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PBS Frontline : The Retirement Gamble, sorta Must See (1 Viewer)

ghostguy123 said:
Basically there is a right option for me i just dont know how to figure out what it is
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I will say that your OOP for your HDP and traditional are very close.  I'd PM Mattyl and see if he can jump in here and comment.  He may have good thoughts.

 
Sand said:
High deductible insurance - still insurance but you have much lower monthly premiums, but your out of pocket can possibly be higher if you have a major medical event.  Along with an HDP you can get a health savings plan (HSA) that is a tax sheltered account - tax free going in and tax free going out as long as it's used for medical expenses.  If you are young and healthy a HDP makes a lot of financial sense.  In my case the HDP and traditional are the same provider so same network - same care, just a different cost structure to pay for care.

From a retirement point of view HSAs don't have to be used right away.  You can reimburse yourself anytime, so it can be a powerful retirement tool if you let it grow and use it later on.  
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That's probably the key here.  We pay dental premiums but not medical. 

 
I thought the whole benefit of the HSA is that its a tax free account to pay off all future medical bills.   I'm not sure what medical expenses you'll have in retirement, but I'd imagine it would involve a combination of premiums, copays, deductibles, etc.   All that will get paid for pre-tax unlike if you paying taxes on your 401k withdrawal and then using that.

 
NutterButter said:
I thought the whole benefit of the HSA is that its a tax free account to pay off all future medical bills.   I'm not sure what medical expenses you'll have in retirement, but I'd imagine it would involve a combination of premiums, copays, deductibles, etc.   All that will get paid for pre-tax unlike if you paying taxes on your 401k withdrawal and then using that.
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Right, but it also depends how much more it will cost NOW as opposed to traditional.  

 
Anyone have a good link showing the historical return for the Dow Jones U.S. Total Stock Market?

Ideally, I'm looking for a link showing since inception but I know that may be difficult.

 
FWIW, I'm looking for an angle to time my backdoor roth contribution for the year.  This article on market reactions in election years came out in December 2015, and while no conclusions were made on the market overall in the year, there was a pretty clear uptick from Nov-Jan of the following year in most election years....makes sense b/c "devil you know..." type of thing.  

Anyway, I know it's not too scientific, but I'm going to go ahead and wait until Octoberish to purchase a S&P 500 mirroring index fund in by Roth.

 
Backdoor Roth question: if you fully fund a Roth IRA, can you then also make a non deductible contribution to a traditional IRA and then convert it to a Roth using the backdoor?

basically I want to put like $20k in my Roth IRA this year. 

 
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Tiger Fan said:
FWIW, I'm looking for an angle to time my backdoor roth contribution for the year.  This article on market reactions in election years came out in December 2015, and while no conclusions were made on the market overall in the year, there was a pretty clear uptick from Nov-Jan of the following year in most election years....makes sense b/c "devil you know..." type of thing.  

Anyway, I know it's not too scientific, but I'm going to go ahead and wait until Octoberish to purchase a S&P 500 mirroring index fund in by Roth.
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There's a pretty good tool to use, might take some time and supplies though.

Get some cardboard, something stiff, and use the template supplied below.  Mount to something (wall?) and add a pin, and you should be good to go

http://speekeeblogcdn.azureedge.net/wp-content/uploads/2014/03/birthday_wheel.png

 
mquinnjr said:
6.791% annualized, assuming inflation adjusted and reinvesting dividends. Time period January 1871 - July 2016.

:thumbup:

Bookmarking this to send to anyone who ever says to me, "Well I'm staying on the sidelines after 2008 - Wall Street is a casino!!!!!"
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An older guy I worded with has been on the sidelines since about then.  He finally went half in a couple of years ago.  Certainly left a lot of money on the table...

 
Slapdash said:
An older guy I worded with has been on the sidelines since about then.  He finally went half in a couple of years ago.  Certainly left a lot of money on the table...
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Guys ...no doubt.  But if you are living off of what you have it makes a huge difference.  If it goes down for several years you are drawing off of dramatically less and you don't get it back.  You realize if you lose 50% ...you have to get 100% to get back to where you were?  And that's if you aren't drawing off of what you have.

 
Binky The Doormat said:
Guys ...no doubt.  But if you are living off of what you have it makes a huge difference.  If it goes down for several years you are drawing off of dramatically less and you don't get it back. You realize if you lose 50% ...you have to get 100% to get back to where you were?  And that's if you aren't drawing off of what you have.
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Not really - provided you diversify and rebalance with discipline. Your entire retirement shouldn't be tied up in one asset class.  

Assume you have $1 million split evenly into stocks and bonds. In 2008, stocks weren't down 50% but let's say they were.  Bonds went up 12%. So your 500k in stocks becomes 250k while bonds becomes 560k. Now you have 810k. Rebalance, 405k each.  Assuming your bonds don't move at all in 2009 (they actually went up 1.2%), your stocks have to make up 190k, or 47%. 

Granted, most people aren't 50/50 but if you're close to needing the money, you probably should be near that balance. 

 
FUBAR said:
Not really - provided you diversify and rebalance with discipline. Your entire retirement shouldn't be tied up in one asset class.  

Assume you have $1 million split evenly into stocks and bonds. In 2008, stocks weren't down 50% but let's say they were.  Bonds went up 12%. So your 500k in stocks becomes 250k while bonds becomes 560k. Now you have 810k. Rebalance, 405k each.  Assuming your bonds don't move at all in 2009 (they actually went up 1.2%), your stocks have to make up 190k, or 47%. 

Granted, most people aren't 50/50 but if you're close to needing the money, you probably should be near that balance. 
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:goodposting:

If you're 30, you should be putting into the 401k as much as reasonably possible, at the very least hitting your employer match. At that point in time, you're 70% equities. Tons of time to make up 2008 like losses. At 60, you should be theoretically about 60% bonds 40% stocks, so you insulate yourself from 2008-like events. 

If an individual waits until 50+ to save to retire, that's on the individual. Waiting too long gives an individual no time to make up losses in equity investments if bad things happen. 

 
speaking of historical rates of return, what's a conservative # for a bond index pre-inflation.  This index is at 6.23% since 86.  5% sound like a good #.

 
Getzlaf15 said:
Not going to copy the above. I don't have sec 8, but my rents are at 795 for very decent places. Refi being done that will set my retirement and three kids retirement for life. 
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Curious what a refi has to do with retirement?  Are you cashing out or refiing to a lower payment?  

I wouldn't dream of quitting my W2 job with rental property debt.  But I'm sure our situations are very different.

 
Tiger Fan said:
FWIW, I'm looking for an angle to time my backdoor roth contribution for the year.  This article on market reactions in election years came out in December 2015, and while no conclusions were made on the market overall in the year, there was a pretty clear uptick from Nov-Jan of the following year in most election years....makes sense b/c "devil you know..." type of thing.  

Anyway, I know it's not too scientific, but I'm going to go ahead and wait until Octoberish to purchase a S&P 500 mirroring index fund in by Roth.
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If you're already waiting (as in, not just putting it in now), better to wait all the way until post-election for this particular cycle. You might "miss" a small bump immediately following a Hillary win, but you'll miss a potential sell-off if Trump wins. 

I know you're not trying to be scientific but to me, October is actually the worst time you could go in on this angle. Either today or day after Election Day would be the most sensible. Just my two cents. 

 
eoMMan said:
Slapdash said:
This is what I use: http://dqydj.com/sp-500-return-calculator/#.Vvybkimm2P0

Not really a point in looking at the DOW; use the S&P instead
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Why do say no point in looking at the DOW?

I ask because I'm looking at some total market index funds which will obviously include S&P500 stocks along with small and mid cap ones. In fact, the small cap stocks have outperformed the big guys if you go back. 
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I don't think price-weighted indices are particularly useful and 30 stocks is way too narrow of a sample.  Weighting performance by market capitalization, like the S&P does, is far more telling for the equity market as a whole.

 
Random said:
Curious what a refi has to do with retirement?  Are you cashing out or refiing to a lower payment?  

I wouldn't dream of quitting my W2 job with rental property debt.  But I'm sure our situations are very different.
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A refi can aid retirement in several ways depending on the situation and the goal. A couple of basic examples: 

  1. Years leading into retirement- you refinance to a lower term to decrease rate and pay off your loan faster. Allowing for a mortgage free retirement. 
  2. Near or in retirement- refinance for a longer term to flatten out payments and increase cash flow in retirement.  
 
Chadstroma said:
A refi can aid retirement in several ways depending on the situation and the goal. A couple of basic examples: 

  1. Years leading into retirement- you refinance to a lower term to decrease rate and pay off your loan faster. Allowing for a mortgage free retirement. 
  2. Near or in retirement- refinance for a longer term to flatten out payments and increase cash flow in retirement.  
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#2 for me. 

 
Ok back to HSA versus traditional real quick.

If you are certain you will be using a lot of health care (say 30 specialist visits with strong potential for a hospital admission for one person plus 15-20 other routine visits for the rest of the family) which would be better?  Obviously MORE could happen, but those are sure to happen.

I will try and add some info to help:

With the traditional plan my monthly premiums would be about 500 a month, and the deductible is $1,200.  The max out of pocket is $4,400.

The HSA would be about 300 per month with a $3,000 deductible.  The max out of pocket is $5,000

There are other intricacies I am sure, but those are the main numbers.

edit...........and a side note, my insurance is going to start at the beginning of August.  Assume for a minute I went the HSA route long term,  would it make sense to elect to go with HSA for the remainder of this year?  Or go traditional then switch at the start of 2017?

 
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ghostguy123 said:
Ok back to HSA versus traditional real quick.

If you are certain you will be using a lot of health care (say 30 specialist visits with strong potential for a hospital admission for one person plus 15-20 other routine visits for the rest of the family) which would be better?  Obviously MORE could happen, but those are sure to happen.

I will try and add some info to help:

With the traditional plan my monthly premiums would be about 500 a month, and the deductible is $1,200.  The max out of pocket is $4,400.

The HSA would be about 300 per month with a $3,000 deductible.  The max out of pocket is $5,000

There are other intricacies I am sure, but those are the main numbers.

edit...........and a side note, my insurance is going to start at the beginning of August.  Assume for a minute I went the HSA route long term,  would it make sense to elect to go with HSA for the remainder of this year?  Or go traditional then switch at the start of 2017?
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what about RX?

 
Getzlaf15 said:
#2 for me. 
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Awesome.  Really lots of ways to win with rentals.

I'm trying to get mine paid off asap.  Never taken a dime of the profit, everything goes to paying down the loans.  We have 1 heloc left, but every time we get within a year of paying it off we buy more.  We bought 4 units last December (really good deal, couldn't pass it up) or we would be within a few months of debt free.

 
Chadstroma said:
Random said:
Curious what a refi has to do with retirement?  Are you cashing out or refiing to a lower payment?  

I wouldn't dream of quitting my W2 job with rental property debt.  But I'm sure our situations are very different.
Click to expand...
A refi can aid retirement in several ways depending on the situation and the goal. A couple of basic examples: 

  1. Years leading into retirement- you refinance to a lower term to decrease rate and pay off your loan faster. Allowing for a mortgage free retirement. 
  2. Near or in retirement- refinance for a longer term to flatten out payments and increase cash flow in retirement.  
Click to expand...
Moving from a 30 to 15 year right now.  Lowering rate and getting rid of PMI all at the same.  Will be a big boon for early retirement (if we stay here).

 
Random said:
Awesome.  Really lots of ways to win with rentals.

I'm trying to get mine paid off asap.  Never taken a dime of the profit, everything goes to paying down the loans.  We have 1 heloc left, but every time we get within a year of paying it off we buy more.  We bought 4 units last December (really good deal, couldn't pass it up) or we would be within a few months of debt free.
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i did a lot of that when I first started.  Always created better opportunities down the road.  I'm not a huge fan of paying off the balance in full because you are leaving money out there to safely buy more. Nothing wrong with having 50% equity in one place and using the other 50% on a cash out to put down 40% on another.  Lots of ways to win as you say and everyone has to do what they feel most comfortable with.

 
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Getzlaf15 said:
i did a lot of that when I first stated.  Always created better opportunities down the road.  I'm not a huge fan of paying off the balance in full because you are leaving money out there to safely buy more. Nothing wrong with having 50% equity in one place and using the other 50% on a cash out to put down 40% on another.  Lots of ways to win as you say and everyone has to do what they feel most comfortable with.
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Agree.  But the low hanging fruit is gone for now (here).  We bought most of ours in 2010-2014 (10-15K houses/duplexes that rent for 700-1000/mo).  There's really no excuse for having mortgages at those prices.  Once or twice a year a good opportunity presents itself so I'm sure we will continue to buy more.

 
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Random said:
Agree.  But the low hanging fruit is gone for now.  We bought most of ours in 2010-2014 (10-15K houses/duplexes that rent for 700-1000/mo).  Once or twice a year a good opportunity presents itself so I'm sure we will continue to buy more.
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That is sick.  My first duplexes were in the $50k/unit range and I rec'd $500/mo.

 
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ghostguy123 said:
There will be about 8 total prescriptions.  Yes 8.

The HSA included both medical and Rx in the deductibles.  The traditional is only medical.  Copays are the same for both.
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That changes the equation - I would have said traditional, but it very well may be that your total out of pocket is actually less with the high deductible plan.  All it takes is one expensive drug to put you over the top.

I'd break out excel and add up your Rx costs that go to deductible (or not) and see if that tips you.  The HSA may just be gravy.  

 
Would like to get into rentals during the next recession...Or get my hands on the properties my parents in law have been investing in over the years around the Carolinas and China

 
ghostguy123 said:
Ok back to HSA versus traditional real quick.

If you are certain you will be using a lot of health care (say 30 specialist visits with strong potential for a hospital admission for one person plus 15-20 other routine visits for the rest of the family) which would be better?  Obviously MORE could happen, but those are sure to happen.

I will try and add some info to help:

With the traditional plan my monthly premiums would be about 500 a month, and the deductible is $1,200.  The max out of pocket is $4,400.

The HSA would be about 300 per month with a $3,000 deductible.  The max out of pocket is $5,000

There are other intricacies I am sure, but those are the main numbers.

edit...........and a side note, my insurance is going to start at the beginning of August.  Assume for a minute I went the HSA route long term,  would it make sense to elect to go with HSA for the remainder of this year?  Or go traditional then switch at the start of 2017?
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Actually now that I look at this assuming you hit your out of pocket max on that big medical bill with the traditional you'd have a total outlay of $10,400.  With the HDP your outlay is $8,600.  As long as the doctor/hospital networks and things are the same (muy importante) the HDP is pretty appealing.

 
Random said:
Agree.  But the low hanging fruit is gone for now (here).  We bought most of ours in 2010-2014 (10-15K houses/duplexes that rent for 700-1000/mo).  There's really no excuse for having mortgages at those prices.  Once or twice a year a good opportunity presents itself so I'm sure we will continue to buy more.
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Where in the US is this a thing?

 
Slapdash said:
Moving from a 30 to 15 year right now.  Lowering rate and getting rid of PMI all at the same.  Will be a big boon for early retirement (if we stay here).
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Even if you do move you most likely get the benefit unless your property loses value and/or you buy more property in the next move. 

 
FUBAR said:
Not really - provided you diversify and rebalance with discipline. Your entire retirement shouldn't be tied up in one asset class.  

Assume you have $1 million split evenly into stocks and bonds. In 2008, stocks weren't down 50% but let's say they were.  Bonds went up 12%. So your 500k in stocks becomes 250k while bonds becomes 560k. Now you have 810k. Rebalance, 405k each.  Assuming your bonds don't move at all in 2009 (they actually went up 1.2%), your stocks have to make up 190k, or 47%. 

Granted, most people aren't 50/50 but if you're close to needing the money, you probably should be near that balance. 




 
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Understand.  My comment was about losing 50% of your entire portfolio.  

 
FUBAR said:
Sure.  How often has that happened with a well diversified portfolio?  Or even in decent mutual funds? 
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Uhh ...2008?

ETA:  Not my point though.  I threw the 50% loss out there because the math was easy.  The point was that if you are at a point of living off the withdrawals and your portfolio takes a wallop - it hurts a lot worse and catch up can be more than twice as difficult.  

 
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Our President has referred me to UBS private wealth management guys.  Fee only financial plans that are supposedly very good.  They would want everything transferred to them. Currently my main 401K is with Wells Fargo Advisors (managed fund).  The UBS guys like to go with individual securities vs. funds like WF.  They are doing analysis of returns minus all fees for the past several years and making recommendations.  I need the financial plan for sure.  Anybody have experience with UBS? Have been smart with some things (college paid with no debt for 3 kids, protected with term life insurance + all the other necessary insurance, have really no debt other than mortgage), but not near what they say my # should be for my age and income.  Good thing is I'm in the money run for my career (50's) and healthy for now, so if smart I can make up lost time.  It's time....Would love to have a bunch of rental income, but I probably missed the last cycle of buying opportunity and will wait for the downturn.

 
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