How much do YOU think YOU need to retire? ...and at what age will you (and spouse) retire? (Part 1)

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4941

H retired for good 7/2013. I am still running my nonprofit, but it’s a part-time position that I do as much (or little) as I choose. It’s still fun for now and we do travel quite a bit, as well as spend a lot time together.

It wouldn’t be the same if one of us was working full time and the other retired and wanting to do joint activities that the other couldn’t break free for–travel, meals out, or other fun activities. It can be done, but seems to be happiest when both folks are happy with how things work out.

4942

Part time to work as much or little as you choose, doing something you enjoy works for me. Otherwise…he’d better be doing a great job with the cooking and cleaning, if I have to go to work.

4943

Btw, was elsewhere during the questions about Roth conversions. I don’t think it’s worth the aggravation unless you
A- have no pre-tax tIRAs
B- can convert everything, or
C- have a 401k into which you can roll all of the pre-tax IRAs. Not all 401k allow this, but some do.

4944

It also depends on how soon you will need to draw down on your retirement accounts and your anticipated income in retirement, at various times (if it may vary). There is no one easy answer, to the best of my knowledge. We’re thinking we may convert H’s remaining small tIRA to a Roth in 2015. We shall see how it works out.

4945

H has realized he needs to work until 65 and then a few months more until I turn 65 (7.5 years) to secure our retirement finances, and also if we still are relying on his company’s health insurance. I told him the last 7.5 years of his earnings at the top of his earnings also means not drawing anything down out of our retirement. If I secure a job (hopefully this year) it will add to our security - I can’t jump into work and climb up to his earnings. But it will be great to use my expertise (lots of education and good work experiences) in areas I am passionate about.

If the first 6.5 weeks of this year have the same investment results for us on our 401k, we are heading for a lot of growth in our retirement funds. The 3.71% increase over that short period meant about $27K. Just wish I would have gotten out of the international fund last year which dragged our return down for 2014.

The good thing is that the kids are on good college tracks, and should have UG completed May 2016 and May 2018, utilizing the scholarships, pre-paid tuition plan, and set aside funds and graduate w/o debt. Our last 8 years of home mortgage is at 2.5% interest.

We pay out a fair amount for insurance, including two term insurance policies for H, and our long term care insurance policies. If I don’t have a job by next year, I am going to end my disability insurance (even as a stage III cancer survivor) because it costs $1100/year but insurance will only pay out if I am 100% disabled (it did pay out during the most severe of my cancer fight, but if I was working I would have also benefited from partial disability payments; I pay the same premiums but I do not have the same benefits as someone employed because disability insurance is ‘income replacing’ unless one is 100% disabled, which essentially is over 80% disabled). By May I will be 5 years cancer free, and by the end of the year, if all looks good, I don’t have to see the radiation oncologist any more.

As another has said, hope sharing the good news doesn’t put a crimp in the plans!

I have mulled over, and actually sort of dreamed what it would be like to live some of the year in Switzerland (I am a dual citizen, and H and I could live there w/o restrictions). I do want to find a way to at least get out there - maybe this summer if I am not working and around the shuffling of our students. I have been in Switzerland and stayed in a lot of great places there, mainly with relatives and friends on four trips (they live in 13 different cities/towns), but it has been over 17 years since my last trip. Two aunts and an uncle died since my last trip. Problem is H is not German speaking so he only catches some of the conversations.

Actually I think H and I are going to stay in our current home some after retirement. We have great health care here, and are comfortable in so many ways including climate and our network of friends and activities. We will have to see where DD1 and DD2 land. Do want to travel some in U.S., to see some sights and also seeing close relatives and friends.

4946

Bob, I agree with you in general. I am not sure about A-have no pretax tIRA. All our IRA was after tax but by the time we were allowed to convert, it had more 100% gains triggering tax on conversion. Not all that different from having pre-tax ira.

4947

^Or are you saying not worth the bother if you have to pay taxes on conversion?

4948

@Iglooo, I’m sorry I didn’t make myself more clear, it’s A OR B OR C, not AND, and I should have added D- you don’t have significant gains on your post-tax account.

I’m confused by your having an after-tax IRA “but by the time [you] were allowed to convert.” You should have been “allowed” to convert the next day, which would keep your gains close to zero (especially if you put it into a MM account, as I’d recommend).

Did you have (mis)guidance from your broker that suggested you leave the money in the tIRA? I’ve heard of that being said, but IMO it’s bad advice.

4949

Maybe Iglooo is talking about the tax law change that allowed people to convert at any income,

4950

Yes, that. The tax law change to do backdoor.

4951

IIRC, there were 2 years, a few years ago, where we were able to convert traditional IRAs to Roths, without the income limit imposed. All I recall is the HUGE tax hit we took! Ouch!

4952

I know, HUGE. That’s why the gov changed the law. They needed money.

4953

Yes, jym, painful for us too. Especially since we didn’t have the cash and borrowed from our HELOC. We might still be paying it off. But the market has gone up so much, I can’t regret it.

4954

Jym, yes , that’s the law that allows backdoor Roths. I’m always looking for minimal tax consequences, which is why I backdoor annually and don’t do any actual “conversions.” Everyone’s tax situation is different.

@iglooo, kicking the can down the road. More tax money for the government now, less later.

4955

The back door is similar to how 401ks started - a sharp accountant saw the advantage to his client (and he probably did it himself) - then the gov’t/IRS decided it was a ‘good thing’ so the idea spread across the country. The gov’t/IRS would shut down ‘the back door’ if they saw it as dis-advantageous - but as poster said, they get to collect taxes now.

The 401k came about at a time when pensions were being reformed and regulated. Too many companies were going belly up and their pensions were funded (often 100%) with their own stock. Companies were then limited in having a maximum choice of 25% in company stock in employee’s 401k choice.

This morning on NPR, report on how the gov’t is looking to having higher fiduciary standards, so that financial advice benefits the customer and is not laden with heavy fees/hidden fees. Mentioned Jack Bogle being on the advisory committee, put in a plug for Vanguard as a low fee option, and talked about saving 2% in fees over 35 years means doubling one’s account value. Also mentioned David Swenson’s book “Unconventional Success: A Fundamental Approach to Personal Investment” from 2005". Swenson was with Yale, and I believe talks about TIAA-CREF in his book (I just ordered the book, so interested in reading this book that seems still current, because it is still selling).

4956

People think of 1% or 2% as being a minimal drag on earnings, and in a year where you’re up 10% or 15%, maybe. But, if your earnings are 2-4%, it’s a HUGE percentage.

We insist that doctors put the patients’ best interests first, and with some exceptions, they do. We should expect no less, the fiduciary standard, from the people who hold our money.

4957

I agree about the percentage of fee and how it can affect low earnings so much more proportionately. If return is not bumped up higher than you can get yourself, or if your fund safety is not changed, you are throwing your money away. Higher fiduciary standards; certain certifications require you do what is in the best interest of the client. However how many financial advisors truly do? Most people are not so savvy. However unfortunately as soon as laws get implemented, a new scheme to pick people’s pockets is hatched.

4958

I couldn’t agree with you more. It’s about time, too. Most people won’t have a pension and will rely on their own investment. They’d be an easy picking without protection. A good industry would make money while helping their customers not off their back.

That explains it. I thought President’s statement sounded like Jack Bogle talking. He’s been at it for more than 20 years or more.

4959

At the risk of sounding like a cult member, IMO Jack Bogle is the best friend the small investor has ever had.

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Bogleheads are a dedicated bunch!