What do you wish you knew before you retired you know now!

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MrCheapo
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What do you wish you knew before you retired you know now!

Post by MrCheapo »

Thank you for those of you who are retired who are guiding those of us who are preparing to retire. Much appreciated!

I think most of us pre-retirees on this board know the obvious stuff that everyone knows. But what insights did you NOT know when you retired that you wished you DID know.
Tib
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Re: What do you wish you knew before you retired you know now!

Post by Tib »

I didn’t know that by converting my 403(b) to an IRA I’d be depriving myself of access to a liquid, 3%+ stable-value fund. That access is all the more valuable for those of us wary of bond funds, especially in the current environment.

On the nonfinancial side, if that’s of interest, I overestimated my largely untested enthusiasm for hiking and moved across country to a location where I could hike in beautiful landscapes. A year later I’d had my fill of hiking and moved again. In general, I’ve found that interests I had pursued for an extended time at some point in life were easily rekindled. If I had never in the past made much time for an activity, I’ve found that I’m still not moved to do so in retirement. No doubt some retirees are different in this respect.
RudyS
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Re: What do you wish you knew before you retired you know now!

Post by RudyS »

I did not fully understand the advantage(s) of deferring social security. The potential advantage of Roth IRA vs t-IRA.
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JoeRetire
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Re: What do you wish you knew before you retired you know now!

Post by JoeRetire »

MrCheapo wrote: Sat May 01, 2021 12:45 pmBut what insights did you NOT know when you retired that you wished you DID know.
I didn't realize how inexpensive health insurance could be when you have virtually no earned income.
I didn't know how good of a sport pickleball could be.
I didn't know how wonderful it is to have grandchildren.

Other than trying to find a little bit of time to play pickleball, I don't think I would have done anything differently had I known these things while I was in the pre-retirement phase of my life.
It's the end of the world as we know it. | It's the end of the world as we know it. | It's the end of the world as we know it. | And I feel fine.
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TexasPE
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Re: What do you wish you knew before you retired you know now!

Post by TexasPE »

I was always a great saver, but didn't consider whether I should have taken the 'catch up' contribution funds I put back every year in my 401(k) and instead funded Roth IRAs for my wife. We are looking at a near six-figure RMD when they begin. I am also concerned that she is several years younger - this will exacerbate the tax bite should I pre-decease her.

A first-world problem, I know.
At 20: I cared what everyone thought about me | At 40: I didn't give a damn what anyone thought of me | Now that I'm 60: I realize that no one was really thinking about me at all | Winston Churchill (?)
260chrisb
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Re: What do you wish you knew before you retired you know now!

Post by 260chrisb »

TexasPE wrote: Sat May 01, 2021 2:53 pm I was always a great saver, but didn't consider whether I should have taken the 'catch up' contribution funds I put back every year in my 401(k) and instead funded Roth IRAs for my wife. We are looking at a near six-figure RMD when they begin. I am also concerned that she is several years younger - this will exacerbate the tax bite should I pre-decease her.

A first-world problem, I know.
Yes, a first world problem but how long until your first RMD and what can you do to lessen it on the way? You're balance has to be substantial if your first RMD is six figures. Seems to me this is a huge concern to a lot of folks who for whatever reason don't touch their IRAs until the are forced to. My plan is to pull from mine in year one and each year thereafter to a certain tax bracket. If you still have household income and don't need the money doesn't it still make sense to draw from it if you're still in the same tax bracket? The other first world problem is an IRAs growth that continues for years as you age and leave it alone. Taking withdrawals from it doesn't mean you're spending it. You can invest the money. There will be years that I won't need the money but will still withdraw from my IRAs to get the money out.
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tennisplyr
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Re: What do you wish you knew before you retired you know now!

Post by tennisplyr »

Retired 10 years. That life flys by in retirement, if you feel like doing something, do it. Money is not a main focus, good health and enjoying life are. “Don’t sweat the small stuff...it’s all small stuff”
Last edited by tennisplyr on Mon May 03, 2021 7:25 am, edited 1 time in total.
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MrCheapo
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Re: What do you wish you knew before you retired you know now!

Post by MrCheapo »

Tib wrote: Sat May 01, 2021 2:23 pm I didn’t know that by converting my 403(b) to an IRA I’d be depriving myself of access to a liquid, 3%+ stable-value fund. That access is all the more valuable for those of us wary of bond funds, especially in the current environment.

On the nonfinancial side, if that’s of interest, I overestimated my largely untested enthusiasm for hiking and moved across country to a location where I could hike in beautiful landscapes. A year later I’d had my fill of hiking and moved again. In general, I’ve found that interests I had pursued for an extended time at some point in life were easily rekindled. If I had never in the past made much time for an activity, I’ve found that I’m still not moved to do so in retirement. No doubt some retirees are different in this respect.
Good point on the 403(b). My retirement "expert" keeps on prompting me to consider converting to an IRA.

Out of interest, what reasoning did you use to covert it into an IRA?
Woodshark
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Re: What do you wish you knew before you retired you know now!

Post by Woodshark »

I didn't realise how hard it would be to shift my mindset from saver to spender. I've been retired a touch less than 6 years and of course the market has been very kind during the past few years. We have absolutely no need to look at prices on menus or clip coupons, yet we still do. It's hard to pivot 180 degrees.
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MrCheapo
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Re: What do you wish you knew before you retired you know now!

Post by MrCheapo »

RudyS wrote: Sat May 01, 2021 2:26 pm I did not fully understand the advantage(s) of deferring social security. The potential advantage of Roth IRA vs t-IRA.
Can you enlighten us on what advantages you refer to. It's something I have thought about. My situation (to simplify it is) as follows

Claim $2270 at 62 = 490K (live till 80)
Claim $3300 at 67 = 514K (live till 80)
Claim $4100 at 70 = 492K (live till 80)

So its all about the same. Now if I live till 90 clearly the spread gets bigger, but that's a bit of hope.
printer86
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Re: What do you wish you knew before you retired you know now!

Post by printer86 »

MrCheapo wrote: Sat May 01, 2021 7:29 pm
RudyS wrote: Sat May 01, 2021 2:26 pm I did not fully understand the advantage(s) of deferring social security. The potential advantage of Roth IRA vs t-IRA.
Can you enlighten us on what advantages you refer to. It's something I have thought about. My situation (to simplify it is) as follows

Claim $2270 at 62 = 490K (live till 80)
Claim $3300 at 67 = 514K (live till 80)
Claim $4100 at 70 = 492K (live till 80)

So its all about the same. Now if I live till 90 clearly the spread gets bigger, but that's a bit of hope.
Two things to consider about when to claim SS. First, If you have a spouse, the survivor gets to assume the higher SS benefit of the two. This is why most folks recommend that the higher wage earner claim at 70. Second, SS is about the best longevity insurance you can find. If you can afford to wait to 70, you are rewarded with an inflation protected payment for the remainder of your life. If you die young, you're just dead.
RudyS
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Re: What do you wish you knew before you retired you know now!

Post by RudyS »

printer86 wrote: Sat May 01, 2021 7:46 pm
MrCheapo wrote: Sat May 01, 2021 7:29 pm
RudyS wrote: Sat May 01, 2021 2:26 pm I did not fully understand the advantage(s) of deferring social security. The potential advantage of Roth IRA vs t-IRA.
Can you enlighten us on what advantages you refer to. It's something I have thought about. My situation (to simplify it is) as follows

Claim $2270 at 62 = 490K (live till 80)
Claim $3300 at 67 = 514K (live till 80)
Claim $4100 at 70 = 492K (live till 80)

So its all about the same. Now if I live till 90 clearly the spread gets bigger, but that's a bit of hope.
Two things to consider about when to claim SS. First, If you have a spouse, the survivor gets to assume the higher SS benefit of the two. This is why most folks recommend that the higher wage earner claim at 70. Second, SS is about the best longevity insurance you can find. If you can afford to wait to 70, you are rewarded with an inflation protected payment for the remainder of your life. If you die young, you're just dead.
That's a good description of my thinking. OP asked about things we know NOW. What I know is, I'm 84.
travelerfromsj
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Re: What do you wish you knew before you retired you know now!

Post by travelerfromsj »

I wish that I'd been a little more aware of my parents' financial situation, and perhaps that of my sister as well. When we retired, I didn't factor in how their lack of planning might affect our own retirement.
cbeck
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Re: What do you wish you knew before you retired you know now!

Post by cbeck »

I didn't know if my financial plans for retirement would actually work. I worried that maybe I had overlooked something that would bite me. Ten years on, it's working just fine.
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GerryL
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Re: What do you wish you knew before you retired you know now!

Post by GerryL »

I've been sitting here considering this question. Frankly, I can't think of anything. I'm not suggesting I had everything all figured out, but let's say that the importance of being adaptable (at all ages) has been reinforced. Especially true in this past year.

I thought I would spend more time on certain activities, but decided I didn't want to. After years of being a super saver, I adapted to being a spender, gradually but inexorably. So maybe the message is: Be sure to give yourself permission to change your mind as your situation evolves.
Vanguard Fan 1367
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Re: What do you wish you knew before you retired you know now!

Post by Vanguard Fan 1367 »

I retired in October 2019. In March 2020 we all got to watch our index funds take a dive! I wish I had studied tax loss harvesting before I retired.

But thank you Bogleheads for giving me a crash course in tax loss harvesting!
John Bogle: "It's amazing how difficult it is for a man to understand something if he's paid a small fortune not to understand it."
Cruise
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Re: What do you wish you knew before you retired you know now!

Post by Cruise »

One thing that surprised me in retirement was that I’d occasionally run into someone who seemed miffed that I was retired and there were not. I think my younger-than-my-years look may have contributed to this.
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Johnsson
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Re: What do you wish you knew before you retired you know now!

Post by Johnsson »

Retiring July 6th...

Not realizing how account values grow once you have 'enough', I wish I had thought through the need to contribute to Roth IRAs earlier in life (my 1st real money in Roth was a conversion last year). I'll be doing massive conversions the next 4 years to catch-up/balance-out.

It would have been cheaper and easier to contribute more much earlier/along the way.

People will always tell you to contribute to a IRA. But few can explain why you should have and need a Roth.
'In theory there is no difference between theory and practice. In practice there is.' Yogi Berra
smitcat
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Re: What do you wish you knew before you retired you know now!

Post by smitcat »

MrCheapo wrote: Sat May 01, 2021 7:29 pm
RudyS wrote: Sat May 01, 2021 2:26 pm I did not fully understand the advantage(s) of deferring social security. The potential advantage of Roth IRA vs t-IRA.
Can you enlighten us on what advantages you refer to. It's something I have thought about. My situation (to simplify it is) as follows

Claim $2270 at 62 = 490K (live till 80)
Claim $3300 at 67 = 514K (live till 80)
Claim $4100 at 70 = 492K (live till 80)

So its all about the same. Now if I live till 90 clearly the spread gets bigger, but that's a bit of hope.
Its not the totals by themselves but what you get to keep/spend, delaying helps us with these.....
- spousal benifits
- ability to Roth convert
- total taxes paid over time
- planning for heirs
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BolderBoy
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Re: What do you wish you knew before you retired you know now!

Post by BolderBoy »

tennisplyr wrote: Sat May 01, 2021 5:56 pmRetired 10 years. That life flys by in retirement, if you feel like doing something, do it.
+1. Amazing how fast the days fly by. I presume this continues to increase right to the end.
"Never underestimate one's capacity to overestimate one's abilities" - The Dunning-Kruger Effect
Wannaretireearly
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Re: What do you wish you knew before you retired you know now!

Post by Wannaretireearly »

Johnsson wrote: Sun May 02, 2021 6:23 am Retiring July 6th...

Not realizing how account values grow once you have 'enough', I wish I had thought through the need to contribute to Roth IRAs earlier in life (my 1st real money in Roth was a conversion last year). I'll be doing massive conversions the next 4 years to catch-up/balance-out.

It would have been cheaper and easier to contribute more much earlier/along the way.

People will always tell you to contribute to a IRA. But few can explain why you should have and need a Roth.
Thanks for sharing your experience. Wise words
This time next year, we'll be millionaires!
vested1
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Re: What do you wish you knew before you retired you know now!

Post by vested1 »

I wish I had known about index fund investing and how easy it is to manage your own portfolio before I retired from megacorp in 2009 with a lump sum retirement and a very low 6 figure 401k. Luckily I found this site in mid 2011 before I permanently retired in early 2016. I stopped the bleeding by getting out of PAS at Fidelity and transferring to Vanguard with a 3 fund portfolio.

At Fidelity they had me in a 5 year 200k fixed annuity in a market that was on fire and a single Ginnie Mae initially, then after talking me into PAS, 20 constantly churning funds of stocks and bonds with high ER's, total hit about 2.5% yearly.

Woulda coulda shoulda, if I had that knowledge in 2009 at the beginning of this raging bull I would have been able to permanently retire even earlier than when I did at 63.5. Can't complain though, so many know nothing about how AUM fees and high ER's eat away at their accounts.

The other thing I learned in the nick of time was the value of delaying SS until age 70 in our situation. I would have likely filed at 63.5 and my wife at 62 when she retired if I had not found Bogleheads. Instead, she filed at 65 and I simultaneously filed a restricted application on her benefit and will file for my own benefit next year at age 70 (we share the same birthday, me at 1 year older).

Back at Fidelity now because of the brick and mortar aspect, competent clerks, and no hassle mistake-free transactions. The difference between then and now? I pay them zero and hold the same VG funds at the same ER as I did at VG for a combined cost of .032%. I never talk to my assigned representative, but I do drink their coffee if I ever feel the need to visit. They handled the wire transfer for the cash purchase of our new home flawlessly for no charge. The coffee was good then too.

Bogleheads should get the prestigious Taylor Larimore Award for the most helpful forum for prospective retirees on the internet.
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celia
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Re: What do you wish you knew before you retired you know now!

Post by celia »

I didn’t realize how much time we’d have to spend on our own health issues and taking care of relatives who need help.

We recently lost one elder but others may need help soon. But I prefer being a helper than someone who needs help.
jdb
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Re: What do you wish you knew before you retired you know now!

Post by jdb »

Not economic or financial. And didn’t need to know this before retirement. Now retired empty nesters with wife still working, finding out enjoyment in cooking great meals at home. Collecting and reading cookbooks. Especially enjoy inviting one or two other couples over on weekends for dinner, with good wine, so much more fun and actually better food than restaurants, especially when get to know best butcher shops, seafood markets and fresh food markets in town. And not playing golf more than two times per week. Good luck.
Last edited by jdb on Sun May 02, 2021 6:10 pm, edited 1 time in total.
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Toons
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Re: What do you wish you knew before you retired you know now!

Post by Toons »

tennisplyr wrote: Sat May 01, 2021 5:56 pm Retired 10 years. That life flys by in retirement, if you feel like doing something, do it. Money is not a main focus, good health and enjoying life are. “Don’t sweat the small stuff”
Perfect
Ditto On Health,Happiness,Family
10 stars out of 5
Life starts speeding by.
Put off nothing if you want to do it.
If you are set financially
Don't even waste your time asking yourself ,
Is it worth it?
Do I need it or
I might need the money later.
Later Is Now
:wink: :wink:
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee
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GerryL
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Re: What do you wish you knew before you retired you know now!

Post by GerryL »

Toons wrote: Sun May 02, 2021 4:17 pm
tennisplyr wrote: Sat May 01, 2021 5:56 pm Retired 10 years. That life flys by in retirement, if you feel like doing something, do it. Money is not a main focus, good health and enjoying life are. “Don’t sweat the small stuff”
Perfect
Ditto On Health,Happiness,Family
10 stars out of 5
Life starts speeding by.
Put off nothing if you want to do it.
If you are set financially
Don't even waste your time asking yourself ,
Is it worth it?
Do I need it or
I might need the money later.
Later Is Now
:wink: :wink:
Toons, I agree with your points ... except for one question you might ask yourself: Is it worth it?
Even when we are financially set, value can still be an important concept when it comes to spending.
Do I want to spend this money on something that might give me a few moments of pleasure, or spend it instead on something that will result in wonderful memories for me or someone else?
Do I need another "thing" that will just gather dust after a few days?
Sure, I can afford it, but is it really worth it to me? Focus your money (and remaining time) on what is of value to you.
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Toons
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Re: What do you wish you knew before you retired you know now!

Post by Toons »

GerryL wrote: Sun May 02, 2021 5:32 pm
Toons wrote: Sun May 02, 2021 4:17 pm
tennisplyr wrote: Sat May 01, 2021 5:56 pm Retired 10 years. That life flys by in retirement, if you feel like doing something, do it. Money is not a main focus, good health and enjoying life are. “Don’t sweat the small stuff”
Perfect
Ditto On Health,Happiness,Family
10 stars out of 5
Life starts speeding by.
Put off nothing if you want to do it.
If you are set financially
Don't even waste your time asking yourself ,
Is it worth it?
Do I need it or
I might need the money later.
Later Is Now
:wink: :wink:
Toons, I agree with your points ... except for one question you might ask yourself: Is it worth it?
Even when we are financially set, value can still be an important concept when it comes to spending.
Do I want to spend this money on something that might give me a few moments of pleasure, or spend it instead on something that will result in wonderful memories for me or someone else?
Do I need another "thing" that will just gather dust after a few days?
Sure, I can afford it, but is it really worth it to me? Focus your money (and remaining time) on what is of value to you.

I understand your point completely
Excellent
:thumbsup :thumbsup
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee
GoneCamping
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Re: What do you wish you knew before you retired you know now!

Post by GoneCamping »

MrCheapo wrote: Sat May 01, 2021 7:29 pm
RudyS wrote: Sat May 01, 2021 2:26 pm I did not fully understand the advantage(s) of deferring social security. The potential advantage of Roth IRA vs t-IRA.
Can you enlighten us on what advantages you refer to. It's something I have thought about. My situation (to simplify it is) as follows

Claim $2270 at 62 = 490K (live till 80)
Claim $3300 at 67 = 514K (live till 80)
Claim $4100 at 70 = 492K (live till 80)

So its all about the same. Now if I live till 90 clearly the spread gets bigger, but that's a bit of hope.
True on the total dollar amounts at age 80 but my thinking recently has shifted to focus more on the monthly (or annual) total should I wind up needing to rely more on SS than anticipated. By the time one reaches 80, while at about break even for total at that point the difference in the annual amount is quite significant. Adjusted for a yearly 2% COLA adjustment, come 80 I'll be getting about $11k more a year filing at FRA of 67 vs. 62, and $18k more for claiming at 70 vs. 62. Several factors will ultimately go into the decisions but I find this pretty compelling.
Shallowpockets
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Re: What do you wish you knew before you retired you know now!

Post by Shallowpockets »

I feel I knew almost everything about retirement. It has panned out just fine.
What I know now being retired and living a good life is that so many others are not. I am no longer immersed in my own striving. And that is a bit of a burden to bear. I wish I had been more compassionate sometimes in my job than I was to those less fortunate. This knowledge is nothing that had I know would have made any difference in my retirement numbers. But retirement is not always about numbers and dollars.
I did not know this aspect of being retired (as the traditional BH retirement) where all I want or need is so well taken care of would manifest itself in this way.
I wish I had known this before but it would not have mattered then. And, as now, there is little I can do about it.
I guess what I did not know and what others did not know can sometimes be expressed as a regret.
SteadyOne
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Re: What do you wish you knew before you retired you know now!

Post by SteadyOne »

MrCheapo wrote: Sat May 01, 2021 7:29 pm
RudyS wrote: Sat May 01, 2021 2:26 pm I did not fully understand the advantage(s) of deferring social security. The potential advantage of Roth IRA vs t-IRA.
Can you enlighten us on what advantages you refer to. It's something I have thought about. My situation (to simplify it is) as follows

Claim $2270 at 62 = 490K (live till 80)
Claim $3300 at 67 = 514K (live till 80)
Claim $4100 at 70 = 492K (live till 80)

So its all about the same. Now if I live till 90 clearly the spread gets bigger, but that's a bit of hope.
And if you inflation adjust it, it even closer. Slightly so, but still
“Every de­duc­tion is al­lowed as a mat­ter of leg­isla­tive grace.” US Federal Court
dboeger1
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Re: What do you wish you knew before you retired you know now!

Post by dboeger1 »

Woodshark wrote: Sat May 01, 2021 7:25 pm I didn't realise how hard it would be to shift my mindset from saver to spender. I've been retired a touch less than 6 years and of course the market has been very kind during the past few years. We have absolutely no need to look at prices on menus or clip coupons, yet we still do. It's hard to pivot 180 degrees.
To be fair, you can always donate or pass down the extra. You probably shouldn't be concerned with menu prices at restaurants, but it doesn't make sense to waste money just because you have it either. If it was absolutely necessary to spend your last penny as you breathed your last breath, retirement portfolio management would be a whole lot more stressful than it already is. Being able to comfortably afford your expenses is a good problem to have.
celia wrote: Sun May 02, 2021 3:51 pm I didn’t realize how much time we’d have to spend on our own health issues and taking care of relatives who need help.

We recently lost one elder but others may need help soon. But I prefer being a helper than someone who needs help.
My grandparents live in a senior village, and they've said many times that mortality didn't hit them completely until they moved there and witnessed multiple waves of friends moving in and passing away before them. They've been blessed with good health and longevity, but the flip side of that is that they're constantly reminded that they could be next. Us family get to not worry too much about that until it happens, but they're constantly confronted by it in their social circle. One of the biggest surprises was when a neighbor of theirs who had suffered from cancer for years successfully battled through it but then died of other natural causes shortly after recovering from the cancer. I suppose that's one thing to consider when evaluating such retirement communities.
travelerfromsj wrote: Sat May 01, 2021 9:51 pm I wish that I'd been a little more aware of my parents' financial situation, and perhaps that of my sister as well. When we retired, I didn't factor in how their lack of planning might affect our own retirement.
This one worries me. I'm still young and far away from retirement, but my father is getting up there in age, had some health scares in recent years, and recently bought a house. While his payments are affordable and the house purchase seems sensible in the long run, I'm not sure assuming future income is the right move in his situation. He hasn't been a saver/investor in probably 20+ years since he was dealt a very rough hand at life that saw him losing the entirety of a fairly substantial net worth. Part of that was him just trying to scrape by, but I feel like at this point, he should really build up some retirement assets, and I just don't think he has the desire to do it anymore. Neither of my siblings are in good financial positions to help him unless they move back in with him, which I guess is possible, but if they don't, it would fall onto me to decide how much I'm willing to help. That's not really a situation I'm looking forward to finding myself in.
tomsense76
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Re: What do you wish you knew before you retired you know now!

Post by tomsense76 »

MrCheapo wrote: Sat May 01, 2021 7:19 pm Good point on the 403(b). My retirement "expert" keeps on prompting me to consider converting to an IRA.
Is the retirement "expert" paid by AUM? If so, that may be the source of this "advice"
"Anyone who claims to understand quantum theory is either lying or crazy" -- Richard Feynman
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Re: What do you wish you knew before you retired you know now!

Post by Oenophileangler »

I wish I knew about the Bogleheads forum before I retired a year ago.
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celia
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Re: What do you wish you knew before you retired you know now!

Post by celia »

Oenophileangler wrote: Mon May 03, 2021 9:33 pm I wish I knew about the Bogleheads forum before I retired a year ago.
So, what were the most useful concepts you learned since you found the forum?
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2pedals
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Re: What do you wish you knew before you retired you know now!

Post by 2pedals »

Think the question should be what are you glad about that you didn't know before you retired. I started retirement a little over two years ago. Covid-19 rules has changed some of our travel to Europe plans. If I knew that this would happen maybe we probably would have waited a few years. Retirement has been great so far with little stress and fun activities. Very little what if's would have changed my decision to retire, if I knew what I know now.
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Re: What do you wish you knew before you retired you know now!

Post by Sandi_k »

Cruise wrote: Sun May 02, 2021 3:45 am One thing that surprised me in retirement was that I’d occasionally run into someone who seemed miffed that I was retired and there were not. I think my younger-than-my-years look may have contributed to this.
Ha! My MIL informed me last month that I could NOT POSSIBLY retire at 60, because it was "too young." Note that she chose to work as an Avon lady until age 83, to "keep herself occupied" and to have "a bit of pocket money" and "to get out of the house."

She actually asked DH and me "why in the world would you retire that young? How could you possibly fill your days?"

Our response: 1) Because we can, and 2) We have no qualms that we will find ways to occupy our hours.

:sharebeer
bwalling
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Re: What do you wish you knew before you retired you know now!

Post by bwalling »

Sandi_k wrote: Mon May 03, 2021 11:32 pm Ha! My MIL informed me last month that I could NOT POSSIBLY retire at 60, because it was "too young." Note that she chose to work as an Avon lady until age 83, to "keep herself occupied" and to have "a bit of pocket money" and "to get out of the house."
I will retire in the next two years (age 46 or 47), and have been told repeatedly by people it's too young and I shouldn't do it. I'll have 40x expenses.
Oenophileangler
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Re: What do you wish you knew before you retired you know now!

Post by Oenophileangler »

celia wrote: Mon May 03, 2021 9:58 pm
Oenophileangler wrote: Mon May 03, 2021 9:33 pm I wish I knew about the Bogleheads forum before I retired a year ago.
So, what were the most useful concepts you learned since you found the forum?
Wow, a simpler question might be what did I know before I joined. Seriously, there is so much that I've learned since retiring. I realize that I haven't been handling finances efficiently. For instance, asset location (I had allocation ok). I didn't know that I could do Roth conversions as a higher earner. I learned about Factor Investing (I know that can be a touchy subject on this board). Tax efficiency is a biggie that I've learned about. I never knew about TLH.

We're just fortunate that we saved a lot, spent below our means, invested fully in our tax deferred accounts, and didn't blink in 2000, 2008, and 2020.
GoneCamping
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Re: What do you wish you knew before you retired you know now!

Post by GoneCamping »

Sandi_k wrote: Mon May 03, 2021 11:32 pm
Cruise wrote: Sun May 02, 2021 3:45 am One thing that surprised me in retirement was that I’d occasionally run into someone who seemed miffed that I was retired and there were not. I think my younger-than-my-years look may have contributed to this.
Ha! My MIL informed me last month that I could NOT POSSIBLY retire at 60, because it was "too young." Note that she chose to work as an Avon lady until age 83, to "keep herself occupied" and to have "a bit of pocket money" and "to get out of the house."

She actually asked DH and me "why in the world would you retire that young? How could you possibly fill your days?"

Our response: 1) Because we can, and 2) We have no qualms that we will find ways to occupy our hours.

:sharebeer
That is another the question we get (retiring at 55/56 this year) from some people, "what will you DO???". My honest and very simple reply is "whatever we want". That is both the beauty and simplicity of retirement to me. In a way, I feel sad for the people who ask that question...
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MrCheapo
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Re: What do you wish you knew before you retired you know now!

Post by MrCheapo »

There was a good narrative earlier the thread about taking SS benefits at 70. Essentially, one views SS as a cheap insurance policy against living way past your 80s. It makes good sense from a risk perspective but not in my simple fiscal analysis perspective.
SteadyOne wrote: Mon May 03, 2021 5:46 pm
MrCheapo wrote: Sat May 01, 2021 7:29 pm
RudyS wrote: Sat May 01, 2021 2:26 pm I did not fully understand the advantage(s) of deferring social security. The potential advantage of Roth IRA vs t-IRA.
Can you enlighten us on what advantages you refer to. It's something I have thought about. My situation (to simplify it is) as follows

Claim $2270 at 62 = 490K (live till 80)
Claim $3300 at 67 = 514K (live till 80)
Claim $4100 at 70 = 492K (live till 80)

So its all about the same. Now if I live till 90 clearly the spread gets bigger, but that's a bit of hope.
And if you inflation adjust it, it even closer. Slightly so, but still
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MrCheapo
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Re: What do you wish you knew before you retired you know now!

Post by MrCheapo »

Johnsson wrote: Sun May 02, 2021 6:23 am Retiring July 6th...

Not realizing how account values grow once you have 'enough', I wish I had thought through the need to contribute to Roth IRAs earlier in life (my 1st real money in Roth was a conversion last year). I'll be doing massive conversions the next 4 years to catch-up/balance-out.

It would have been cheaper and easier to contribute more much earlier/along the way.

People will always tell you to contribute to a IRA. But few can explain why you should have and need a Roth.
Let me just double check my situation here. If one has a 403b and 457b which they are maxing out (including catchups) all this IRA stuff is moot right as we can't do it?
SnowBog
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Re: What do you wish you knew before you retired you know now!

Post by SnowBog »

MrCheapo wrote: Tue May 04, 2021 10:54 am There was a good narrative earlier the thread about taking SS benefits at 70. Essentially, one views SS as a cheap insurance policy against living way past your 80s. It makes good sense from a risk perspective but not in my simple fiscal analysis perspective.
SteadyOne wrote: Mon May 03, 2021 5:46 pm
MrCheapo wrote: Sat May 01, 2021 7:29 pm
RudyS wrote: Sat May 01, 2021 2:26 pm I did not fully understand the advantage(s) of deferring social security. The potential advantage of Roth IRA vs t-IRA.
Can you enlighten us on what advantages you refer to. It's something I have thought about. My situation (to simplify it is) as follows

Claim $2270 at 62 = 490K (live till 80)
Claim $3300 at 67 = 514K (live till 80)
Claim $4100 at 70 = 492K (live till 80)

So its all about the same. Now if I live till 90 clearly the spread gets bigger, but that's a bit of hope.
And if you inflation adjust it, it even closer. Slightly so, but still
As a reminder, SS goal is effectively equal payments to a given individual that aligns with the longevity assumptions.

In other words, for the average person who "dies on schedule", it shouldn't matter when you claim - you'll get roughly the same overall payments. (Either more smaller payments if you claim early or fewer larger payments if you claim late, but the total is intentionally roughly the same.)

For someone single, they basically need to figure out if they'll live longer or shorter than the average estimate. Someone in bad health probably should claim early, as they might not live long enough to hit the "average". For others, it's more subjective.

If married, the analysis is arguably simpler. The highest earner (especially if by a large margin) should try to delay claiming (assuming finances allow). So long as one of you beats the average life expectancy, you likely come out ahead. (Since the survivor gets to effectively keep the higher payment of the two spouses. [In reality, I think they keep their payment and then get a 2nd check for the difference.])

Beyond that consider what happens if you "guess wrong" related to how long you live.
  • If you die sooner, sure from an SS viewpoint you'll have been paid less (maybe nothing if you delayed SS). But presumably your portfolio has unused assets since you had less expenses vs your "planned" lifetime expenses. So you'll probably leave more assets to your heirs than planned (OK, maybe less as they didn't grow as long, but they'll get them much sooner).
  • If you live longer, you risk living beyond your saved assets. This is where SS can really shine as "longevity insurance". Delaying your SS as long as possible - combined with its COLA helping to keep pace with inflation, will drastically reduce the risk of running out of money.
Between the two options, I'd rather err on the side of delayed SS. If we both die young, our heirs will get plenty (even if we never get $1 from SS). If one of us lives to 100+, it's likely their expenses will be fully covered by SS (and we are lucky that spouse has a small inflation adjusted pension as well).
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rterickson
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Re: What do you wish you knew before you retired you know now!

Post by rterickson »

MrCheapo wrote: Tue May 04, 2021 10:55 am
Johnsson wrote: Sun May 02, 2021 6:23 am Retiring July 6th...

Not realizing how account values grow once you have 'enough', I wish I had thought through the need to contribute to Roth IRAs earlier in life (my 1st real money in Roth was a conversion last year). I'll be doing massive conversions the next 4 years to catch-up/balance-out.

It would have been cheaper and easier to contribute more much earlier/along the way.

People will always tell you to contribute to a IRA. But few can explain why you should have and need a Roth.
Let me just double check my situation here. If one has a 403b and 457b which they are maxing out (including catchups) all this IRA stuff is moot right as we can't do it?
Not exactly.

The rules of the individual retirement plans dictate what you can do. For example, I have one 457b account that permits in-plan Roth conversions and another that does not.

Regardless, once retired you will have the option to roll over a portion (or all) of your 403/457 to an IRA, pay the taxes (from other sources), then convert to Roth IRA.
Somethingwitty92912
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Re: What do you wish you knew before you retired you know now!

Post by Somethingwitty92912 »

Finding direction for your life, it’s a big challenge. Yeah I know, oh whoa are my problems. On a personal level through, finding what you should be doing with your time is a full time job. At least, I suspect it will be till you find it.
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celia
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Re: What do you wish you knew before you retired you know now!

Post by celia »

MrCheapo wrote: Tue May 04, 2021 10:55 am
Johnsson wrote: Sun May 02, 2021 6:23 am People will always tell you to contribute to a IRA. But few can explain why you should have and need a Roth.
Let me just double check my situation here. If one has a 403b and 457b which they are maxing out (including catchups) all this IRA stuff is moot right as we can't do it?
On the contrary!!!

Why you need to have a Roth IRA
Let’s look at your future self. Suppose you are age 70, would you be glad you had tax-deferred accounts that had grown to $2M or would you be glad that you had $1.5M in a Roth IRA? Or would you like half of each? [Forget the math for the moment and decide your answer before continuing]

If all/most of your retirement money is in tax-deferred, you will have to start withdrawing RMDs and pay taxes on every dollar withdrawn, regardless if you need the money for spending or not and regardless of what your tax bracket is at that time. By the time you pay the taxes, there will less left over and the tax bracket will be unknown until then. There is also a surcharge on those Medicare beneficiaries with higher income. Instead of paying $2K in premiums each year like the vast majority pay, you could be one of those paying $11K in premiums just because the RMDs made your income higher. Double those amounts if Married.

In addition, if you are MFJ now, when you are widowed, you will have to file as Single. The space in each tax bracket for Single is half as much as MFJ, so you could easily be bumped into a higher tax bracket.

Now, if you were half (or all) Roth, all your Roth withdrawals would be tax-free. You could leave them in your Roth or spend them as you want. Withdrawals would not raise your Medicare premiums or push you into higher tax brackets when widowed.

[Stop and ask yourself again which kind of accounts you would rather have at age 70.]

How to contribute to Roth IRAs
Everyone with earned income (wages) or with a spouse with earned income can contribute to a Roth each year. Instead of deducting your income on your taxes when contributing to tax-deferred accounts, you contribute money that was NOT deducted. If your current income is too high to contribute directly, you can contribute indirectly by doing a Backdoor Roth instead.

After reading that page, if you have questions, ask them in a new thread you start.
A dollar in Roth is worth more than a dollar in a taxable account. A dollar in taxable is worth more than a dollar in a tax-deferred account.
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billthecat
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Re: What do you wish you knew before you retired you know now!

Post by billthecat »

SnowBog wrote: Tue May 04, 2021 3:23 pm For someone single, they basically need to figure out if they'll live longer or shorter than the average estimate. Someone in bad health probably should claim early, as they might not live long enough to hit the "average". For others, it's more subjective.
Given the same level of contributions, women get more social security benefits than men because, on average, they live longer. So is being male like having bad health? Meaning, should men claim social security sooner just by virtue of being male?
We cannot direct the winds but we can adjust our sails.
SnowBog
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Re: What do you wish you knew before you retired you know now!

Post by SnowBog »

billthecat wrote: Tue May 04, 2021 11:33 pm
SnowBog wrote: Tue May 04, 2021 3:23 pm For someone single, they basically need to figure out if they'll live longer or shorter than the average estimate. Someone in bad health probably should claim early, as they might not live long enough to hit the "average". For others, it's more subjective.
Given the same level of contributions, women get more social security benefits than men because, on average, they live longer. So is being male like having bad health? Meaning, should men claim social security sooner just by virtue of being male?
Perhaps...

But if married, it's also common that the husband had higher SS earnings, and thus even if they die before "their" breakeven point on delayed SS, the surviving spouse likely comes out ahead (as you noted, the wife tends to live longer).

However, if you were a Meatloaf (singer) fan and are "praying for the end of time..."
vested1
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Re: What do you wish you knew before you retired you know now!

Post by vested1 »

SnowBog wrote: Wed May 05, 2021 5:22 am
billthecat wrote: Tue May 04, 2021 11:33 pm
SnowBog wrote: Tue May 04, 2021 3:23 pm For someone single, they basically need to figure out if they'll live longer or shorter than the average estimate. Someone in bad health probably should claim early, as they might not live long enough to hit the "average". For others, it's more subjective.
Given the same level of contributions, women get more social security benefits than men because, on average, they live longer. So is being male like having bad health? Meaning, should men claim social security sooner just by virtue of being male?
Perhaps...

But if married, it's also common that the husband had higher SS earnings, and thus even if they die before "their" breakeven point on delayed SS, the surviving spouse likely comes out ahead (as you noted, the wife tends to live longer).

However, if you were a Meatloaf (singer) fan and are "praying for the end of time..."
+1

Not only if they die before their breakeven point, but if they die even before filing. We don't need the income from SS to meet expenses. I'm 69 in two months and still delaying. If I die today my surviving wife will receive $1,411 more dollars every month than she would have had I filed at age 62 and died today. If I make it another 14 months before filing, that number will increase by 9.32% not including 2021 COLA increases.

Breakeven is simply a convenient way for most people to relate to the decision, but it creates a false equivalency. I don't care about breakeven because SS isn't a lump sum. It's insurance, or more accurately a better annuity than you can get on the open market. Knowing that my wife will have more fixed income when I die helps me sleep at night. Wondering if I will break even on cumulative SS benefits is a waste of time.
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billthecat
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Re: What do you wish you knew before you retired you know now!

Post by billthecat »

SnowBog wrote: Wed May 05, 2021 5:22 am
billthecat wrote: Tue May 04, 2021 11:33 pm
SnowBog wrote: Tue May 04, 2021 3:23 pm For someone single, they basically need to figure out if they'll live longer or shorter than the average estimate. Someone in bad health probably should claim early, as they might not live long enough to hit the "average". For others, it's more subjective.
Given the same level of contributions, women get more social security benefits than men because, on average, they live longer. So is being male like having bad health? Meaning, should men claim social security sooner just by virtue of being male?
Perhaps...

But if married, it's also common that the husband had higher SS earnings, and thus even if they die before "their" breakeven point on delayed SS, the surviving spouse likely comes out ahead (as you noted, the wife tends to live longer).

However, if you were a Meatloaf (singer) fan and are "praying for the end of time..."
What about if not married?
We cannot direct the winds but we can adjust our sails.
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