays well.
I agree.

OP, I was $35k in debt at your age. I retired at age 59 and live comfortably, spending the same as before I retired. The key for me was a well-paying job, living below my means, and aggressively saving. I suggest you choose wisely, and get in gear my friend. Do that, and you should be fine.
Semper Augustus

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bligh
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Re: I'm 37, late to the game, worth about 35k...

Post by bligh » Tue Apr 30, 2019 6:27 pm

student wrote:
Tue Apr 30, 2019 5:33 pm
It is not too late but I think you need to come back to the US ASAP to get a job that pays well.
+1

The longer you put this off, the more you are missing out on compound growth. This means, you will need to work longer and save harder with each year you put off saving for retirement in earnest.

Think of it as borrowing from your future to enjoy your present.

stoptothink
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Re: I'm 37, late to the game, worth about 35k...

Post by stoptothink » Tue Apr 30, 2019 6:29 pm

middleWave wrote:
Tue Apr 30, 2019 6:05 pm
middistancerunner wrote:
Tue Apr 30, 2019 4:58 pm
Are you earning social security credits under your current employment?
As I'm currently doing a year in the States, this is the first year since college that I've been earning credits (I'm currently at 36 of the 40 required to qualify for benefits). Which leads me to another question...

Does your SS payout depend on how much you pay in over the course of your life? I was told by someone that you could simply work the last few years before retirement age, and receive the same payout as if you'd worked your whole life. That didn't sound right to me - any idea about this?

I'd like to keep living and working overseas but not if it means killing my potential SS benefits. If that whole thing even survives.
No, that is not how it works. It is calculated by your 35 highest years of (SS credited) earnings. Right now you have a whole bunch of $0yrs, so unless you are planning to work until you are 70 (and at what income?) I wouldn't factor SS into your plans at all. If I was in your position, I'd be pretty scared, not just because of the limited savings and lack of SS credits, but the low-income history. But, sounds like with your lifestyle that you could make it work as long as you stay committed to saving.

Dottie57
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Re: I'm 37, late to the game, worth about 35k...

Post by Dottie57 » Tue Apr 30, 2019 6:48 pm

middleWave wrote:
Tue Apr 30, 2019 6:18 pm
protagonist wrote:
Tue Apr 30, 2019 4:25 pm
Question: Do you intend to continue your current lifestyle for a while yet or are you looking for a change in employment to make more money? You said you want a more secure position at some point, but is that imminent?
Yeah I'm definitely looking to continue this lifestyle as much as I can...but with more responsibility. I think the secure higher paying job needs to happen at some point (45 at worst?) but not necessarily imminent. A big game changer has been the past year in the US, where all my figures are plugged into Personal Capital, that I can see exactly what's happening with my monthly spend/save rate. Spawning some changes in habit. Soon I'll be back in Asia managing two separate currencies again.
Everything depends on where you plan to retire. If you plan to retire in U.S. then stay here now. If you retire overseas, then you need to work their system.

Something is a bit hinky. How dd you get 36 quarters of SS credits if this is the first time since college you have earned credits? 36 quarter = 9 years. What gives?

stoptothink
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Re: I'm 37, late to the game, worth about 35k...

Post by stoptothink » Tue Apr 30, 2019 6:58 pm

Dottie57 wrote:
Tue Apr 30, 2019 6:48 pm
middleWave wrote:
Tue Apr 30, 2019 6:18 pm
protagonist wrote:
Tue Apr 30, 2019 4:25 pm
Question: Do you intend to continue your current lifestyle for a while yet or are you looking for a change in employment to make more money? You said you want a more secure position at some point, but is that imminent?
Yeah I'm definitely looking to continue this lifestyle as much as I can...but with more responsibility. I think the secure higher paying job needs to happen at some point (45 at worst?) but not necessarily imminent. A big game changer has been the past year in the US, where all my figures are plugged into Personal Capital, that I can see exactly what's happening with my monthly spend/save rate. Spawning some changes in habit. Soon I'll be back in Asia managing two separate currencies again.
Everything depends on where you plan to retire. If you plan to retire in U.S. then stay here now. If you retire overseas, then you need to work their system.

Something is a bit hinky. How dd you get 36 quarters of SS credits if this is the first time since college you have earned credits? 36 quarter = 9 years. What gives?
My assumption is that OP worked before and during college. I spent 11yrs in school, yet at 38 I have 22 uninterrupted years of SS credits.

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Watty
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Re: I'm 37, late to the game, worth about 35k...

Post by Watty » Tue Apr 30, 2019 6:59 pm

middleWave wrote:
Tue Apr 30, 2019 6:05 pm
Does your SS payout depend on how much you pay in over the course of your life? I was told by someone that you could simply work the last few years before retirement age, and receive the same payout as if you'd worked your whole life. That didn't sound right to me - any idea about this?
It is calculated on your highest 35 years of inflation adjusted earnings so you would have a lot of zeros in the calculations. The way it is calculated is pretty complex but the first $10,000 of income counts a lot more than higher income after that. Even things like jobs in high school count for that. You can get estimates of your future Social Security benefit amounts on the Social Security website but you need make sure that the assumptions about future wages are right.

If you have nine non-zero years and work under Social Security until you are 65 then you should not have any zero years which will help.
middleWave wrote:
Tue Apr 30, 2019 6:05 pm
(I'm currently at 36 of the 40 required to qualify for benefits).
Medicare uses the same 40 quarters of coverage so it is important to get that so that you will qualify for medicare without paying an additional premium when you are 65. Even then be sure to understand that once you are on Medicare it is not totally free since you have multiple parts and may need to pay for those and other copays and supplements. There are lots of details and it will vary but we pay around $350 a month in premiums and supplements for one person to get coverage that covers most things except some prescription costs.

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DanMahowny
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Re: I'm 37, late to the game, worth about 35k...

Post by DanMahowny » Tue Apr 30, 2019 7:09 pm

You are young, single, traveling the world, and surfing.

I have no advice for you, but would certainly listen if you have any advice for me.
Funding secured

CnC
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Re: I'm 37, late to the game, worth about 35k...

Post by CnC » Tue Apr 30, 2019 7:12 pm

I'm a bit younger than you, and I have a much different outlook so bare with me as I try to reconcile between our viewpoints to give you an answer.

Your net worth at 37 isn't that bad, but making in the $20,000 range you are going to fall behind where you need to be very quickly.

Let's start with Social Security
In 2019, you receive one credit for each
$1,360 of earnings, up to the maximum
of four credits per year.
You must have 40 credits that means 10 years of making $1,360 per quarter at the least. I assume you have 8-9 years worked and paid into ssa? Your social Security pays out a percentage of your 35 highest earning years. That means unless you earn ssa credits 35 years you will have 0's averaged in.


You are ok now but if you spend another 10 years earning relatively little and not not earning social security credits you are going to struggle to retire in America by 70.

But if you don't want to retire in America you are likely doing just fine.
Last edited by CnC on Tue Apr 30, 2019 7:48 pm, edited 1 time in total.

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aspirit
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Re: I'm 37, late to the game, worth about 35k...

Post by aspirit » Tue Apr 30, 2019 7:14 pm

middleWave wrote:
Tue Apr 30, 2019 6:18 pm
protagonist wrote:
Tue Apr 30, 2019 4:25 pm
Question: Do you intend to continue your current lifestyle for a while yet or are you looking for a change in employment to make more money? You said you want a more secure position at some point, but is that imminent?
Yeah I'm definitely looking to continue this lifestyle as much as I can...but with more responsibility. I think the secure higher paying job needs to happen at some point (45 at worst?) but not necessarily imminent. A big game changer has been the past year in the US, where all my figures are plugged into Personal Capital, that I can see exactly what's happening with my monthly spend/save rate. Spawning some changes in habit. Soon I'll be back in Asia managing two separate currencies again.
I’ve known and heard of numerous people 50-55 yrs old that believed they’d inherit the bulk of their retirement, fairly often that changes.
Money near 100k or more and new dynamics in the family often changes everything. :oops: Just sayin. Good Luck!
Time & tides wait for no one. A man has to know his limitations. | "Give me control of a nation's money and I care not who makes it's laws" | — Mayer Amschel Bauer Rothschild ~

middistancerunner
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Re: I'm 37, late to the game, worth about 35k...

Post by middistancerunner » Tue Apr 30, 2019 7:48 pm

stoptothink wrote:
Tue Apr 30, 2019 6:29 pm
middleWave wrote:
Tue Apr 30, 2019 6:05 pm
middistancerunner wrote:
Tue Apr 30, 2019 4:58 pm
Are you earning social security credits under your current employment?
As I'm currently doing a year in the States, this is the first year since college that I've been earning credits (I'm currently at 36 of the 40 required to qualify for benefits). Which leads me to another question...

Does your SS payout depend on how much you pay in over the course of your life? I was told by someone that you could simply work the last few years before retirement age, and receive the same payout as if you'd worked your whole life. That didn't sound right to me - any idea about this?

I'd like to keep living and working overseas but not if it means killing my potential SS benefits. If that whole thing even survives.
No, that is not how it works. It is calculated by your 35 highest years of (SS credited) earnings. Right now you have a whole bunch of $0yrs, so unless you are planning to work until you are 70 (and at what income?) I wouldn't factor SS into your plans at all. If I was in your position, I'd be pretty scared, not just because of the limited savings and lack of SS credits, but the low-income history. But, sounds like with your lifestyle that you could make it work as long as you stay committed to saving.
Agree with others that you need to sort out ASAP exactly how Social Security is accumulating for you. Stoptothink is correct that it's not simply based on your last few years... at least not in the U.S.

I also don't understand what you mean by "this is the first year since college that I've been earning credits (I'm currently at 36 of the 40 required to qualify for benefits).." these two statements seem contradictory.

The good news is for you that you know how to live cheaply, but I'd be very very concerned about ensuring you will have good access to the US Social Security system. If you do you would be better positioned than most to retire abroad and live entirely off that income. (My father, who went through bankruptcy and has no savings, lives in the Philippines on early Social Security taken at 60.)

I learned from a quick google that it seems that if you are payed as a self-employed contractor while working overseas, you can pay self-employment taxes and then earn social security credits that way. Perhaps it'd be worth figuring out if that is an option for you. 15.3% would be a steep haircut on your pay, but it might be worth it relative to trying to save for retirement all on your own.

smectym
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Re: I'm 37, late to the game, worth about 35k...

Post by smectym » Tue Apr 30, 2019 10:17 pm

Agree with the “late to the game? What NONSENSE, why when I was your age...&c.” meme.

But, while we were still getting evicted from apartments for non-payment of rent in our late 20s, “one day” we just snapped out of it. Having kids did have something to do with it, but even without that we were ready and more than ready, in fact eager to move on from the previous lifestyle. Charting a new life and committing to it 100% has its own exhilaration.

Smectym

Independent George
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Re: I'm 37, late to the game, worth about 35k...

Post by Independent George » Tue Apr 30, 2019 11:45 pm

You might be late to the game, but at least you are starting out on solid ground - namely, you don't have massive debts hanging over your head, and given your experience in Asia, you might enjoy retirement in Thailand or Malaysia (which requires much less overhead than retiring in the US). To address the points you brought up:

1. I'd move money to one of Vanguard/Schwab/Fidelity as soon as possible. Those $6.95 fees are slowly strangling your gains, especially since you are more likely to make a lot of small purchases in the future rather than large lump sums.
2. Money you intend to spend soon - such as for a wedding - should not be held in stocks. Put that in a safe fixed-income investment - yes, you will be giving up yield, but the downside risk to stock is much too high for a short-term investment.
3. While there is no such thing as a "right" asset allocation, that $5k in Apple represents an extremely high percentage of your portfolio, along with your "gambles". I think you need to shift those into something more diversified immediately.
4. Retirement savings are often expressed as a multiple of your annual expenses. Your annual expenses right now are extremely low due to your location - which will not be a problem if you remain there, but you are in for a shock if you expect to retire in the US. You don't have to make any decisions immediately, but be aware that your options diminish the longer you wait.
5. Don't make any plans on the assumption of a large inheritance - beside not knowing how much will remain (medical expenses and in-home care, for example, can eat up savings extremely rapidly), you also have no way of knowing when you might get it. Plan your future assuming you will get $0, and then adjust accordingly if/when that changes.

Prahasaurus
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Re: I'm 37, late to the game, worth about 35k...

Post by Prahasaurus » Wed May 01, 2019 12:03 am

CnC wrote:
Tue Apr 30, 2019 7:12 pm
Let's start with Social Security
In 2019, you receive one credit for each
$1,360 of earnings, up to the maximum
of four credits per year.
You must have 40 credits that means 10 years of making $1,360 per quarter at the least. I assume you have 8-9 years worked and paid into ssa? Your social Security pays out a percentage of your 35 highest earning years. That means unless you earn ssa credits 35 years you will have 0's averaged in.


You are ok now but if you spend another 10 years earning relatively little and not not earning social security credits you are going to struggle to retire in America by 70.

But if you don't want to retire in America you are likely doing just fine.
It also depends on where you live outside of the USA. If you live, work, and pay into the social system in a country with a Totalization Agreement with the USA, you do get credit for time working there if needed to reach your 40 credits. You also receive benefits from that country when you retire, paid through the US. But the calculation seems complex, and it's also country specific (based on the actual Totalization Agreement).

Most of these countries are in Europe. But over time, I would suspect more countries will sign these agreements with the USA, including Asian countries.

typical.investor
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Re: I'm 37, late to the game, worth about 35k...

Post by typical.investor » Wed May 01, 2019 1:43 am

middleWave wrote:
Tue Apr 30, 2019 4:02 pm

• Planning to put in $500/month into my Roth to max it out by next April. However not really keen on the $6.95 trading fees with Merrill. Would it make sense to invest with Robinhood monthly then transfer over to Merrill next April? Or roll over my account to a more fee-friendly platform such as Fidelity, Vanguard, or Schwab for the free ETFs? I'll qualify for free trades after I reach 50k with Merrill. IF the China investment comes through, I should be there in a year.
The Schwab International One account has a $25 minimum which you'd meet by transferring your ROTH and taxable accounts there. No need to sell anything, you can transfer in-kind. https://international.schwab.com

Fidelity and Vanguard would likely reject you unless you are using your parents address in the States. Vanguard may freeze your account if they find out.

I assume you are not using the FEIE (Foreign Earned Income Exclusion). Money excluded under the FEIE can not be used for a ROTH
(or any IRA) contribution. And you are filing US returns every year correct? You said you wanted to do this right.

And early congratulations on your wedding - whenever that is!

Luckywon
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Re: I'm 37, late to the game, worth about 35k...

Post by Luckywon » Wed May 01, 2019 2:06 am

Not sure whether this was mentioned, but it appears that you are at the 0% capital gains tax rate now so keep an eye on unrealized capital gains in your taxable accounts, and realize those gains if you are still at the 0% capital gains tax rate this year or in subsequent years.

My opinion is that you are indeed late to the game, (but better late than never). Unless you raise your income and strictly manage your living expenses your options later in life are going to be extremely limited.

You mention a few Hail Mary investments. Those are unlikely to bear fruit for you. 10 years from now, you could be telling us about those in a thread entitled "worst investment decisions I ever made." I would advise strongly that you stick with equity index funds. You cannot afford to make mistakes in your portfolio.

Time for some soul-searching and a big change in trajectory, is my advice to you. I do wish you well. Check back here for advice frequently.

VegasBH
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Re: I'm 37, late to the game, worth about 35k...

Post by VegasBH » Wed May 01, 2019 6:49 am

Congratulations on your adventure overseas. Two things first I would start reading this blog. https://www.millionaireeducator.com/ Second I think the easiest solution to your problem is finding some kind of remote work that you can do to earn additional income for investments and to earn your Social Security credits. If your Internet connectivity is good have you considered something like teaching for VIP kid on the weekends? I think it pays $20 per hour.

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middleWave
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Re: I'm 37, late to the game, worth about 35k...

Post by middleWave » Wed May 15, 2019 4:48 pm

thanks everyone for the replies and advice.

- assuming that i get the Chinese investment back next year, what kind of account would you put this in? i guess a traditional IRA would make the most sense? the Roth will be maxed out.
- someone above mentioned that i don't qualify to invest in IRAs, although i already have. is there any way of that catching up to bite me in the future?
- would it make sense to open up an educational savings account, even if i'm not sure that i'll have kids? would be nice to be prepared, but also have flexibility to get the money out easily in case kids don't eventuate.
- finally got an understanding of how SS works. apparently i got some credits when i reported a few years income overseas, though i can't recall if i actually paid tax those years or not. i do recall a refund of sorts. also it seems if i work a solid 10 years in the states on a teaching salary, then i'll be able to qualify for at least $833 of SS a year. not a bad start...
- finally invested the idle roth 5K into ITOT, woohoo! scooped a grand of ICLN to boot. here's hoping for a clean energy future.

big ups!

TallBoy29er
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Re: I'm 37, late to the game, worth about 35k...

Post by TallBoy29er » Wed May 15, 2019 8:45 pm

maybe we could trade lives...i could travel around the world surfing, and you could work under fluorescent lights, and go surfing for a week per year. :D

I think you were right to grab life by the horns and enjoy what you love. I also think you want to start thinking long term on how to prolong your passion for years to come. That probably entails creating some sort of long term plan. But if you have a pretty sure thing re an inheritance, than why change? For real. :sharebeer

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Socrates
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Re: I'm 37, late to the game, worth about 35k...

Post by Socrates » Wed May 15, 2019 9:51 pm

Spend a lot of time/summers travelling and surfing around the world, not willing to give that up quite yet.

Good for you my brotha! Enjoy life while you are young!

Roth IRA: 100% SP 500 or Total Stock Market. Let itride you have 30 plus years.

:sharebeer
“Don't waste your time looking back. You're not going that way.” ― Ragnar Lothbrok.

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leeks
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Re: I'm 37, late to the game, worth about 35k...

Post by leeks » Wed May 15, 2019 10:20 pm

middleWave wrote:
Tue Apr 30, 2019 4:02 pm
• Individual Brokerage holding 10.5k (an early "wedding fund" gift from parents). I need to keep a few K available for a potential wedding. Otherwise I want to keep it growing with the market for any future needs. Kids? Probably not.
Finding someone you want to marry (and maybe who will change your mind about having kids, or who will already have some, you never know!) is the most likely scenario that will cause you to reorient your long-term plans for income and country of residence.

I think the idea mentioned above of looking for some supplemental online work (freelance, translation/teaching/tutoring/etc) that can follow you wherever you travel is a good one. Both for extra income now to boost savings and for flexibility later (a bridge to keep some income flowing the next time you are in a job transition).

I hope you are building your own foreign language skills during your travels.

Luckywon
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Re: I'm 37, late to the game, worth about 35k...

Post by Luckywon » Wed May 15, 2019 11:34 pm

middleWave wrote:
Wed May 15, 2019 4:48 pm
- someone above mentioned that i don't qualify to invest in IRAs, although i already have. is there any way of that catching up to bite me in the future?
My understanding is that you are required to distribute ineligible/excess contributions along with earnings on those contributions and possibly penalties, and pay applicable taxes on those distributions. Check with an accountant or perhaps the IRA custodian may be able to help you.
middleWave wrote:
Wed May 15, 2019 4:48 pm

- would it make sense to open up an educational savings account, even if i'm not sure that i'll have kids? would be nice to be prepared, but also have flexibility to get the money out easily in case kids don't eventuate.
What if you don't have kids? Or they don't go to college? This does not sound like a good idea to me at all.
middleWave wrote:
Wed May 15, 2019 4:48 pm
- finally got an understanding of how SS works. apparently i got some credits when i reported a few years income overseas, though i can't recall if i actually paid tax those years or not. i do recall a refund of sorts. also it seems if i work a solid 10 years in the states on a teaching salary, then i'll be able to qualify for at least $833 of SS a year. not a bad start..
You can get your SS earning history from the United States Social Security Administration online, if that helps or is of interest to you.

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BL
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Re: I'm 37, late to the game, worth about 35k...

Post by BL » Thu May 16, 2019 2:56 am

You can get lots of info on SS and taxes on the internet so there is no excuse for not finding out about things. The total amount of Roth IRA and/or traditional IRA is limited to your wages or self-employment income on your 1040 tax form up to a total of $6k/year. If you won't have any then you can't use either of them this year. There is a penalty of 6% each year you still have unauthorized contributions that have not been withdrawn.
Withdraw the Excess. If you don't qualify to contribute to an IRA, you can withdraw the extra contribution and any NIA before your tax deadline without penalty. You must declare the NIA on your taxes as income.
Since you are not able to contribute much to savings, I suggest you at least make the effort to chose a simple, diversified portfolio and stop and undo single company stocks and other risky "fun" gambles. You simply can't afford to waste the small amount you have.

typical.investor
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Re: I'm 37, late to the game, worth about 35k...

Post by typical.investor » Thu May 16, 2019 5:29 am

middleWave wrote:
Wed May 15, 2019 4:48 pm

- someone above mentioned that i don't qualify to invest in IRAs, although i already have. is there any way of that catching up to bite me in the future?
BL wrote:
Thu May 16, 2019 2:56 am
You can get lots of info on SS and taxes on the internet so there is no excuse for not finding out about things. The total amount of Roth IRA and/or traditional IRA is limited to your wages or self-employment income on your 1040 tax form up to a total of $6k/year. If you won't have any then you can't use either of them this year. There is a penalty of 6% each year you still have unauthorized contributions that have not been withdrawn.
Withdraw the Excess. If you don't qualify to contribute to an IRA, you can withdraw the extra contribution and any NIA before your tax deadline without penalty. You must declare the NIA on your taxes as income.
BL is correct I believe. The penalty is 6% of the ineligible amount for each year.

I'd be wary if you have an excess contribution. There isn't a time limit for as with other things such as audits. As far as I know, the clock doesn't stop ticking.



middleWave wrote:
Wed May 15, 2019 4:48 pm
- finally invested the idle roth 5K into ITOT, woohoo! scooped a grand of ICLN to boot. here's hoping for a clean energy future.
Yeah clean energy :sharebeer I hope you didn't make the contribution with income excluded under the FEIE. It has to be US taxable income (wages or self employment income that is taxable to the US).

crre
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Re: I'm 37, late to the game, worth about 35k...

Post by crre » Thu May 16, 2019 1:06 pm

do you pay taxes in the country where you teach/live? if so, you might find that the foreign tax credit is a better choice than the foreign earned income exclusion, as it might allow you to contribute to a u.s. ira. and you might be able to amend some number of previous years' returns, thus some of your prior contributions might be able to stand.

i say "might" about all of this, because while i have used the foreign tax credit in the past, and also amended returns, i have never contributed to a u.s. ira since i have a retirement plan in the country where i live. i do know that there are cases where an expat can contribute to a u.s. ira by using the foreign tax credit instead of the foreign earned income exclusion. i do not know if this applies in your case, and also i know do not know if previous contributions can be "laundered" by filing an amended return.

i highly recommend consulting a tax professional, preferably a u.s. accountant located in your foreign country who is familiar with the tax treaty, if any, between the u.s. and your country.

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middleWave
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Re: I'm 37, late to the game, worth about 35k...

Post by middleWave » Sat May 18, 2019 9:08 pm

BL wrote:
Thu May 16, 2019 2:56 am
You can get lots of info on SS and taxes on the internet so there is no excuse for not finding out about things. The total amount of Roth IRA and/or traditional IRA is limited to your wages or self-employment income on your 1040 tax form up to a total of $6k/year. If you won't have any then you can't use either of them this year. There is a penalty of 6% each year you still have unauthorized contributions that have not been withdrawn.
Withdraw the Excess. If you don't qualify to contribute to an IRA, you can withdraw the extra contribution and any NIA before your tax deadline without penalty. You must declare the NIA on your taxes as income.
Since you are not able to contribute much to savings, I suggest you at least make the effort to chose a simple, diversified portfolio and stop and undo single company stocks and other risky "fun" gambles. You simply can't afford to waste the small amount you have.
This is the first time I've heard of the 6% tax. Scary stuff. My parents told me to go with Roth back in 2014 and I didn't question it. I don't have any taxed income during contribution years until 2018, so that makes 4 years of unauthorized contributions. Assuming I never learned of this, would they just tax the hell out of me when I start withdrawing after retirement? Or is there a possibility they won't even pick up on this? Isn't this chump change to them and they have bigger fish to fry?

After making the withdrawal, I guess my only/best choice is to move that money into my individual broker account?

I did pay tax (in Asia) on all my earnings in those years abroad, but just recently filed the last 3 years of delinquency using an FEIE, not the Foreign Tax Credit.

It's pretty shitty that the IRS doesn't inform you when you've contributed in excess, running up your bill without your awareness. They don't exactly teach this stuff in school. I just spent an hour googling and...taxes are not easy. So it's good to get answers from people who know. Will call the IRS soon...

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BL
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Re: I'm 37, late to the game, worth about 35k...

Post by BL » Sun May 19, 2019 8:16 am

I would take this thread as a hint to get things figured out, not authority on the fine points of taxes and IRAs while working in a foreign country. Most of us are not educated in foreign income details, and your title does not even hint on that which could get the attention of folks who might be knowledgeable in that area.

lakpr
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Re: I'm 37, late to the game, worth about 35k...

Post by lakpr » Sun May 19, 2019 8:29 am

Contribution to a Roth IRA requires earned income. I don’t believe there is any requirement that it has to be earned within US, or that you have to have “taxed” income (meaning you paid non-zero taxes to the US government). Unless you have been just living off your investments for the past few years and never worked the entire time during this period, and assuming you earned at least $6000 equivalent per year in that foreign country you are residing in, I assume you are in the clear.

Be prepared to show evidence though that you did earn $6000 earned income each year — pay stubs, etc.

Disclaimer: I am not a tax authority or a lawyer, this is my layman's interpretation of the tax law.

typical.investor
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Re: I'm 37, late to the game, worth about 35k...

Post by typical.investor » Sun May 19, 2019 9:01 am

lakpr wrote:
Sun May 19, 2019 8:29 am
Contribution to a Roth IRA requires earned income. I don’t believe there is any requirement that it has to be earned within US, or that you have to have “taxed” income (meaning you paid non-zero taxes to the US government). Unless you have been just living off your investments for the past few years and never worked the entire time during this period, and assuming you earned at least $6000 equivalent per year in that foreign country you are residing in, I assume you are in the clear.

Be prepared to show evidence though that you did earn $6000 earned income each year — pay stubs, etc.

Disclaimer: I am not a tax authority or a lawyer, this is my layman's interpretation of the tax law.
It's pretty clear that you need taxable earned income to make an IRA or ROTH contribution.

Yes, you can earn it overseas.

No, you don't actually have to pay taxes on it (for instance the amount earned and taxable to the US is below your standard deduction).

There is just no way to use FEIE excluded income (taxes overseas but not in the US) to make an IRA or ROTH contribution.

If the OP only earned 20k, then about half is excluded under the standard deduction and personal exemption if the OP claimed the foreign tax credit instead.

So maybe only around $950 in US taxes would be owed.

Perhaps the OP is eligible for the EITC (earned income tax credit) or perhaps has other deductions.

And depending on taxes paid to China, some credit may be available there (or maybe not).

In the end, it migjt cost less to not take the FEIE if doing so means you have to take a penalty for over contributions.

I'm assuming here that it's not too late to amend past years to not actually take the FEIE.

In the future, perhaps not taking the FEIE, claiming the EITC, getting a foreign tax credit and making a traditional IRA contribution would mean no actual US taxes.

The IRS offers free tax software for those making below a certain amount. I'd use those if I could.

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