Personally, I like the philosophy of Vanguard but don’t like that they don’t have a form that states “Durable Power of Attorney” (DPOA) on it and would require you to jump through some hoops when you need a durable power of attorney & can’t set it up in advance. I like that Schwab has a brick & mortar office in Honolulu, as well as 24/7 phone, but still no DPOA. I like the Fidelity has a DURABLE POWER OF ATTORNEY form. I have found all of them to be equally easy to deal with and still have accounts at all three brokerages.
H has an inherited IRA–it was with Schwab and we had to take our RMD before we rolled it over to FIdelity. We sold all the managed funds it was invested in and plan to buy index funds–45% bonds, 50% stock & leave 5% in cash for distributions. You can specify where you want the distribution drawn from in the account, I believe. If you don’t have dividends reinvested, you can have the RMD drawn from the unreinvested dividends (if they are sufficient). Whatever target brokerage you want to have hold the funds should be able to help you with the paperwork and walking you through the process. It’s fairly straight-forward and quick.
Igloo, throw in the lump sum value of a $3,000/mo pension and it’s a pretty nice chunk of change.
We should be OK in retirement, but I don’t think we’ll be having a $3.4 M problem, though! DadII, OTOH, should be following this closely, since his stated goal was $10M.
“Igloo, throw in the lump sum value of a $3,000/mo pension and it’s a pretty nice chunk of change.
We should be OK in retirement, but I don’t think we’ll be having a $3.4 M problem, though! DadII, OTOH, should be following this closely, since his stated goal was $10M.”
I think that was the stated goal of what to have by retirement. However, I don’t think for many people the number is restricted to retirement funds, but includes taxable investments, real estate investments, and spouses accounts. No doubt, the second an account gets near the magic number, people will start taking money out of it, investing in lower return investments, anything to not trigger additional taxes.
Then again, someone manages to get this in place, and the next year the number isn’t 3.4 million, but 2.4 million. Because who really needs more than that? And then 1.4 million, and they can just change it around however they like. Of course, exclude thrift savings plans and any other plans that would affect people in Congress.
RE: post #4465.
Never invest with a hedge fund (unless you can afford to lose most of it) especially one that has such a short track record.
Some of these guys are so aggressive with their leverage, few unforeseen mistakes or circumstances and they blow up.
“Apparently no one needs more than $3.4 million in retirement accounts (refer to the very last sentence):”
ROFL … if we had that, we’d for sure be retired now I’d have to agree that nobody NEEDS that much (or 2x, if it is per person as I think I saw above). I suppose some people are accustomed to a lifestyle where they’d want it. But they could probably survive nicely with or without tax advantaged savings.
That kind of money could go away pretty quickly if it was invested in low return investments, people had no pension, and lived a long time in nursing or retirement homes. I wonder how much money someone might need to survive for 35-40 years, only withdrawing and not replenishing the account, with annual inflation.
Plus the fact that what gives anyone a right to determine what amount someone should “need”, of their own savings, and decide to tax away the rest? This starts with retirement accounts and keeps going. Nobody gets to keep more than some government official decides they need.
If you consider Roth as a tax break, the question becomes who should get tax breaks from federal government.
Raising capital gains tax to 28% as “Reagan did” is disingenuous. It didn’t last. Only one year the rate was 28%. It came back down the following year. We got caught in that 28%. We had IPO issues we held over 40 years that we were forced to liquidate that year due to merger/aquisition. An event I can’t forget since the gains tax rate came down the following year.
Good question. Not sure, but they might be looking at RMD starting at age 70.5, which is 3.65% but by age 80 it is 5.35%, so if they ASSume some type of return on the account, even with your required minimum distributions by age 90 your RMD will be 8.77% and if you have $2.5mm left in your account that will be over $210k. Anyway, they clearly made some heroic assumptions and worked in RMDs; Seems like the underlying assumption is you use up your retirement savings as opposed to living off the earnings and passing the principal on to your heirs.
The RMD really should circumvent most abuse of IRA accounts. The money has to come out, and when it comes out it is taxed as ordinary income. There are strict limits on the amount of cash that can go into an IRA or a 401K account, so mere mortal investors are unlikely to accumulate $25mm of assets in their IRA. My limited understanding of the worst abusers is that some folks are given access to private stock deals where they can purchase stock in their IRA for $5,000 that magically increases in value to $100mm in several years. One of the worst abusers I believe was an unsuccessful candidate for president.
I have retired a few months ago and have contributed to a 457 plan for about 20 years (better late than never). There aren’t that many investment options within the plan, though it has expanded in recent years. I saw my account value plummeted around 2007-2008 (whenever the last crash was), then slowly coming back up. Sadly to say, compared to those who have phenomenal returns, my account merely doubles the amount of my contribution. My account include big cap stock fund, mid cap, small cap and a technology fund.
Don’t think I can stomach the fluctuations in the market as good as I have been in the past when I was younger and contributing to the plan, I am thinking and have started converting some % of some funds into a guaranteed fixed income account, currently yielding 4% and has been at 4% for a number of years, which can change.
I understand everyone’s risk tolerance level is different, and for me, one of the problem is of “sentimental” nature, I am not the short term trade kind of person, and I have problem letting things go (i.e. to sell shares of anything!), but I got to do something to preserve value of my 457 plan, so I am at the crossroads and try to figure out : (1) How much should I convert to the fixed 4% account? (2) Should I convert some to bond funds (which I never held)? (3) Should I just stay put and hopefully the market will still be ahead if given a longer time horizon? I won’t be touching this money until RMD time.
It is a very personal choice, but are there any pitfalls of converting and not converting that I should pay attention to?
I haven’t seen anybody talk about whether the $210K is before-tax or after-tax, and don’t think it matters. Even if that number is before paying taxes, it will still be at least $160K after taxes, and that’s not chump change. Especially considering people who are retired generally don’t need to save for retirement and are done paying for college for their kids (which for us will be around 25% of our income this year).
If you are netting $160K+ per year from your tax-advantaged accounts, they have done their job, and I don’t think it is unreasonable to cap it.
And nothing prevents you from piling up as much money as you want in after-tax accounts if you manage to hit $3.4mil in your IRA.
I’d have to agree that nobody NEEDS that much (or 2x, if it is per person as I think I saw above). I suppose some people are accustomed to a lifestyle where they’d want it. But they could probably survive nicely with or without tax advantaged savings.