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PBS Frontline : The Retirement Gamble, sorta Must See (2 Viewers)
- Thread starter Smack Tripper
- Start date
-OZ-
Footballguy
NutterButter
Footballguy
Ya think? Santa Barbara, Irvine and San Diego are all 36% or above for acceptance rate. Maybe that equates to what you're saying. I really don't know.
saintfool
Dead sexy
As I understand it, states aren't really in a position to fund their colleges adequately. They've forced colleges and universities to hike tuitions as a result. I've got a 529 going for my almost 8 year-old boy and it just cleared the $100k mark. I'm want to encourage him to consider studying in Germany because they have free tuition for anyone accepted to their universities.xulf said:
sbonomo
Footballguy
saintfool
Dead sexy
sbonomo
Footballguy
hmmm, does not seem to be the best venue to try to become fluent in another language. What could possibly go wrong?
NutterButter
Footballguy
The Ref
Footballguy
It's the Florida prepaid college program.
The deal, if you can believe it, actually got better a few years ago. The governor signed a law that had the board reduce plans by a semi material amount.
the "new price" for a 4 year university plan purchased 5 years ago is $31,500. Not that bad at all and it let's you spread it out over 13 years.
Gawain
Footballguy
I came out of law school with 150K of debt in 2010. The estimated cost of attendance in 2017 per year is now $86,771. 260K for 3 years, where most of that isn't subsidized. So graduating right about 300K.
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kutta
Footballguy
Funny you bring this up. My son just graduated here in the states with a Psychology degree and is talking with some friends about heading to Germany for their masters. It is free to US residents, and there are schools that teach a good portion of the classes in English. There are a few European countries that do something similar. He's pretty stoked about it, and I thnk it would be pretty cool for him.
-OZ-
Footballguy
Not bad. I'll assume that's tuition.
What happens if the kid gets scholarships or grants?
The one in Alabama is closed to New enrollments :(
Not sure if it would make sense for us anyway but it would be nice to have the option.
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⚡DEADHEAD⚡
Footballguy
Ok let's see if I can do this.
I've built a version of a spreadsheet I use to track rough progress toward our retirement goals. As I said earlier, based on my configuration in the attached, I project me and my wife to have about $300k in income/year without affecting our base.
Here is the link.
This sheet is somewhat generic and is built for two people, Spouse 1 and Spouse 2.
Spouse 1 is contributing the max to a 401k and a little into a ROTH 401K. No other IRA, and no pension.
Spouse 2 is contributing to a Traditional IRA and will receive a pension based on a $100k salary.
For Spouse 1 and Spouse 2, social security options exists. Amount will depend on when you want to start taking in.
Save your own version and play around with it if you like. Would love to know people's thoughts.
Cheers.
I've built a version of a spreadsheet I use to track rough progress toward our retirement goals. As I said earlier, based on my configuration in the attached, I project me and my wife to have about $300k in income/year without affecting our base.
Here is the link.
This sheet is somewhat generic and is built for two people, Spouse 1 and Spouse 2.
Spouse 1 is contributing the max to a 401k and a little into a ROTH 401K. No other IRA, and no pension.
Spouse 2 is contributing to a Traditional IRA and will receive a pension based on a $100k salary.
For Spouse 1 and Spouse 2, social security options exists. Amount will depend on when you want to start taking in.
Save your own version and play around with it if you like. Would love to know people's thoughts.
Cheers.
Sand
Footballguy
Yeah, that one was way overpromised and underfunded. Lawsuits were looming as it guaranteed things that shouldn't have been. So they closed it to uphold the promises and fund it properly. Those in it got a good deal.
It's a good tool. It has a lot of knobs to turn to handle lots of scenarios - the best free one out there, by a long shot. However, it doesn't take into account taxes at all. So oversize your expenditures by a factor to cover that.
I also highly recommend looking at portfoliocharts.com. Not a calculator, but it will show you what the sustainable withdrawal rate of common portfolio constructions are, their variability, etc. Very useful when thinking about sustainable cash flow.
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sbonomo
Footballguy
How in the world do you get $54,000 into 401K and an additional $10,000 per year into a Roth? Making the assumption that you make under $189,000 combined and that spouse two is in the $100,000 range (maybe a bit lower but will be there somewhere in the next 10-15 years) basically all of the spouse #1 is going into a 401K. Is this realistic? Also, with the Spouse 2 income increases and spouse 1 potential income increases you will hit the caps someday reducing what you can actually save.Sandeman said:
-OZ-
Footballguy
Living on one so spouse's salary? Why wouldn't that be realistic?
Maybe I misunderstand your question/point. Maybe you just mean those numbers into the 401k and Roth exceed the cap.
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sbonomo
Footballguy
This, sorry if that isn't clear. I was trying to get my mind around how they stay under the limits along with getting extra into the 401k. I would kill to be able to put 54,000 into my 401k on top of being able to contribute to a roth every year.
Tom Hagen
Footballguy
wilked
Footballguy
Sand
Footballguy
Some are. Most are products of research from one author or another. All are valid except for the golden butterfly, IMO. That one is a statistical anomaly and I wouldn't trust it over the next few decades to repeat.
Sand
Footballguy
If you have ~30x annual expenses you're good. 25x if you're over 60. If not there is something wrong in your calculations. Make sure you get the base expenditure right on the forest entry screen.
KCitons
Footballguy
$630k. (the house is paid off and worth an estimated $200k) Annual expense is $30k. (my wife was able to continue her BCBS federal when she was forced into disability retirement. It runs $580 per month for a family of 5) So, that's after health care and removing short term and retirement savings. But includes $350 a month savings for property tax and inflated expenses for kids car insurance, kids food, and utilities. I pay to heat and cool a 4k square foot house. Once the kids are gone, a smaller house and less mouths to feed will knock that down another $2-3k easily.
I also added Firecalc $30k for my wife's pension that will start in 10 years, $28k from her SS that starts in 15 years and $20k from my SS that would kick in 18 years.
The one thing I didn't estimate is inheritance. My parents are in their upper 70's and discussed it a few years back. They purchased a life insurance policy to guarantee each kid would get $100k when they die. But, I don't expect anything. Too much time left to think about that.
Now that I type it out, I must live in squalor. Actually, we are just simple people that don't spend a lot. My only fear is long term heath care. But, can you really save enough for that?
-OZ-
Footballguy
wilked
Footballguy
Based off The above... I think you’re in fantastic shape to retire in about 5-10 years
⚡DEADHEAD⚡
Footballguy
Yes, you're right. I copy/pasted the formulas and forgot to remove the contribution. Good catch.
KCitons
Footballguy
⚡DEADHEAD⚡
Footballguy
So I aim to maximize my contribution. Personally, I put in $18k in pre-tax contribution followed by - I admit an unknown contribution - plus employee match, which is 6% plus 4.5% of salary. It appears I wind up contributing more than the maximum contribution allowed, and I am allowed to roll this "extra" into an after-tax Roth 401k. I do not know if this is a standard employer offering. This is not a backdoor IRA.
I am, however, contributing to a traditional IRA for my wife and rolling that into a Roth every year, which is essentially a backdoor IRA.
The Ref
Footballguy
Yes. They have a separate room and board plan too. I got a mini promotion two years ago so I signed up for just two years. Figure she's not going to want to get off campus Jr/Sr year.
almost costs as much per year as the tuition plan.
⚡DEADHEAD⚡
Footballguy
This is part of a challenge of a sheet like this. So I removed the contributions for Spouse 1 and Spouse 2 as of 66, but of course not everyone retires at 66.Yeah. Now I'm broke again.
Judge Smails
Footballguy
I'd love to learn more about this. Any links? My daughter graduated from UCSB, then worked and saved money for a year. Is in month 4 of a worldwide trip. All of over Europe, then Southeast Asia, then just called an audible and is going to New Zealand for a month. All on her own dime. She is an ideal MBA candidate and loves to travel. Germany might be interesting to her.
KCitons
Footballguy
Or at 50-55. Which is what I'm trying to do.
One other thing that I noticed with your sheet was that there was no way to enter current retirement balances? Since I'm 49, I changed the 401k and Roth contributions to an amount that created a balance close to what I currently have. I didn't change the age column and left it starting at age 30. But for someone starting at 30 (or before), they would need to have a way to account for current balances.
CR69
Footballguy
Are you sure it goes into a Roth 401k? I thought it was just an after tax contribution to a traditional 401k, which can then be rolled into a traditional IRA then Roth IRA?
⚡DEADHEAD⚡
Footballguy
You are correct. This is where things get a little fuzzy for me. I use Fidelity and they do all the moving for me. Some of my excess contribution goes to a traditional, some goes to a Roth.
I'll modify the spreadsheet.
⚡DEADHEAD⚡
Footballguy
I think I can fix this by adding a line where the contributions and the percentages are with a current balance. I'll try to do that later today.
⚡DEADHEAD⚡
Footballguy
These fixes are going to be complicated. May need a bit more time.
And it looks like I'm double counting some 401k $. I can maximize my 401k at $54k, but much of that is going to the Roth IRA as an elective deferral. So what I get in my 401k contribution is my $18k contribution plus employer match. And my Roth IRA is whatever is left up to $54k. For example, I think my 2017 will look like this:
$18k pre-tax contribution from employee (maxed)
$20k pre-tax contribution from employer
$13k after-tax contribution from employee, moved to Roth IRA
ETA: I think this is what the earlier poster was getting at.
And it looks like I'm double counting some 401k $. I can maximize my 401k at $54k, but much of that is going to the Roth IRA as an elective deferral. So what I get in my 401k contribution is my $18k contribution plus employer match. And my Roth IRA is whatever is left up to $54k. For example, I think my 2017 will look like this:
$18k pre-tax contribution from employee (maxed)
$20k pre-tax contribution from employer
$13k after-tax contribution from employee, moved to Roth IRA
ETA: I think this is what the earlier poster was getting at.
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re: bolded, are you sure it's not after tax contribution to a 401k? You can't contribute any more than $5500 per person to a traditional or Roth IRA each year.
⚡DEADHEAD⚡
Footballguy
Ok, I modified the spreadsheet based on input. Only Spouse 1 is correct at the moment.
I have 5 possible income streams for Spouse 1. Social security, 401k, ROTH IRA, traditional IRA and pension. In the current version, I have a 401k contribution of 38k/year until 50, and 44k/year after that, with some contributions to the ROTH IRA as well.
The spreadsheet starts at age 22. If you want to start at a later age, simply zero out those cells. And if you want to bring in a 401k balance, like say $300k at age 30, put that in the column.
Let's see where this gets us.
⚡DEADHEAD⚡
Footballguy
kutta
Footballguy
Now he's thinking about the Netherlands. They've done some more looking and have found that Germany pretty much requires proficiency in German, but France and the Netherlands have total English programs. He's going to send me some info and I'll pass it on here.Judge Smails said:
Here's an article I found while doing some research on the subject: http://money.cnn.com/2016/02/23/pf/college/free-college-europe/index.html
But I'm sure the info from my son will be more specific.
⚡DEADHEAD⚡
Footballguy
LINK from 2015 (apologies for the long post)
Making pretax contributions to your 401(k) retirement plan is a no-brainer. But recent changes in federal tax rules may make it more attractive for serious savers to increase after-tax contributions, as well.
The benefit of pretax contributions to your employer’s traditional 401(k) plan is, of course, that doing so reduces your taxable income. Taxes on any earnings from the money are deferred; you do not pay income taxes until you start withdrawing the funds. For 2015, you can contribute up to $18,000 on a pretax basis, or more if you are 50 or older.
Some plans allow workers to make additional contributions of after-tax money, up to the Internal Revenue Service’s total annual contribution limit. For those under 50, the maximum is $53,000 for 2015. Doing so does not reduce your taxable income, but taxes are deferred on any earnings that the after-tax money makes.
A recent I.R.S. ruling has made it easier to convert those after-tax contributions directly to a Roth I.R.A. when you retire or leave your company. Under the new rules, you can roll over your pretax contributions and any earnings into a traditional I.R.A., while putting the after-tax contributions into a separate Roth I.R.A., where the money can then grow tax-free. (Recall that a Roth, while funded with after-tax money, allows the funds to grow tax-free and remain tax-free upon withdrawal.)
Previously, investors had to jump through a series of financial hoops to achieve that result because I.R.S. rules on the subject were unclear. But late last year, the I.R.S. issued a clarifying notice, known as 2014-54, which greatly simplified the situation.
Some employees who made after-tax contributions to their 401(k)’s in the years before Roth I.R.A.s became available have large balances saved that would benefit from this treatment, said Lisa Brown, a wealth adviser with Brightworth in Atlanta. Clients’ eyes widen when the option is explained, she said: “It’s phenomenal for their retirement.”
Others, however, may be able to use the strategy prospectively, she said, to in effect “super-fund” a Roth I.R.A.
By making after-tax contributions to your 401(k), you are not subject to the initial individual 401(k) contribution limits, so you can save much more. You also are not subject to income limits that apply when funding a Roth I.R.A. the usual way, Ms. Brown said.
Ms. Brown offers this example: Assume you are 45, and your employer allows you to make pretax and after-tax contributions to your 401(k). You contribute the maximum pretax amount for the year ($18,000), and receive $7,000 in employer matching contributions (these vary by employer), for a total of $25,000. You can then contribute as much as $28,000 extra — up to the total contribution limit of $53,000 — on an after-tax basis.
Say you contribute that amount for five years, then leave the company. You would have $140,000 in after-tax contributions, which you would roll into a Roth I.R.A., tax-free. And the money would then grow tax-free. The remaining balance in your 401(k) rolls into a traditional I.R.A., where it remains tax-deferred until you withdraw it.
If, by comparison, you had put the maximum contribution into a Roth I.R.A., or a traditional I.R.A. that you converted to a Roth each year, you would have been able to contribute $5,500 a year at most, or $27,500 — far less than the after-tax approach, she noted.
There are some caveats, of course. For one, not all employers allow after-tax contributions to traditional 401(k) plans. About half of plans allow after-tax contributions, according to the benefits consultant Aon Hewitt, and about 6 percent of plan participants made such contributions in 2014.
Michael Kitces, a financial planner and director of research at the Pinnacle Advisory Group, has written about the subject on his blog. He said that with the after-tax approach, the money grows tax-deferred, rather than tax-free, until you actually leave the company and complete the rollovers. It may make the most sense to contribute now to a Roth I.R.A., he said, since that money would start growing tax-free immediately. Another good option, he advises, would be to contribute to a Roth 401(k), if available.
If you are fortunate enough to be able to max out your pretax contributions to a 401(k), as well as to maximize after-tax contributions to a Roth I.R.A., and still need somewhere to put extra money, then you may benefit from after-tax contributions, he said.
Brony
Footballguy
Binky The Doormat
Footballguy
You would put it in a Roth (if eligible) or regular IRA. In the regular IRA that after tax amount can be withdrawn with no taxes (after 59.5) - just pay taxes on the interest.
NutterButter
Footballguy
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