And, I’ll just add that my goal in retirement is not to feel “rich” or be rich or be able to act rich. My goal is to be secure enough to live reasonably comfortably - again, something that will have different meanings to different people - and not to be a financial burden to our son and not to be at the mercy of the government in determining what is reasonably comfortably.
The amount that one feels is needed to retire is a matter of personal opinion. The initial question posed by the thread is clearly seeking individualized opinions/responses based on the wording of the question and certain bolded words contained therein - “do YOU think YOU need to retire.” The idea, so I thought, was to get different views on this - not to reach some magic number that works for everyone in all situations. I don’t think that exists.
I think it should be no surprise that people will desire to maintain their standard of living from the time they retire to the time they die. Yes, that will mean different things to different people. When it is discussed for someone’s circumstances, that shouldn’t be viewed as a knock to someone who might have different expectations or abilities.
Sometimes the complaining on CC about people with some means who are just talking about their lives get’s old.
Regardless of what 2021 brings in terms of leadership, I wouldn’t be counting on the country’s economic affairs to be ironed out in the next calendar year or two. Much harder to climb economically as a country than fall.
We don’t absolutely need SS, but we’ve included it in our calculations of how long our retirement and investment money will last.
Right now we have a good amount in cash, and are converting money from traditional IRAs to Roths. Most of our money is in traditional IRAs, so we’re trying to decrease the hit from RMDs while we have the chance.
As others have said, our goal is to live comfortably, not extravagantly, and not be a burden to our kids.
One of my bigger concerns is the cost of health care, because that is a big unknown. You don’t know the cost, form or shape of it in the future. I’m not sure how people decide how much to allocate to that for future planning, especially if they have known health issues and an individual policy.
Social security is much more of an actuarial issue. Math problem. So solutions are easier in terms of fixes. Doesn’t mean they are easily politically though. We have been kicking the can down the road on that for decades. Not like the issue just snuck up on us out of the blue.
Medicare is much tougher issue because its not just math. Lots of additional healthcare options (procedures, medicines, etc) that didn’t exist years ago. And more to come. Of course everyone wants all of it. But costs become a big issue. Making that program much tougher to address. Even tougher in terms of politics.
I read a different article and the answer was that the whole section of the Code for stepped-up basis would be eliminated, so I suppose the answer is yes, apply to spouses as well.
(since this is proposed legislation, we probably should drop any further discussion of it, so we don’t push the limits of the ToS.)
Yes, I heard about that @cbreeze. Losing that step-up in basis is a big deal. I’m assuming that if someone inherits the family house, they will then get to pay taxes on it, in my case, from the 15K house that my parents purchased 60 years ago in Seattle. Not so much a problem for me, because I wouldn’t live there, but for those who want to move into the family house, it’s a big problem, and they might have to sell the house to pay the taxes. However, there are so many proposals out there, you don’t know what’s going to happen. I would say there’d be some serious yelling if that one passed. These kind of things are why I never feel quite sure I know how much is enough for retirement, the bar keeps moving.
Huh? If there is no basis step-up, wouldn’t heirs not have to pay capital gain taxes on an inherited appreciated asset if they kept it (e.g. kept an inherited house to live in), but would pay capital gain taxes on a larger capital gain if they did sell it?
Of course, a proposal for the estate to pay capital gain taxes before transferring it to an heir would be more than just eliminating the basis step-up.
Seems like these kinds of things do not affect retirement planning as much as they do estate planning. Potential changes in things like medical care costs and Medicare would more directly affect retirement planning (or inject uncertainty to have to account for).
Biden’s proposal is to essentially “mark to market” when the property transfers, meaning your heirs would owe capital gains based on the market value when you die. It would be a huge can of worms because many things (like real estate) do not have an easily identifiable value without a sale.
It also ties into estate tax, because you could face a double taxation problem if you are wealthy enough.
Not necessarily. If it affects one spouse when the other spouse dies, that is a retirement issue. If you have to pay a significant amount of taxes when your spouse dies, and potentially sell your home because of that, and get taxed on your spouses assets, it most definitely affects your retirement.
I think one thing not often mentioned in this retirement thread is inflation. We haven’t had huge inflationary pressures since the 70’s, but with excessive largesse ( gov’t) and lots of boomers retiring at the same time, it could be an issue. Too much money chasing too few goods can have huge implications.
One thing that I’ve noticed in my lifetime, being younger than the boomers, is every demographic change boomers make has a huge ripple. They bought houses in their 20’s and 30’s, prices went way up, they bought vacation homes same thing. Many are in retirement and entering retirement and that will change the economy, esp health care.
Some on this thread are worried about being a burden, some are worried about health care, some are worried about high taxes. It really depends on what you think will happen in the time from now until when you retire. If I was retiring tomorrow, I’d be very nervous.
Estate taxation is impossible to plan for unless it stays the same. Small legal changes can have huge implications. Many people move to FL and other states just for the estate reasons. I consider estate planning and retirement planning to be one and the same. What do I need to have in retirement, what is saved in case of a bad scenario and what is left.
My megacorp pension is great for now, but would be whittled away by inflation. SS payments are indexed for inflation. Investments can be structured to lessen inflation losses. It’s a big puzzle with a lot of pieces.
A WSJ article recently hinted that POTUS (any POTUS, actually) could change the way capital gains are taxed. Gains are now considered, broadly, to be (sales price) minus (cost). But there is not a definition of “cost” in the statute. So that possibly the executive branch could decree that “cost” is “purchase price adjusted for inflation” and not just “purchase price.” Capital gains would then be just the inflation-adjusted gain.
That would cause some heads to explode. But I’m not counting on it.