Sand
Footballguy
I wouldn't, really. It can be a last ditch income source (reverse mortgage, etc.), but in general you need a place to live.
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PBS Frontline : The Retirement Gamble, sorta Must See (1 Viewer)
- Thread starter Smack Tripper
- Start date
matuski
Footballguy
The only way I account for it is to have a lower % of income needing to be replaced in retirement.
Random
Footballguy
Agree with others. It does not produce income, but having it paid off reduces expenses.
Bob Sacamano
Footballguy
While I agree with not counting the value of your home in your retirement portfolio for income purposes, I'd count the estimated value as real estate exposure from an allocation perspective. I mean, if you're sitting on $2 mil cash and have a $600k house paid off, you may not feel the need to have an additional 10% of your investment portfolio in real estate.
FUBAR
Footballguy
this. 
Steve Tasker
Footballguy
I usually factor it into my calculations less a discount rate of some sort. I figure if I needed to actually liquidate it immediately, I'd take a hit on the sales price and expenses of sale....so I undercut the FMV of the home on my personal net worth calc by like ~20%. I know some people say you shouldn't include it at all, but I consider my equity to be an asset.....not a liquid asset, but an asset all the same. Just my personal preference.
KCitons
Footballguy
This was the angle I was coming from. With the house factored in, we have 28% of our total portfolio in real estate. Also wondering were to factor it in when balancing equity/bond ratio. Since my house isn't equitable the same way my REIT holdings are, then do count it in a special category?Bob Sacamano said:
Without the house included - Equity 75% - Bonds 17% - Cash 8%
With the house included - Equity 54% - Bonds 12% - Cash 6% - House 28%
This probably why people leave it out. It skews the numbers.
Sand
Footballguy
Yeah, I'd leave it out there. Though your allocation with the RE doesn't bother me. It serves to show that you're wealth is more stable than you might otherwise think.
IC FBGCav
Footballguy
Hey all, need some help if you have time. I finally convinced my wife to ditch her work 401K that has Principal Funds with pretty high expense ratios. I now need to move her funds to an IRA and put them in Vanguard Funds. We are talking over 100k not sure the exact amount. I currently use options house to trade stocks on a low level. I would prefer to stay there if possible but looking for the best deal/platform to move it too. TIA.
She also has a pension and she is 53, I was thinking a traditional IRA would be best but would like that confirmed.
Finally, my work 401k uses a time matrix with Vanguard so I can mimic that for her.
She also has a pension and she is 53, I was thinking a traditional IRA would be best but would like that confirmed.
Finally, my work 401k uses a time matrix with Vanguard so I can mimic that for her.
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NewlyRetired
Footballguy
I had assumed she left her job and he was now moving it. It might be a bad idea to move it if she is still working and getting a match.
Re-reading his post I am not sure what he meant.
@FatUncleJerryBussis your wife still employed at the company and if so what is her 401k match? The match may very well easily out pace what ever added expenses she is paying.
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IC FBGCav
Footballguy
It is 3% but what we are doing is continuing to take that and putting the other 7% with Vanguard. I don't know how she can move here funds while still being employed but she can move it ALL.
NewlyRetired
Footballguy
I don't understand.
Are you saying you have no choice in where the match goes in the 401k umbrella?
IC FBGCav
Footballguy
The match and 3% has to go into principal funds but we can roll them after they go in. She is paying over 1% on the expense ratios for principal.
NewlyRetired
Footballguy
it is plan by plan in terms of the restrictions.
I think it is universal that you are allowed to transfer but some companies will place a ban on further contributions for a time if you withdraw money. It does not sound like his wives 401k has any sort of penalty for doing this though.
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IC FBGCav
Footballguy
She can move it. They are a 6 person company, so I do not know or have current access to the plan document. She spoke with the advisor yesterday and he said she could move it all.
IC FBGCav
Footballguy
NewlyRetired
Footballguy
Ours moved from Fidelity to LPL Financial when we retired. (the LPL accounts are managed).
Lately I have become focused/obsessed on when my wife and I can quit our jobs. I burned out two years ago and am counting the days until I can stop working. Occasionally there's a good day but for the most part I'm simply tired of my day-to-day work. My wife is in a similar position, high stress day after day. The upside is that both of our jobs pay pretty well so we can reasonably stop working within 4 years when she'll be 50 and I'll be 46.
When we retire early, we need enough $$ to bridge the gap between when we quit and when we're eligible to withdraw from retirement accounts. Looking the numbers yesterday, I think we can quit in 2 years. We'd both be OK with part-time jobs or something to bring in a little income - anything to get us out sooner.
Health care cost is the one big unknown that might extend our exit date. Right now we're budgeting for $2000/month since we just don't know.
When we retire early, we need enough $$ to bridge the gap between when we quit and when we're eligible to withdraw from retirement accounts. Looking the numbers yesterday, I think we can quit in 2 years. We'd both be OK with part-time jobs or something to bring in a little income - anything to get us out sooner.
Health care cost is the one big unknown that might extend our exit date. Right now we're budgeting for $2000/month since we just don't know.
NewlyRetired
Footballguy
If you are in the situation where you have enough in the retirement accounts to live off of, the government has a plan that allows you to take out the money earlier than normal with no penalties.
You can read about it here
http://www.gcbaonline.com/retirement/understanding-irs-72t-withdraws-rule-calculator
IC FBGCav
Footballguy
At your age decent insurance will run you guys at least 1200 a month. HTH. Really good 1600 but that will increase every year.
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Awesome, thanks!
We're estimating in two years we'll have $750K and no debt. That leaves us ~10 years until my wife reaches 59 1/2. If our 401(k) grows at 4%/year, we estimate we'll have ~$1.5MM by the time we can withdraw. That's not factoring in any Social Security which will be ~$4500/month if we take it at 67.
We'll check out the 72t rule and review it with our planner. It might get us where we want to be a little faster.
IC FBGCav
Footballguy
Zen, check these out, they break down by plan and age.
http://imgur.com/a/PJbSX
http://imgur.com/a/hTFSz
http://imgur.com/a/PJbSX
http://imgur.com/a/hTFSz
NewlyRetired
Footballguy
don't forget to consider your house. I don't know your situation but many times early retirees can downsize once the kids have grown. We plan to downsize in the next couple of years.
As to part time jobs, they are out there, you just need to keep eyes open and think outside of the box. As an engineer I never even considered working in a library but it has been a great part time job for me since I retired with basically zero stress compared to the old job.
Sadly, we're going to upsize the house. We currently live in Dallas and I'm guessing our house will sell for ~$500K. We're looking to move to Lake Tahoe (Nevada side) and our max budget is $700K. We're looking now and if we can find the right one, we're happy to rent or AirBNB until we can get out there.
I totally agree on the part-time job. I'm an engineer now and I'm open to anything. Working at a golf course would be great (free/cheap golf!). The nice thing about Tahoe is there's lot of seasonal work. I could lead bike or hiking tours in the summer.
NewlyRetired
Footballguy
understood. That sounds really nice.
Is the 200k difference going to be handled from non retirement accounts? Also keep in mind the cost differences between old house and new (taxes, insurance etc).
I am sure your planner has told you this, but just in case, as an early retiree, your expected expenses are actually more important than your savings. If you have not already, make sure you work really hard on estimating your costs and be on the conservative side and don't forgot to amortize in items like buying new cars etc over the years.
Yes, the $200K difference will come from non-retirement accounts. We initially planned for zero debt during retirement but we're considering whether it might be worth it to carry the $200K mortgage.
We've estimated our expenses and I think we're conservative but we need to review it with our planner to make sure we haven't missed something obvious. Our estimated budget looks good with non-retirement for 10 years and then retirement for 35 years. Since that doesn't include Social Security, we'd look at that as something 'extra' that could be used to rapidly pay off the mortgage when we got to that point. I'm not sure if that's a good idea, though (that's where the planner comes in!). The 72t option might make sense because we could supplement any withdrawals from retirement accounts with Social Security.
Maybe with the record snowfall this year people will be itching to leave Tahoe and we can find what we want for <$600K. That would be huge.
I appreciate your insight - it really helps!
NewlyRetired
Footballguy
anytime you have any questions, just pm me. I went through all of this 6+ years ago but the process is still fresh in my mind.
Also, it is worth perusing the early retirement boards just out of knowledge gathering even if you don't actively engage in posting. There are a ton of people there with info about travel, health care, home costs, etc for early retirees. I picked up my biggest single tip at that site that lowered our health insurance cost significantly.
http://www.early-retirement.org/forums/
JoeSteeler
Footballguy
for those thinking about part time work after "retirement", last I knew Costco offered medical coverage if you worked 24+ hours/week
Saw this today:
http://www.cnbc.com/2017/02/22/heres-how-much-money-you-should-have-saved-at-every-age.html
By age 35: Have twice your annual salary saved.
By age 40: Have three times your annual salary saved.
By age 45: Have four times your annual salary saved.
By age 50: Have five times your annual salary saved.
By age 55: Have six times your annual salary saved.
By age 60: Have seven times your annual salary saved.
By age 65: Have eight times your annual salary saved.
http://www.cnbc.com/2017/02/22/heres-how-much-money-you-should-have-saved-at-every-age.html
By age 35: Have twice your annual salary saved.
By age 40: Have three times your annual salary saved.
By age 45: Have four times your annual salary saved.
By age 50: Have five times your annual salary saved.
By age 55: Have six times your annual salary saved.
By age 60: Have seven times your annual salary saved.
By age 65: Have eight times your annual salary saved.
IC FBGCav
Footballguy
NewlyRetired
Footballguy
I am not a fan of these one size fits all rule of thumbs for retirees because it is kind of fantasy stuff.
They focus too much on savings and not enough on expenses.
You could have 3 people who retire follow these type of rules and could easily result in three different results:
1) one person who saved way too much and ended up working longer than he had to
2) one person who it worked out for perfectly
3) one person who saved way less than he needed for retirement
In general you need to save at a rate to support what you expect your own retirement expenses to be. Since one couple may want to have a lifestyle that includes travelling the world every year in retirement, they need to save a ton more than the couple who just wants a quiet play with the grand children type of retirement.
No two cases are identical and as such there is really no rule of thumb for how to save.
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FUBAR
Footballguy
I'd only include the house in asset allocation if you're also investing in other RE. If you have a couple rental houses nearby, you definitely should include all houses as a category and not exceed your allocation. If your house is your only RE, I'd keep it separate like Sand stated.
That seems really low past 50 (if not before) and if you're only increasing your investments by 20% of your income each year, symmetrically, you're not getting enough return.
James Daulton
Footballguy
FUBAR
Footballguy
True. Though I think there's some benefit in using a rule of thumb of savings vs. expenses. i.e. When I'm 60, I want to have enough to cover 40 years of retired expenses (along with pension and SS).
saintfool
Dead sexy
Binky The Doormat
Footballguy
is she going to have them manage her money? It's a little less than having a local guy - 0.89% to the first million. They focus on low fee ETFs and have a couple hooks that they sell hard - tax harvesting and an equally balanced sector approach instead of the traditional market-based sector weighting.
Most of our stuff is in Vanguard across several accounts, but we still have some stuff in other places. I use their site to aggregate all my accounts, including several checking & savings accounts. I love it - and it's free. Really nice dashboard and ROI reports too.
They also will give you a nice set of recommendations and report - I thought it was pretty good. I just abandoned the idea of paying someone a decent chunk of money to manage our savings. I do pay a CFP to look at our stuff annually and provide recommendations.
The only thing about Personal Capital that I didn't like is that their cold-call appointment setters kept calling me even though I told them to take me off their list. I finally said yes to another call to speak directly to the advisor to tell him to take me off the list and I told the appt setter guy that. The same that I talked to before came on the line and was a lot more cocky than our previous discussions (two of them). After I told him that I wanted to ask him directly to, again, please take me off the list, he got a lot ####tier (PM me if you want his name). Then proceeded to tell me how I was making wasting my money and asking those hardcore car salesman questions like "don't you want to save money???" #### him.
Wooderson
Fight The Power
For those of you that use Personal Capital or Mint? Do you record everything down to the cent? For example you buy a coffee you later that night enter that coffee. Or do you just use if for more major things. I would like to dive into one of these and want to know what level of commitment I should be ready for. Also any big differences between Personal Capital or Mint? I'm guessing they are both free if you don't take advise correct?
Binky The Doormat
Footballguy
omg no. Never did, but I have gotten much more lax about tracking my expenses ...that I have been doing for 45+ years, ever since graduating college and moving out. I always just lumped food/household goods in one category and gave myself a set amount each pay/month. I will dump VISA bills and track where that money is going though. I don't find their breakouts terribly helpful, so I look at each transaction and do my own categories.
Wooderson
Fight The Power
When you say dump Visa bills? Does that mean it will take your visa bill and categories it for you? We use one credit card fro 99% of our purchase right now so that would make it easy.
Binky The Doormat
Footballguy
Your Visa card should allow you to set how many months of Visa bills you want to download and it should categorize them. But if it is a department store for instance, it gives you something like "retail." It doesn't itemize the stuff you bought. So if some of it is clothing, some of it housewares, etc. it won't give you that. I keep my Visa receipts to break it down further.
It's tedious. But I have the time.
ex-ghost
Footballguy
I signed up a few months ago. It is a great tool. I checked it every day for the first month, now just every week.
Main things so far:
- Tired of Mint's account sync issues. Have a few accounts that are always dropping off once a month or so
- Much more focused on investments. Easier to view total allocations. Easier to see and measure performance
- Manual addition of accounts more flexible to get a better accounting of things. This is particularly important to track my wife's new 401k which won't sync with either site
I never really use budgeting features.
