<p>It also matters if the folks have ANY pension or similar benefits in addition to retirement accounts. If we didn’t have a pension, I’m not sure H could retire even after working for 45+ years. We live very comfortably on the pension plus the Required Minimum Distributions on his traditional and inherited IRAs and 401K plans. We had always planned on some pension, otherwise we would have had to sock away a LOT more than we did. </p>
<p>jim626,
I knew Steve Jobs is dead. If he were not so stubborn, he could still be alive today.</p>
<p>Re: 70+ $177,700</p>
<p>If such a person withdraws 4% out of $177,700 in a year, the withdrawal amount is only about $180,000/100 then times 4, which is only about $7200 a year, or $600 a month. Suppose his SS is only $120,00 a year or $1,000 a month, he has only $1,600 a month. Unless he also has pension or 401K he can tap, how can he survive with jus $1,600 a month? Have I missed anything here?</p>
<p>Yes…you are right himom. I am ignoring pensions in my prior post. </p>
<p>@mcat - it is very difficult to determine what people actually have, because they can have multiple IRAs and 401Ks split over multiple companies, and there is no way to combine them. I think between my wife and I, we have 5 IRAs and 2 401Ks. Most are at one place, but not all.</p>
<p>The Fidelity link I posted shows that, at least for Fidelity customers, their total balances are double that or more. And that people aged 70+ have higher balances than people 65-69, which means… people aren’t taking money out because they don’t need it? Investment returns are comfortably exceeding withdrawal rates? Hard to say…</p>
<p>I haven’t found anything yet that really creates a clear picture of how people in the 55-65 age bracket are really doing retirement-wise… how much they really have, how many are getting pensions and for how much, etc.</p>
<p>^Exactly, people have multiple IRAs, multiple 401Ks(some just leave it alone when they move), some have pensions.</p>
<p>dstark, I too can decide what’s doom and gloom, LOL. Some websites I’ve followed some people have 4-6M in their 30s, some have salary $650K in their 30s. When people push the doom and gloom scenarios they have some interior motives, mostly political ones.</p>
<p>There are average net worth studies…the average pension is pretty low too.</p>
<p>6 figure pensions are not the norm.</p>
<p>
I was exposed to VAX VMS for about 3 or 4 years also. (mostly when the color of the binder of the documentation set is orange, likely in their later years.) I visited DEC’s huge (in terms of the area, not the height) building in MA once (for some VAX VMS Device Driver training.) I agree that its architecture is efficient and elegant. At one time, I was very familiar with many useful system services on that OS. Even as of today, when some newer generation wants to learn, say, the signal handling on a computer, I still often referred to VMS as an example. It was somewhat sad that many younger engineers today (unless they are in the closely related field) even do not know the existence of VAX VMS. But they know a lot that we old timers do not know. When I was with a major semiconductor company in Silicon Valley, all test engineers used VAX as their front-end control computers for their test machines. (despite the fact that this semiconductor company designed/manufactored the main processor for Windows PC.)</p>
<p>I heard that MS hired the main architect of VMS from DEC in the later years of DEC, when it started to build its first more robust OS, Windows NT.</p>
<p>I am not a doom gloomer. I am into reality though. We have some economic issues including retirement issues in this country. I havent read Krugman much over the last two years. It doesnt matter. We dont need to look at politics at all to know we have serious economic and retirement issues in this country.
Doesnt mean the country is going to fall apart. Doesnt mean the goverment is going to raid our retirement accounts in the middle of the night. Doesnt mean I am going to get fat. </p>
<p>After reading what notrichenough said, I realize my wife and I have 3 ira accounts with very little in those accounts. </p>
<p>Looks like Fidelity is counting accounts…not people. </p>
<p>So my wife and I are hurting the averages with those 3 accounts. There are also 7 million accounts and fewer than 7 million people owning those accounts. </p>
<p>
Yep, Dave Cutler, back in the 80’s. I only ran into him a few times.</p>
<p>VMS -> go to the next letter -> WNT = Windows NT. Coincidence? ;)</p>
<p>Speaking of multiple IRAs has anyone put money into a taxable IRA (non-Roth and non-backdoored to a Roth)? Assuming the model that long term capital gains rates will be significantly lower than regular income, even accounting for annual distributions in non-retirement accounts, don’t the numbers point to TIRA generally coming out worse than non-retirements like the S&P index?</p>
<p>
</p>
<p>We are losing an experienced COBOL programmer on our project, and apparently even they are getting difficult to replace! I am wistfully thinking about hanging up my project manager hat (so tired of babysitting people!) and going back to coding – I suspect I might be able to make almost as much dusting off my COBOL and JCL skills these days!</p>
<p>Dad of 3, it depends what the rates are going in and going out. </p>
<p>What is the tax rate when you are going to fund the traditional ira? Add that to the cap gains tax rates when you retire. Are those two rates combined less than your ordinary tax rates in the future when you would withdraw from your traditional ira ?</p>
<p>
I think the churn level also matters. The benefit or IRAs, even after-tax ones, is decades of tax-free growth. If you actively trade a non-retirement account (or invest it in mutual funds which have distributions every year), even though long term capital gains taxes are lower, you might still come out worse because you are paying the taxes as you go along, which reduces what is available for investment.</p>
<p>Example: assume 8% annual return, 7% after tax, 20% effective tax rate in retirement:</p>
<p>1.08^30 * .8 = 8.05
1.07^30 = 7.61</p>
<p>You still come out ahead after 30 years with the IRA. And there is likely some non-realized capital gain in the non-IRA number, which will get taxed at some point.</p>
<p>Yes… Churn rate matters. When funds are withdrawn matters. </p>
<p>Dadof3, you dont like the roth because…</p>
<p>
I don’t see how this affects the equation with taxable/non-deductible IRAs because you have to pay the same current tax for both the IRA and the non-retirement option - I believe our federal marginal rate is 33%. The only two differences I see are:
- the IRA doesn’t incur annual taxes
- at the time of withdrawal, the IRA gains are taxed as ordinary income versus the regular investments are mainly taxed as long term capital gains perhaps 25% marginal versus 15% marginal.
When I plug in actual values from 1099-DIVs into a spreadsheet, the TIRA always comes out much worse.
Am I missing something?</p>
<p>Edit - Perhaps it made sense if the investment was heavily into bonds at a time when they had little capital gain, but lots of dividends…?? </p>
<p>
Don’t qualify for Roth, and when we did, I don’t think Roths existed.</p>
<p>If we do backdoor IRA to Roth, we would incur tons of taxes now.</p>
<p>We could do something like a reverse rollover of our IRA into our 401(k)s, start with a zero dollar IRA account, and then do a regular IRA followed immediately by a backdoor Roth conversion, but I’m nor sure it’s worth the hassle…</p>
<p>VAX… wow, that brings back memories from my college days. When I was a junior, my college was the first to require PCs (all same Z100 model). They added $200/semester to the student bills (for new students, not me) … cheaper than if they had tried to replace the old mainframe. </p>
<p>Dad<em>of</em>3, there is non-deductible tIRA and then convert immediately to Roth IRA, but the trick is you must not have other tIRA outside of your 401K. Otherwise the tax situation is going to haunt you. </p>
<p>Ok… Dadif 3, sorry I missed the nondeductible part…</p>
<p>Nevermind. Trust your spreadsheet.</p>
<p>I am going to play around with your scenario.</p>
<p>Do the numbers change dramatically if you trade a lot (take cap gains) before retirement?</p>
<p>You are going to lose some compounding. If you churn before retirement…</p>