Poll

Do you contribute to retirement funds?

No
 Contribute <15% of take home pay
Contribute >15% of take home pay
Max out all retirement funds

Author Topic: Retirement Funds  (Read 64866 times)

Offline ushdadude

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Re: Retirement Funds
« Reply #300 on: August 30, 2021, 12:07:03 PM »
So that 10k would be reduced by things like SS, pension, annuities and other things?
other things can (and should?) include streams of passive income

Offline AsherO

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Re: Retirement Funds
« Reply #301 on: August 30, 2021, 12:07:33 PM »
is 17 years enough? you also assumed expenses go down as you get older. That should be true for things like mortgages and child related expenses but things like medical expenses and taxes tend to go up.

That depends on retirement age, health, life expectancy, and what to fall back on if this income is depleted.

As others have said financial/retirement planning plays a big role in this, including how one plans to account for potential medical/LTC expenditures down the road.
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Offline AsherO

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Re: Retirement Funds
« Reply #302 on: August 30, 2021, 12:09:59 PM »
obviously this doesn't cover every situation. My point is that retirement costs a lot more than people think. Having 500k squirreled away isn't gonna cut it.

That depends on who. Let’s use your numbers, let’s say $3m = $12k/month, so $500k = $2k a month. Someone with their house paid off, low property taxes, a modest lifestyle, maybe a tenant paying rent or some other income, SS for both spouses, the $500k isn’t that far off from meeting their needs.
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Offline ushdadude

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Re: Retirement Funds
« Reply #303 on: August 30, 2021, 12:13:40 PM »
That depends on who. Let’s use your numbers, let’s say $3m = $12k/month, so $500k = $2k a month. Someone with their house paid off, low property taxes, a modest lifestyle, maybe a tenant paying rent or some other income, SS for both spouses, the $500k isn’t that far off from meeting their needs.
we're both illustrating extremes. most people will be somewhere in the middle

Offline ExGingi

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Re: Retirement Funds
« Reply #304 on: August 30, 2021, 12:15:11 PM »
Correct but figures you have seem high. Probably because government annuities are a better deal?

IME, yes. I recall talking once to a NYC pre-retiree and the options he was offered were overwhelmingly better than what was available as a commercial annuity.
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Offline CountValentine

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Re: Retirement Funds
« Reply #305 on: August 30, 2021, 12:19:06 PM »
IME, yes. I recall talking once to a NYC pre-retiree and the options he was offered were overwhelmingly better than what was available as a commercial annuity.
I talked to a few of the big companies when I took out my annuity. They could not compete.
The funny part is one of them was MetLife, the same company that ran the government plan.
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Offline ExGingi

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Re: Retirement Funds
« Reply #306 on: August 30, 2021, 12:20:58 PM »
I talked to a few of the big companies when I took out my annuity. They could not compete.
The funny part is one of them was MetLife, the same company that ran the government plan.

Nothing funny about that.

I am guessing that they give governments sweet deals in exchange for the huge volume (and possibly different cost structure, and maybe some other business).
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Offline aygart

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Re: Retirement Funds
« Reply #307 on: August 30, 2021, 12:35:27 PM »
Everyone I know it is the best decision they ever made. One neighbor retired a couple years ago at the age of 53. My other neighbor just retired last week at the age of 51. Trying to get the neighbor across the street to retire and he is 55. Best advice I can give is retire as early as you can.
That is great with one major caveat-they need to have a plan to stay productive (not just occupied)
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Offline aygart

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Re: Retirement Funds
« Reply #308 on: August 30, 2021, 12:37:07 PM »
Taxes don't have to go up if you've structured things well to that point. Medical is important, and a major component of retirement planning. Having an employer with retirement benefits makes a huge difference. Without that, it absolutely needs to be budgeted for as a major component of expenses (more so than during working years). Getting a LTC policy is looking increasingly important. And the list goes on.
There are strategies, but for a couple with no dependents earning 120k in ordinary income besides any previous income streams stands a very good chance of bringing taxes higher.
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Offline avromie7

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Re: Retirement Funds
« Reply #309 on: August 30, 2021, 01:24:28 PM »
The math for such a strategy is simply dependent on both the earnings rate on the money and the draw down rate.

The $2m I quoted was for a male age 65 receive $10k per month in perpetuity. No running out after x years. That's the contract. My point was that if someone plans to leave the principal alone and live on the earnings, they'd do better to buy a lifetime annuity. Obviously it's not apples to apples for various reasons, but the point stands.
Does the annuity include annual increases? The 4% draw rate allows for 3% increases.
I wonder what people who type "u" instead of "you" do with all their free time.

Offline ExGingi

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Re: Retirement Funds
« Reply #310 on: August 30, 2021, 01:28:38 PM »
I talked to a few of the big companies when I took out my annuity. They could not compete.
The funny part is one of them was MetLife, the same company that ran the government plan.

Another possibility which I just thought of (with no knowledge) might be that MetLife is just administering it (in a similar fashion to health benefits from large employers, where the employee will get an insurance card from a national well known insurer, who is actually just acting as an administrator, with the plan being self-insured/funded by the large employer), while the local government is funding it. Since they have taxing power, and they don't really have much bankruptcy risk, they can make promises that a sound business cannot match.
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Offline CountValentine

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Re: Retirement Funds
« Reply #311 on: August 30, 2021, 01:35:46 PM »
That is great with one major caveat-they need to have a plan to stay productive (not just occupied)
There's always DDF to keep them busy  ;)
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Offline Fish Tank

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Re: Retirement Funds
« Reply #312 on: August 30, 2021, 01:38:57 PM »

Offline CountValentine

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Re: Retirement Funds
« Reply #313 on: August 30, 2021, 01:40:19 PM »
He said productive  ;)
Forgot you don't have access to 5k and 10k lounge.  :)
There you could read the thread: How to retire in 10 years MS'ing!!!
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Offline skyguy918

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Re: Retirement Funds
« Reply #314 on: August 30, 2021, 01:54:31 PM »
There are strategies, but for a couple with no dependents earning 120k in ordinary income besides any previous income streams stands a very good chance of bringing taxes higher.
Doesn't have to be 120k in ordinary income. If you balance your Roth/Traditional contributions well, you could be talking about a much lower proportion of taxable income.

Offline skyguy918

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Re: Retirement Funds
« Reply #315 on: August 30, 2021, 02:33:32 PM »
Does the annuity include annual increases? The 4% draw rate allows for 3% increases.
Def not how I read the OP. If you have an account with $3m, earning a constant 4% annually, and you withdraw $10k the first month, increasing that amount by 3% every 12 payments, you'll run out of money at the beginning of the 30th year. There is a concept out there of only using the earnings and leaving the principal untouched, and that was what I assumed he was referring to. $3m*4%=$120k/yr=$10k/mth.

Offline CountValentine

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Re: Retirement Funds
« Reply #316 on: August 30, 2021, 02:37:27 PM »
Does the annuity include annual increases?
Not mine but it is fixed payments.
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Offline skyguy918

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Re: Retirement Funds
« Reply #317 on: August 30, 2021, 02:47:28 PM »
Not mine but it is fixed payments.
Many carriers offer COLA options where you could pick something like 3% annual increase. Obviously it would increase the cost or lower the initial income.

Offline Fish Tank

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Re: Retirement Funds
« Reply #318 on: August 30, 2021, 02:59:18 PM »
Can one contribute to a RIRA and TIRA in the same year? (Splitting the $6000 contribution limit between the 2) 

Offline CountValentine

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Re: Retirement Funds
« Reply #319 on: August 30, 2021, 03:01:59 PM »
Can one contribute to a RIRA and TIRA in the same year? (Splitting the $6000 contribution limit between the 2)
Yes

IRA Contribution Limits
Your total IRA contributions, whether you have one type of IRA or both, are capped at $6,000 for 2021. However, if you're age 50 or older, you're permitted an additional $1,000 in catch-up contributions, for a total of $7,000 for the year.

This contribution limit applies to all your IRAs combined, so if you have both a traditional IRA and a Roth IRA, your total contributions for all accounts combined can't total more than $6,000 (or $7,000 for those age 50 and up). You get to decide how to allocate the contribution, however. If you wanted to put $50 in a traditional IRA and the remaining $5,950 in a Roth IRA, you could. Or you could put the maximum amount in just one IRA.
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