I was a bridesmaid in my cousin’s first wedding (I had to fly there), and flew to her second. Never cared for her first husband, but her second husband was such a great guy and they had many happy years together. I’m glad I went.
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Wow, that sounds like what you do for vacations, and where you spend your money. Can’t imagine going to 5 weddings in a year, especially if I had to travel. You must have a big budget for that, all the presents, and then when they send you birth announcements!
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I would love some thoughts and advice from those of you who may be more well versed on all of this than I am. Hubby and I are both 47. I am a 1099 consultant and do $6500 annually to a traditional IRA. My husband does as well (prior company 401k plus we add the max each year), and does the max 401k pre tax contribution plus company match. The kids will have about $15k total in school loans which we will pay and the remainder is funded by cash flow and 529. We have one car payment and a reasonable mortgage on a new construction 4br home in suburbia. Without going into all the details, I think we have done a great job saving. We made out on the real estate market very well in every transaction, most currently in July and did a CD ladder with the proceeds for 2 years and keep reinvesting that as they mature.
DH also has a significant company pension (JnJ) and will have lifetime healthcare for both of us. (He is not allowed to leave as this point, we have both decided!!)
We do also have 6 months of living expenses liquid.
All that to say, what else should we be doing if we have extra cash flow monthly? Should it go into his 401k without the tax benefit? Is there anything I can do besides an IRA?
We do plan to start working with an advisor now that we have “real money” as I call it 
but still like to hear what others have to say.
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Sounds like things are working out well for you. Maybe Roth IRA?
Be aware that the healthcare in retirement may at some point get phased out. It has happened at many other big corporations. Hope for the best, plan for the worst.
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Roth for both of you, if income eligible, otherwise backdoor Roth could be an issue tax wise for you, since you have a traditional IRA. Mega backdoor Roth for your husband, up till the max allowable, backdoor Roth for him if he’s not income eligible for a Roth, if he has no traditional IRAs. Better for you to google the backdoor and mega backdoor Roth than I attempt to explain it!
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Why not an SEP IRA (25% of compensation up to $66K contribution per year) or SIMPLE IRA (at least $15.5K max contribution per year)?
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Thanks for the recommendations. We have been doing all of this solo, and frankly I don’t know what I don’t know.
I am not incorporated or have a “business” which I thought was need for a SEP IRA.
I don’t know what the income limits are for Roth or the simple but off to google
Really appreciate the replies.
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Why not invest what Warren Buffett recommends for his wife’s assets should he die, buy low cost S&P 500 index funds.
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Neither requires you to be an incorporated business. A 1099 employee is by definition a sole proprietor, ie you should file Schedule C (line 19 is where you deduct the contribution). If you earn a lot then SEP is likely better (and it’s certainly simpler), if you don’t (and want to save more than 25% of your earnings) then use a SIMPLE IRA (note that needs to be set up earlier in the tax year).
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Congrats on doing so well with your financial position and having a lot of great work already on your way to retirement at your ages.
DH and I both turn 67 this year. I had a sunset career after an 18 year gap while being SAHM and also fighting aggressive cancer when DDs were in 8th and 10th grades (DDs are now 27 and 29) - never good to be in a cancer position where you are so close to the line of being a survivor or having it be your cause of death, but I had a miraculous turnaround/cure against the odds (intercessory prayers at Lourdes from my aunt, and then the biopsy at primary tumor showed no cancer, which in cases like mine are much less than 10%). Still had a long treatment time with radiation, IVs, and oral medication for 10 years. Still cancer free and able to enjoy life but see medical oncologist annually. Having the cancer systemic in lymph system requires the caution.
So with my return to work at age 60, I earned enough to draw SS on my own - which I took out right when I turned 65 and stopped working. DH had retired at 64 (lousy boss made it the right thing to do versus follow the plan and retire the same time I did) and we both were on my employer’s insurance until we both took Medicare (DH is 4 months older than me). DH did have a dental plan that we did COBRA with at low cost versus our benefit. We purchased Vision Service Plan (VSP) for him as he has high index glasses and this also is a good plan for him. I had Lasix eye surgery years ago and use cheater reading glasses.
We had some cash reserves - I transferred money out of 401k after DH retired (primary income source) and had plenty in our checking account, and we spent down a little until we ‘turned on’ the annuity cash stream and also DH’s SS some months after I retired - so he was about 65 1/2 when he started his SS (“full” SS for us would have been 66 and 4 months) - but it made sense for us and we would not do it different on ‘do over’. DH has family longevity, and weigh out the time value of money with SS draw and not drawing down any more of our other funds.
We had 10 year home loan at 2 1/2% interest which was completing payments in first quarter 2022/very low payout left, and was able to nab another 10 year home loan at 2 1/2% interest from one of our membership credit unions just before interest rates climbed (secured Jan 2022 - once I got through to the credit union mortgage dept, he - the manager at the central office, gave me the rate and said it was going up the next day but he was able to lock me in that day) - we only took a portion of the home’s value (and I probably would have taken out a bit more than we did on a ‘do over’), but it kept our monthly mortgage payments at $1400/mo (we pay taxes and insurance directly/no escrow). The mortgage amount payout we received, we have invested in a separate TD Ameritrade account that Financial Advisor manages, and we plan to draw off of that to do home upgrades for when we plan to sell, or to help one of DDs with down payment on house (DD2 is closer to doing that as DD1 is still moving around with her H’s employment). We don’t plan to sell during the next 10 years, but might be if DD1/H/children get to a permanent location and DH is ready to be away from his activities in our current location. I am not going to downsize here - if we move, we move away. We may also consider having two smaller places with one primary but both with family considerations. We built a custom home here in 1992 (it was our 4th purchased home from 4 different cities/states), and I know the housing market here as well as the improvements we need to make to get the ‘best bang’ with selling when the time is right for us. Only most recently are the property tax assessed value getting closer to true value, but in our area (and IDK if it is a state thing), we get a 65 and older adjustment where we pay 1/2 plus $50 on our home yearly property tax.
Finding the right financial person/team is important. Although I have two graduate business degrees, learning about and watching the range of financial markets and financial instruments intently is not my ‘bag’. But I do well with DH’s 401k and have that investment fine tuned.
However I did find someone knowledgeable and trust worthy - we found him in 2013. We have no pensions, and needed diversity from almost all stock (DH’s 401k had some good investment choices - and I continue to manage those) - and we had a variety of funds elsewhere that needed to be consolidated. We have spun out money over a 8 years/4 different time to purchase annuities out of this 401k fund. We now draw monthly retirement money out of some of these annuities - each annuity has varying rules on when one can make draws and what the limits are – our FA does all the paperwork and adjustments with which annuities to draw off what monthly amount for us from each, based on our monthly cash flow amount. We just had 2 annuities ‘retire’ (they were 10 year annuities) and we replaced them with 2 other annuities.
People with pensions may find, in their situation, they don’t need annuities - and have their retirement fitting their situation. Every month we print out our balance sheet and asset positions, and it gives our breakdown by asset type. We get a twice a year “state of the markets” FA group presentation, and meet with our FA twice a year.
I learned in our area there are about 6 different groups like our Financial Advisor’s (FA) group - however he was able to help us diversity to reduce our risk, and hearing recently from another who switched over to our FA from another group, we did well with our selection. How we found him? We attended a two session “Retirement Planning Today” which used Financial Educators Network resources. I knew he was well versed in being able to manage our funds. We met with him over a time period starting in 2013, and started by consolidating all our ‘lose’ ends. He also is a ‘Fiduciary’ which means …look at Find Your Advisor Match | SmartAsset.com - they define some things very basically there. Our FA is president of the firm, and have added a few additional advisors to the group, original 2 then 3 and now 5 – so now we meet twice a year with one of the 2 newer FA/last added to the group (while our new FA always still keeps our original FA/group president in the loop). President of the firm is good at what he does with his business and for his clients.
Another thing to look at is keep informed generally, and then can always find some information specific to retiring.
I made up a summary list from and article “Biggest retirement regrets” – 13 of them from an article www.cheatsheet.com/money-career/the-biggest-regrets-people-have-about retirement.html/
#13 is Not getting professional financial advice earlier. #1 is Not saving enough money. If article is no longer on the web (2-18-2018) I can itemize in another post.
With our FA, we also are watching for when we have RMD (Required Minimum Distributions), and actually are shifting a bit each year now from 401k into Roth IRAs and paying the taxes which we are in a low tax bracket and still stay so with the yearly money shift. Always watching the tax decisions with our shifting of funds.
You can look at this book summary and decide if you want to buy the book (it is currently available, I looked on Amazon) “What the Happiest Retirees Know: 10 Habits for a Healthy, Secure, and Joyful Life” by Wes Moss (paperback 2021) - can look at their book summary. Wes Moss is/was a financial advisor out of Atlanta. I have not read the book. I copied what an earlier CC participant on this retirement thread wrote way back, and this is what that CC participant wrote as relevant to this thread’s financial bent, Wes Moss does discuss: 1 Minimum amounts of liquid retirement savings; 2 Whether to pay off the mortgage/having second homes; 3 Having Multiple streams of retirement income; 4 Dividend investing; 5 Being a tomorrow investor rather than a today investor; 6 The validity of the 4% rule; 7 Spending habits of retirees. His goal is to raise awareness so you can check off as many happiness boxes as possible. Says he includes lots of anecdotes about different clients he has worked with.
There also is a ‘rule of 72’ - time to double your money; for example 8% interest rate, 72 divided by 8 equals 9 years.
I never felt I needed to read the Wes Moss’ book - once we built up enough assets and had the assets structured in the way it works best for us – felt I know enough from other sources, and have an ongoing reading list that I have trouble keeping up with. I would probably enjoy parts of the book as I do like life stories and various financial situations.
With us, we do plan a lot of our retirement time at present – I primarily plan around adult children and grandchildren (and help with the grandkids who currently are 100 miles away but with me staying for periods of time; 4th gradchild due in June within 5 years from DD1 - oldest turns 5 tomorrow), but have gotten involved in a local city issue which should mostly resolve in May. DH around his hobby involvement with professionals/hobby rocketry group, and mentoring high school rocket teams for TARC (Team America Rocketry Challenge) - two of the three teams from one school is going to the National Competition and another local team he gave assistance to is also going to the National Competition (out of 800 teams, best 100 go to the National Competition) – his career was not in rocketry (he was a ECE working in electronics manufacturing but teaches a lot of skills to the teams) - he also had a published article this year in the national Sport Rocketry publication (designed and built a wireless launch system).
We have to ‘work’ at staying healthy. DH’s 2nd Covid shot and he immediately had Paroxysmal A Fib. DH now walks 2 hours/day regularly (either 6 or 7 miles, depending on which way he goes on nearby greenway), and I am getting into a routine of 1 1/2 hours walk/jog in our neighborhood and connecting neighborhood (with one very challenging elevation) - but also can swim and use exercise equipment at local wellness center, and use equipment at home. We both are working on losing weight/eating healthy. It is more slow going with aging, but we are still in go-go years!
Again, pat on the back for having done a great job with saving. All the rest will fall into place as you think and plan.
I just looked at that cheatsheet.com site, and if you do a search with retirement, you can see a list of articles. However I will type out the ‘top 13 here - biggest retirement regrets’ 1 Not saving enough money; 2 Leaving the workforce too early; 3 Not having a plan for your free time; 4 Not planning for your retirement goals; 5 Not adjusting to the required lifestyle; 6 Drawing Social Security too early; 7 Not retiring earlier; 8 Not downsizing earlier; 9 Making a rash moving decision; 10 Depending too much on debt in peak earning years; 11 Not accounting for taxes; 12 Making the wrong decisions for surviving spouses; 13 Not getting professional financial advice earlier.
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Check on summer travel plans (and buy travel insurance)
For the 1099 employee, if you wish to save in a tax-deferred vehicle more than 25% of your income, you may be able to set up a Defined Benefit Plan. Depending upon your income, you might be able to save$200K before tax or more annually. You would probably have to switch from a 1099 to a C-Corp, which you would be your employer.
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Good for the APA, that’s a tremendous vote turnout and a fantastically high strike percentage. You have to be very unified to get a decent contract, and their work rules stink. It is very possible it could come to strike if this doesn’t get settled, but it’s hard to tell the timeframe.
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Can I ask - for those who use a financial planner for holistic advice (not managing accounts) - about how much the planner chargers?
We met with one for the first time (comes highly recommended, liked him a lot). Talked for 2 and a half hours, gave him copies of all our financial stuff, he ran scenarios on giant computer screen w/software, etc.
As for cost - this first meeting was free - he said going forward it would be in the vicinity of $300 a month ($3600 a year). We’d meet as often as we wanted (most people meet 1-3 x a year).
I am definitely willing to pay for someone’s expertise. And I don’t necessarily think it should be hourly (I get that we are compensating for their training, knowledge). And I’d be willing to pay a few thousand for the first few meetings (very time-consuming - reviewing all our papers, listening to our goals, etc.).
But $3600 for every year afterwards? Is that in the realm of average cost for service (when they aren’t managing your stocks; rather providing holistic advice about whether we on track for retirement, could tweak a few things, etc.)? Thanks!
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Is this a fiduciary planner? Or suggesting annuities and getting commissions? Perhaps see
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We would like to find a similar planner as you found @Jolynne_Smyth. An hourly rate with a guaranteed minimum amount per year seems the most fair. If you tend to ask A LOT of questions, they are not penalized with a fixed fee, but they know they will be providing at least a minimum amount. To date, we have not found anyone with a similar fee structure in our area. We haven’t even found anyone interested in an hourly advisory fee.
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@Jolynne_Smyth, I don’t remember as far back as the point at which we started the relationship with the holistic FA, but I think we paid a fixed fee for the first year when the FA was doing the financial planning.
Thereafter, we have paid a fixed fee that has something to do with the asset level, but adjustments are only made from time to time. I think we are talking about a percentage equal to 0.4% to 0.5% of assets. Brokerage firms are likely to charge 1% of assets and will throw in the planning and even expertise (estate lawyers etc.).
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During research it seemed that many fee-only planners charge in the range of 1% of the assets managed (though some will advise on the big picture, including assets such as 401K/IRA outside of that portfolio.) Established planners might have minimum portfolio size for new clients.
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@Colorado_mom is on target. Typical fees for managing money are 1% of assets, though this can be lower if the portfolio is all or largely fixed income. All three of the FAs I’m working with (two for us and one for my mother) have minimums. I don’t know what the minimum is for the holistic FA but for one it is $1 MM and for the it is probably $2 MM or $3 MM.
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Prior to when I retired, my financial planner (who now works with both of us) did some per task billing, as well as some hourly billing. They moved away from that model and now charge a monthly fee. Since it’s for both of us, we don’t think it’s an onerous amount…plus we can seek out info whenever we want. It’s $300 a month…but that’s for two of us.
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