Your Vote Counts - Learn How to Make Politicians Listen to What Matters Most to You on AARP Live at 10 p.m. ET. Watch Now!

Reply
Frequent Social Butterfly

Re: How much do you need for a comfortable retirement?

1,432 Views
Message 11 of 166

Great conversation by the way @NOTHAPPENING...  I may be learning more than I am imparting.  I never looked much into RMD since it is still a few years off and my accountant will just tell my portfolio manager how much to move. It is what it is I can't really change anything.  I have read about stratagies to pay less taxes.  The big question is is it good or bad to pay taxes.  That all depends on the bottom line.  Which stratigy provides you with the most money.  I inherited part of my mother's account which was taylored to lower her tax bracket but she was in a high bracket when it was taylored.  The tax paperwork was odious so I told my broker to get rid of all that stuff.  He sold off all her equities and moved me to the company's manager protfolio.  The result was I made 300% more profit but had to pay taxes on it.  Even in the highest tax bracket you still keep more than you give to Uncle Sam.  Therefore, it is always better to pay more tax than less tax.  Tax free bonds and equities don't pay as much return and are probably priced to do better if you are in the top tax bracket but I am not. You need a 7 figure income to be in that bracket.

 

This was just food for thought.

Report Inappropriate Content
Valued Social Butterfly

Re: How much do you need for a comfortable retirement?

1,479 Views
Message 12 of 166

@RonMesnardwrote:

@NOTHAPPENING, your math is sound and so is your statement but that is only for the up comming tax year.  This is what the IRS says.

 

https://www.irs.gov/pub/irs-tege/uniform_rmd_wksht.pdf

 

Actually you only want to take out RMD since the rest still grows tax differed.  As long as the market stays up, your IRA will continue to grow if you have mostly stock. If you were invested purely in a S&P index fund you would be making over $300,000 and only taking out 60,000 if the market hold at this rate.  You could have an RMD of 90k 'if the music lasts that long'.


As you get older, the RMD "factor" gets smaller forcing you to deplete your IRA more rapidly as you age. Your RMD amount may cause you to pay higher Medicare monthly rates (assuming you also have pension, SS benefits, as well as income from other investments). Another complex problem is the tax rates being lowered (normally a good thing) but if you see legislation coming in the future that raises those rates substantially, it may be time to exceed your RMD while the rates are lower. If fact, once you've taken the RMD out, you can even CONVERT some of the IRA to a Roth IRA which doesn't have the mandatory RMD! It's always OK to take more out than the RMD but never lower because of the 50% penalty.

Report Inappropriate Content
Frequent Social Butterfly

Re: How much do you need for a comfortable retirement?

1,494 Views
Message 13 of 166

@NOTHAPPENING, your math is sound and so is your statement but that is only for the up comming tax year.  This is what the IRS says.

 

https://www.irs.gov/pub/irs-tege/uniform_rmd_wksht.pdf

 

Actually you only want to take out RMD since the rest still grows tax differed.  As long as the market stays up, your IRA will continue to grow if you have mostly stock. If you were invested purely in a S&P index fund you would be making over $300,000 and only taking out 60,000 if the market hold at this rate.  You could have an RMD of 90k 'if the music lasts that long'.

Report Inappropriate Content
Valued Social Butterfly

Re: How much do you need for a comfortable retirement?

1,490 Views
Message 14 of 166

@sggbrownwrote:

I will retire in April 2018.  I figure i can maintain my lifestyle pretty comfortably on $68K a year - maybe less, that's pretty still including vacations, helping the kids, etc.  the 2 big 'annoyances' in retirement for me are - my Social Security will be taxable because of the amount of spend down i am taking from my investements and the fact that because i DID manage to save a good amount for retirement ($1.6 million before taxes) I will never be in a lower tax bracket - my min distribution will run about $90K annually at age 70 1/2 - so, hey, might as well take it the tax hits now and enjoy!


At 70.5 years old, your RMD factor is 27.4 so dividing your $1.6 million by 27.4 gives you just over $58K as your RMD amount (pretty good but not $90K)!

Report Inappropriate Content
Frequent Social Butterfly

Re: How much do you need for a comfortable retirement?

1,470 Views
Message 15 of 166

I think you are arguing how many angles can dance on the head of a pin!  What does it matter if you could have made a better return if you did you own investing?  You SHOULD have invested your own money and see what happens to it.  Mine has been all over the place and has been lack luster dispite some major triumphs.  It was only this last bull run that has saved me.  My current investor has a great track record for knowing when to play it safe in the market.  After taking a bath in 2000 and 2008 I started using my mom's broker because she didn't lose more than 20% in either crash.  I lost 80% in 2000! 

 

My opinion about how much you need to retire is no one knows.  These retirement calculators are pretty much worthless.  The 2 biggest factors about how much you need are how long will you live and how will your investments do in the next 20 years.  No one has a clue about either!  My opinion is save as much as you can and retire as late as you can unless you have a great deal of money.  Most persons I know who retired before 60 are hurting.  Both assumed their investment would be doing much better and are forced to spend principle as wel as having to get a minimum wage job.  Once you are retired a few years and are in your 60s you are as needed as a square tire. Unless you have rare skill which are in high demand you will never get a real job again unless you know someone.  I am certain they 'will be taken to the cleamers' in the next few years.  Their 'solid' investments will turn to dust with rising interest rates.  They are so ignorant they may be eager for higher interest rates assuming that will make their bonds more productive.  NOT!  Thier bonds are locked into a 1% interest rate.  If the rates go to 2% their bonds will be worth half what they bought them for.  Who would want a 1% rate when they can buy a 2% rate and make double? They need to sell their bonds and buy CDs until the interest rates stabilize then buy bonds at a descent interest rate.  Then bonds will be a good safe investment. 

 

All the complaints I have heard are persons with too little money.  I don't think you can have too much money.  At the very worst, you leave your kids some money. I say make hay while the sun shines!

Report Inappropriate Content
Conversationalist

Re: How much do you need for a comfortable retirement?

1,546 Views
Message 16 of 166

Hi, not sure what state your in but please google the senior job service called - Experience works. They may have a job for you working for either government or non profit organizations right in your community. I know they are not in every state but they pay minimum wage and offer part time work according to what your current situation is.Also I think that there are others out there and if you have an ADRC in your county they may be able to point you in even more directions. I know a man that delivers meals on wheels a few hours a day as a volunteer but he has an economy vehicle and gets federal mileage pay earning around $55 per day.

Report Inappropriate Content
Conversationalist

Re: How much do you need for a comfortable retirement?

2,827 Views
Message 17 of 166

All my wife and I need for a comfortable retirement is enough income to cover our normal living expenses.  I didn't get around to retiring until I was 68 and my wife was 66 and eligible for the full Social Security spousal benefit.  As a result, Social Security provides 87% of our normal living expenses but only 66% once you include Federal and State income taxes in our normal living expenses.

 

RMD withdrawals from my IRA account were to be used for an extravagance, new car, major home improvements, or unexpected medical expenses.  What wasn't anticipated when I retired was my IRA more than doubling in value after I retired resulting in my RMD more than doubling as well.  So far, we haven't been able to shed the frugal habits we learned raising three children and putting them through college.  The RMD withdrawals have been moved to a taxable account and invested to ensure that we have assets that can be sold to cover the expenses that we might incur in our nineties.

Report Inappropriate Content
Silver Conversationalist

Re: How much do you need for a comfortable retirement?

3,606 Views
Message 18 of 166

Epster wrote:

ASTRAEA wrote:
retiredtraveler wrote:

 

   No semantics won't change anything. Facts will. The average American gains about 25%-33%  in benefits over what is paid in. That is an entitlement. I'm on medicare, and happy to be so. But I'm perfectly aware that the odds are that I will be getting an entitlement, or welfare, if you like.


That's not really accurate, if you factor in the interest you would have earned, had you saved the amount paid in to SS all those years. In the years when we had high interest rates, it didn't take that long for savings to double in value .. so money that was paid in when I started working back in 1973, should have gained a lot more than 25 - 33% by now!

 

"The Rule of 72"


Thank you @ASTRAEA, I was just about to make that point.

 

 


Actually, @retiredtraveler was a bit low on how much more the average person gets back from SS over what they paid in taxes.  Since the taxes were invested in special Treasury bonds and the rates are known, I took a look at those invested earnings.  It hasn't grown near as much as you would think.  Those early taxes were lower than now and your wages were a lot lower too.  The later year taxes haven't had much time to be invested and grow.  For example, my 1973 SS tax for the year was $173.  That year's tax invested in the special T-bonds for the last 45 years is worth $1980 today.  My total taxes paid since 1970 is $155,330 (from my SS statement, page 3) and when invested in the T-bonds, it's worth $343,141, barely over double.  At age 66, when I start SS, it will take me just 5 years to recover the same as I paid and in 10 years I will recover my taxes plus the interest earned in bonds.  At twenty years, I'll have back mine, my employers, and all bond earned interest back, which is 75% more than I personally paid in, or 50% more than my taxes with earnings.  Those are the longest time frames.  Average and lower earner full recovery of all taxes and earnings of employee and employer at full retirement age (FRA) are shorter, from 6-12 years.  People who start before their FRA will take longer but still receive quite a bit more than they paid.  The only way to not make out is to die early.

Report Inappropriate Content
Silver Conversationalist

Re: How much do you need for a comfortable retirement?

3,115 Views
Message 19 of 166

ASTRAEA wrote:

@sggbrown - Are you sure you've got that calculation right? At 71 the IRA RMD divisor is 26.5, so you'd need to have about $2.38 million in an IRA, to have a $90K RMD. If your IRA is the $1.6 million you mention, the RMD at 71 would be just over $60,377.


I took a quick look at it and agree that @sggbrown used the wrong numbers.  I believe he/she used the wrong RMD table.  The Uniform Life Expectancy table is the correct one with the 26.5 divisor.  I believe what @sggbrown used was the Single Life Expectancy table which is used for inherited IRA's.  The age 71 factor for that table is 16.3 which would be $98K.  He needs to be looking at IRS Publication 590-B, Appendix B, Table III Uniform Life Expectancy.

https://www.irs.gov/publications/p590b#en_US_2016_publink1000231236

 

Report Inappropriate Content
Treasured Social Butterfly

Re: How much do you need for a comfortable retirement?

3,043 Views
Message 20 of 166

ASTRAEA wrote:
retiredtraveler wrote:

 

   No semantics won't change anything. Facts will. The average American gains about 25%-33%  in benefits over what is paid in. That is an entitlement. I'm on medicare, and happy to be so. But I'm perfectly aware that the odds are that I will be getting an entitlement, or welfare, if you like.


That's not really accurate, if you factor in the interest you would have earned, had you saved the amount paid in to SS all those years. In the years when we had high interest rates, it didn't take that long for savings to double in value .. so money that was paid in when I started working back in 1973, should have gained a lot more than 25 - 33% by now!

 

"The Rule of 72"


Thank you @ASTRAEA, I was just about to make that point.

 

 

"The key to success is to keep growing in all areas of life - mental, emotional, spiritual, as well as physical." Julius Erving
Report Inappropriate Content