By the time I retire, there won’t be Social Security, so for a cheaper suburban area, probably at least 2 million invested for a modest living, assuming no mortgage. If I lived in a big city, probably 10 million invested since it’s just so expensive. I wouldn’t retire in a big city though.
People in my family who are near retirement either have very little invested (a couple hundred thousand or less) or 10 million+ invested with no mortgage. It sucks when you can’t do anything in retirement because you have no spare money whereas the latter can pretty much do whatever they want since they have no real costs each month.
tIRA is just short-hand for traditional IRA – the kind where you put deductible contributions.
The 401k option to do this is offered by some employers, not all. It is probably more common that employers offer Roth 401k as an option, but I think the post-tax option is preferable (because of its higher limits). I think the post-tax option had fallen out of favor because of the PITA of getting the money out, but perhaps it will become more popular since the IRS notice.
I haven’t read the book myself, but certainly understand the benefits espoused by the author. Here’s a tribute in the NYT about Thomas Stanley which describes the origin of the book:
Well at least I’m hoping to be loaded, @igloo . One reason for setting up the trust was asset protection. It was settled with a nominal investment by a relative. It has in it a company I started that has done some Advisory projects. Then purchased other things. The Trustee is authorized to pay for health, welfare, education or housing for us and our progeny at her discretion. We are in effect lifetime beneficiaries for a So it is designed to could help a kid with downpayment on a house. It can also purchase a property for investment and purchased the condo in which ShawD lives with roommates. The rent ShawD and her roommates pay goes to the trust. It is a complicated structure that distances me from assets that I think I hope I won’t need for retirement but the trustee would give use for the big categories above if they were needed.
@busdriver11, my prediction has been that the country at some point will need to increase tax revenues. We probably can’t just keep printing money forever and we can’t just keep shrinking discretionary spending at the expense of SS and MC and defense. Then, Congress will need to be like Willie Sutton – they will have to go where the money is. They could tax really rich people (oops, but who gives politicians their campaign contributions?) or they could tax dead people by dramatically lowering the estate tax threshold. My bet has been the latter. So, I’m anticipating for a world in which tax rates are higher and the estate tax threshold is lower. Politics will have to change, but necessity is the mother of invention.
Plans for the mega-Roth slowed down. My FA wants to hold off as I would need to change administrators for the 401k. Mine doesn’t take in after-tax contributions.
This is overly pessimistic, IMO. Current revenues that go to old age benefits are sufficient to fund about 70% of current benefits when the alleged “surplus” runs out. So at worst you will get 70% of your current projected benefit.
Although there is always a chance that something like means-testing will be started, which might cut that 70% a bit for wealthy retirees, more likely tweaks will be made to preserve full benefits. Too many old people, who vote.
The bigger problem is the disability side of things, which seems to be morphing into a long-term unemployment program for many people. This part is on much shakier financial ground.
I agree. I remember being in the late-1980s and hearing that SS was doomed “for us.” It was generally accompanied by a pitch to save more for retirement, which is good thing. However, it was also used by financial salesmen who were marketing variable annuities and life insurance products, which they also pitched as having great “tax advantages.” Most people hear “SS doomed” and “lower taxes” and go nuts without understanding the cost of the product and reading the terms.
Edited to add: thank you, @notrichenough. I have mastered the quote box!
^ It’s not means testing, but with 85% of SS benefits being taxed, it’s not as though “wealthy retirees” (ie, those couples making more than $44k) get a free ride either.
That’s why the Roth conversions may still make sense, even if the comparative tax rates stay the same pre- and post-retirement. Roth withdrawals are neither required nor counted in AGI. They also don’t go into AMT. IRA distributions do, don’t they? More reading…
^ I disagree, taxing SS benefits is absolutely a form of means-testing. It phases in, and you have to be up around $80K in total income for the full 85% to be taxed.
We have no DB pensions. We have strictly DIY retirements, which mean defined contribution plans and IRAs.
What I meant to address was the difference in treatment of IRA withdrawals (RMDs, counted in AGI and affects AMT) vs. Roth distributions (no RMD, not counted in income (AGI) and does not affect AMT).
^ I took means-testing as “if you make $x, no SS for you.” IRL, I expect that I will be paying taxes on 85% of my SS. Since I’m receiving benefits early, I’m already paying taxes on it.
