How the hell are we supposed to retire?

I agree that you need to put as much into your 401K as you can and I do put the IRS maximum in every year. Since I'm an old fart I also do the Catch-up. However, if you're planning on handing some of that down to your child(ren) when you pass away that's not a good idea because they'll get taxed to death. 401K, YOUR retirement account, is designed for you, not your heirs. If you're disciplined enough to save, accumulate, and budget your spending and withdraws from your 401K and decided there will be plenty of money left to leave some of that money behind then buy a life insurance policy if you don't already have one and obviously name your heirs as beneficiaries. This way when you die your heirs will collect on the policy and that is tax free. I know life insurance get progressively more expensive as you age so that's where your 401K come in. Rather than saving all that extra money in your 401K and leave it to your heirs, use that to pay your life insurance premiums.
 
rick81721 said:
The college thread reminded me of this one. Interesting article on millennial savings for retirement. Basically most are being super-frugal - surprising!

https://www.forbes.com/sites/alexan...re-saving-money-to-retire-early/#d68946253599
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#5 is spectacular, find that girl and put that ringpop only her!
#9 disagree, diversifying with real estate is a sure fire component towards wealth. One recommendation is that your primary home should not be your most valued asset. It should be that summer home at the shore which you rent out.
 
tonyride said:
I agree that you need to put as much into your 401K as you can and I do put the IRS maximum in every year. Since I'm an old fart I also do the Catch-up. However, if you're planning on handing some of that down to your child(ren) when you pass away that's not a good idea because they'll get taxed to death. 401K, YOUR retirement account, is designed for you, not your heirs. If you're disciplined enough to save, accumulate, and budget your spending and withdraws from your 401K and decided there will be plenty of money left to leave some of that money behind then buy a life insurance policy if you don't already have one and obviously name your heirs as beneficiaries. This way when you die your heirs will collect on the policy and that is tax free. I know life insurance get progressively more expensive as you age so that's where your 401K come in. Rather than saving all that extra money in your 401K and leave it to your heirs, use that to pay your life insurance premiums.
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Only rub is currently the required minimum withdrawal is about 3% for a 50 year old. Even at my current tax bracket, it isn't killing me, or moving me into the next bracket.

This may change to a 5 year rule. But i doubt it. Wealthy people don't like to tax their kids

If there is enough$$ around to insure 80 year olds, I'd rather not give it to an insurance Co.
 
tonyride said:
I agree that you need to put as much into your 401K as you can and I do put the IRS maximum in every year. Since I'm an old fart I also do the Catch-up. However, if you're planning on handing some of that down to your child(ren) when you pass away that's not a good idea because they'll get taxed to death. 401K, YOUR retirement account, is designed for you, not your heirs. If you're disciplined enough to save, accumulate, and budget your spending and withdraws from your 401K and decided there will be plenty of money left to leave some of that money behind then buy a life insurance policy if you don't already have one and obviously name your heirs as beneficiaries. This way when you die your heirs will collect on the policy and that is tax free. I know life insurance get progressively more expensive as you age so that's where your 401K come in. Rather than saving all that extra money in your 401K and leave it to your heirs, use that to pay your life insurance premiums.
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I totally disagree about the 401k being for me and not my heirs. An ideal strategy is to roll it into an IRA when you stop working, then use Roth conversions to soak up low tax brackets, and finally name young beneficiaries for those IRAs. Google stretch IRA. The beneficiary's RMD is likely less than the corpus yield, letting the IRA grow, creating, in effect, a lifetime pension for the beneficiary.
Some people even advocate grabbing Social Security at age 62 to let the 401k (or rollover IRA) accumulate precisely to maximize the stretch IRA.
Finally, life insurance gets real expensive just about the time our savings reach anything worth inheriting.
 
Jim Richardson said:
I totally disagree about the 401k being for me and not my heirs. An ideal strategy is to roll it into an IRA when you stop working, then use Roth conversions to soak up low tax brackets, and finally name young beneficiaries for those IRAs. Google stretch IRA. The beneficiary's RMD is likely less than the corpus yield, letting the IRA grow, creating, in effect, a lifetime pension for the beneficiary.
Some people even advocate grabbing Social Security at age 62 to let the 401k (or rollover IRA) accumulate precisely to maximize the stretch IRA.
Finally, life insurance gets real expensive just about the time our savings reach anything worth inheriting.
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Seriously? Our job as parents is to provide lifetime pensions for our kids? That's crazy talk... my son will likely inherit alot of money but it won't be by design. He will get whatever is left after we enjoy retirement to the fullest.
 
rick81721 said:
Seriously? Our job as parents is to provide lifetime pensions for our kids? That's crazy talk... my son will likely inherit alot of money but it won't be by design. He will get whatever is left after we enjoy retirement to the fullest.
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i think the point was if you leave them a little money, it could grow into a lot of money over time because the RMD is so low.
by choosing grandchildren rather than children as the beneficiaries - i'll also assume there is some post tax money around
for the children. and maybe a house, and a couple of mustangs.
 
fidodie said:
i think the point was if you leave them a little money, it could grow into a lot of money over time because the RMD is so low.
by choosing grandchildren rather than children as the beneficiaries - i'll also assume there is some post tax money around
for the children. and maybe a house, and a couple of mustangs.
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Depends on how long we live tho. I plan to stick around until at least 100 so I imagine not much will be left in my IRA by then. Goal to beat this clown:

http://www.cyclingnews.com/news/105-year-old-frenchman-sets-new-hour-record-gallery/
 
Of course we all want to leave some money to our heirs but I think the best thing to leave them to ensure they live a comfortable life is the ability to make their own money. If the money comes too easy to them (gift) without having to earn it then they won't appreciate how they got it and will most likely squander it off. If my heirs know they'll have free money coming to them for life then they'll be less likely to work hard in school, at work, and in life and be a productive member of society. By teaching them how to make their own money they will never run out and will learn the value of and have an appreciation for money. This will allow me to enjoy the fruits of my retirement savings that I've so religiously contributed to. My 401K is for me and my wife (mostly). My lessons and proper upbringing to our son to be the best and most productive person he can be is I think the best gift I can give him.
 
rick81721 said:
Seriously? Our job as parents is to provide lifetime pensions for our kids? That's crazy talk... my son will likely inherit alot of money but it won't be by design. He will get whatever is left after we enjoy retirement to the fullest.
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Exactly. After I kick the bucket and even if I used up every last penny of my retirement savings our son won't be left with nothing. Far from it in fact. Aside from my life insurance there's still one of my biggest assets left, my house.... and my fleet of bikes.
 
tonyride said:
Of course we all want to leave some money to our heirs but I think the best thing to leave them to ensure they live a comfortable life is the ability to make their own money. If the money comes too easy to them (gift) without having to earn it then they won't appreciate how they got it and will most likely squander it off. If my heirs know they'll have free money coming to them for life then they'll be less likely to work hard in school, at work, and in life and be a productive member of society. By teaching them how to make their own money they will never run out and will learn the value of and have an appreciation for money. This will allow me to enjoy the fruits of my retirement savings that I've so religiously contributed to. My 401K is for me and my wife (mostly). My lessons and proper upbringing to our son to be the best and most productive person he can be is I think the best gift I can give him.
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Yep that's my view. If a kid knows he's inheriting a pension, what incentive does he have to save for his own retirement?
 
@rick81721 - at some point i expect you (and me, and others) to be cash-flow-positive in the later years.
we will have a hard time spending it. couple of social security checks, some post tax account income,
the RMD at 70 - we will complain about all the tax to pay on the RMD! And about the quarterly tax that needs to be
paid on dividend income.

are you going to give it away, or give it to your kid? or if you live long enough, help fund the grandkids' college,
since we are talking about that nut now too.

and yes, you won't be able to spend it all. there are only so many cruises, cars, homes, vacations.
your friends will be hitting the two-fers, and free trivia, and you'll be right there. Going to bed early,
and watching wheel on the dvr - playing poker for $0.25 ante, or $5 hold-em tournaments.

here is one, people say the kid has to have a loan, or foot the bill for college, so they have skin in the game.
well they graduate with solid grades, get a good job, and are looking at 10 years of loans, which is preventing them
from purchasing a home, and getting into a 401k. Well mission accomplished, they are now responsible, if we have the means, why not pay off that loan?
chuck them the extra 10% down payment so they don't have pmi on the mortgage.

why are we stuck with the idea that kids have to start and struggle like we did? if they are going to waste the
opportunity, sure. If it relieves them of a burden, to start enjoying life earlier, hell, why not? beats having them start enjoying it
on a credit card, so they can waste their inheritance paying off debt, which they can start accumulating again.

there is also the fact that your kid is going to be 60 when you are 100 (or something like that) - so the plan does have other
complications - at that point they were either betting on you kicking, or are all set anyway, and you can start working on skip generation trusts.
 
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fidodie said:
@rick81721 - at some point i expect you (and me, and others) to be cash-flow-positive in the later years.
we will have a hard time spending it. couple of social security checks, some post tax account income,
the RMD at 70 - we will complain about all the tax to pay on the RMD! And about the quarterly tax that needs to be
paid on dividend income.

are you going to give it away, or give it to your kid? or if you live long enough, help fund the grandkids' college,
since we are talking about that nut now too.

and yes, you won't be able to spend it all.
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We will be cash-flow positive as soon as we ditch our house in Montgomery and get something smaller, so yes that is a good point.

Big fishing/cruising boat, maybe a mini Jay Leno car collection? We will help the kid when he graduates from college, gets a real job, if he wants to buy a condo or house.
 
Don't believe anyone has mentioned it, but what about the economics for the care of elderly parents? My in-laws have been very fiscally responsible and we don't need to worry about them, but my parents have never been good at finances and planning for the future. My dad is in his late 80's and my mom a few years younger than him. So we'll need to plan for what happens when they can't live alone and need assisted living and such. Parents are separated so they can't really help each other much. I just started attended a few caregiver info sessions to prepare for this, but since they live in NYC, I'll need information specific to there. They do not want to move back into NJ as all their conveniences and friends are out there. A number of my friend's parents are also in the same boat as they did not expect retirement to be so expensive and I'm starting to get worried whether I'll have sufficient savings to support them when the time comes.
 
qclabrat said:
Don't believe anyone has mentioned it, but what about the economics for the care of elderly parents? My in-laws have been very fiscally responsible and we don't need to worry about them, but my parents have never been good at finances and planning for the future. My dad is in his late 80's and my mom a few years younger than him. So we'll need to plan for what happens when they can't live alone and need assisted living and such. Parents are separated so they can't really help each other much. I just started attended a few caregiver info sessions to prepare for this, but since they live in NYC, I'll need information specific to there. They do not want to move back into NJ as all their conveniences and friends are out there. A number of my friend's parents are also in the same boat as they did not expect retirement to be so expensive and I'm starting to get worried whether I'll have sufficient savings to support them when the time comes.
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Assisted living is very expensive - hopefully your parents have some savings to pay for some of it.
 
Chill guys, I haven't even hit mid-life crises yet. Shits getting too real here. But all here is sound comments to keep in mind. ;)
 
rick81721 said:
Assisted living is very expensive - hopefully your parents have some savings to pay for some of it.
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Exactly, I think some older folks have it harder than most now preparing for retirement. Rarely did pre-baby boomers save like we do today. They were always told that social security would take care of them, we know better unfortunately it was too late by the time they knew.
 
qclabrat said:
Don't believe anyone has mentioned it, but what about the economics for the care of elderly parents? My in-laws have been very fiscally responsible and we don't need to worry about them, but my parents have never been good at finances and planning for the future. My dad is in his late 80's and my mom a few years younger than him. So we'll need to plan for what happens when they can't live alone and need assisted living and such. Parents are separated so they can't really help each other much. I just started attended a few caregiver info sessions to prepare for this, but since they live in NYC, I'll need information specific to there. They do not want to move back into NJ as all their conveniences and friends are out there. A number of my friend's parents are also in the same boat as they did not expect retirement to be so expensive and I'm starting to get worried whether I'll have sufficient savings to support them when the time comes.
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i'll relate some non-nyc stories, and how we handled them when i see you.
It takes some luck, and some $$$.
 
qclabrat said:
Don't believe anyone has mentioned it, but what about the economics for the care of elderly parents? My in-laws have been very fiscally responsible and we don't need to worry about them, but my parents have never been good at finances and planning for the future. My dad is in his late 80's and my mom a few years younger than him. So we'll need to plan for what happens when they can't live alone and need assisted living and such. Parents are separated so they can't really help each other much. I just started attended a few caregiver info sessions to prepare for this, but since they live in NYC, I'll need information specific to there. They do not want to move back into NJ as all their conveniences and friends are out there. A number of my friend's parents are also in the same boat as they did not expect retirement to be so expensive and I'm starting to get worried whether I'll have sufficient savings to support them when the time comes.
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Oh I got that covered too. My parents didn't think of that either so I was left with the responsibilities of having to take care of both of them when they got to the point where they can't take care of themselves with doctors, insurance (Medicare and Medicaid), pharmacy, social workers, and eventually nursing homes. We even had to get an attorney who specializes in Elder Care to deal with all that. My parents just didn't plan and I got stuck with having to take care of all that. I had my brothers helping but I did most of the work. Learning from that and not wanting my son to have to go through that I purchased Long Term Care insurance for both me and my wife. The sooner you buy the less it costs.
 
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