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Personal Finance Advice and Education! (1 Viewer)

Thank you. I just saw this for the Roth in my plan details:

Roth Contributions
Your plan permits Roth after-tax employee contributions. You may contribute a minimum of 1% and your total employee contributions (Roth after-tax and Traditional pre-tax deferrals combined) may not exceed $xxx annually ($xxx if you are at least age 50 and your plan has a catch-up feature). If permitted by your plan, you may be able to make additional catch-up contributions between the ages of 60 - 63. Annual limitations are set by the IRS and are subject to change.

Is this recommended here? I know no one knows my financial situation, but I am looking to save a bit more. Is the Roth a good conduit for this?

Edit: I just edited out the numbers, werent completely sure if they were particular to me or not

My personal rule of thumb is- add your marginal federal and state together. If under 20%, go Roth. If over 30%, go traditional. In the middle, more factors would need to come into play.
 
I am turning 50 this year. Am I eligible for the $7,500 Catch-up?

I will be maxing out my 401k contribution at $23.5. How does my employer match impact my total contribution?

In my 401k provider (Voya), I see an option for "Roth" next to my "Employee PreTax". Is this a 401k Roth, standard Roth, or something different? How does this work and what are the financial implications?

ty

Yes, you’re eligible for catch up in the year in which you turn 50.

Employer contribution (match) does not count against your $23.5k, or your catchup.

That’s Roth 401k. Explained a bit above.
 
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It sounds like I cant exceed 23.5+7.5 across both the 401k and Roth 401k? So if I max out 401k, then I cant touch Roth 401k. Correct?

Any benefit to splitting here? Is there a case where all of it should not go into a traditional 401k?

Correct on the first bit - across all 401k you can’t exceed 23.5+7.5k catchup. You can, though, potentially also do an individual Roth IRA (not tied to your employer) for another 7k this year, with an additional $1k catchup.

As for a benefit of splitting - maybe. Perhaps you do enough traditional to lower your marginal bracket from, for instance, 22 to 12% - then the rest in Roth. Takes a lot of math.
 
OK I have a SSI question for the experts here. I'm grappling with taking it now or waiting. Here's my situation I'm 67.5 yrs old, not married, good health & currently working at minimal stress free job I have well enough in brokerage accounts to retire ( but never think its enough 1.5 mil) mostly debt free. I'll make additional $230 per month till I reach 70 at yearly adjustments ($3,455 max). I'd like to quit work. Would you take now $2,900 per month or wait it out. This is a serious question but need a bit if prodding. My broker is says yes all day long. Thanks for the help
Also where do you find out break even calculation?
 
OK I have a SSI question for the experts here. I'm grappling with taking it now or waiting. Here's my situation I'm 67.5 yrs old, not married, good health & currently working at minimal stress free job I have well enough in brokerage accounts to retire ( but never think its enough 1.5 mil) mostly debt free. I'll make additional $230 per month till I reach 70 at yearly adjustments ($3,455 max). I'd like to quit work. Would you take now $2,900 per month or wait it out. This is a serious question but need a bit if prodding. My broker is says yes all day long. Thanks for the help
Also where do you find out break even calculation?

Not a full answer, but wouldn’t you get a bit more per month at 68, just a few months from now? If nothing g else, wait till then.
 
Those of you planning on starting SS at 62, I assume you will be fully retired without earned income?
If things go well, I’ll be using from 60-70 for massive Roth conversions. Max SS at 70 as a nice insurance policy.
Just looking at 65-70 since ideally 60-65 are the aca years so gotta keep that magi low low low.

Speaking as an insurance agent, if you’re u der 60 right now, I wouldn’t be planning with the above in mind. Stuff is going to change, perhaps drastically. The ACA (and its subsidies) are in effect today, but that might not be the case 2-3 years from now. 5-10+ years away is too far to be planning around it.
Absolutely. Nothing is in stone. All I do is plan based upon what I know now (whether its aca subsides, tax rates, ss benefits, etc) and adjust accordingly. There's a lot of wiggle room in my retirement plan.

I guess what I meant to say is that while of course there should always be room for change and adaptation - there are certain things that we can be extremely confident we’ll still have in 10-20 years when planning for one’s retirement. Things like a progressive tax system, a standard deduction, tax deductions, Medicare, some type/amount of social security. Then there are things we can be fairly confident of - tax free withdrawals from roth accounts and from HSA accounts for eligible expenses. There are things that may or may not still be around - like the ACA in its current form, and the subsidies for them. I have much less confidence in those for my planning than other things.
Is medicaid an option if aca subsidies go away or does the quality of care that comes with that something you really want to avoid? Obviously need to have enough non-taxable income to qualify and then to go through the usual analysis of the financial implications of taking such an approach.
 
OK I have a SSI question for the experts here. I'm grappling with taking it now or waiting. Here's my situation I'm 67.5 yrs old, not married, good health & currently working at minimal stress free job I have well enough in brokerage accounts to retire ( but never think its enough 1.5 mil) mostly debt free. I'll make additional $230 per month till I reach 70 at yearly adjustments ($3,455 max). I'd like to quit work. Would you take now $2,880 per month or wait it out. This is a serious question but need a bit if prodding. My broker is says yes all day long. Thanks for the help
Also where do you find out break even calculation?

Not a full answer, but wouldn’t you get a bit more per month at 68, just a few months from now? If nothing g else, wait till then.
Each month I wait I get delayed credit amount of approx $20 per month so at 68.5 next Jan it goes to about $3,100
 
Those of you planning on starting SS at 62, I assume you will be fully retired without earned income?
If things go well, I’ll be using from 60-70 for massive Roth conversions. Max SS at 70 as a nice insurance policy.
Just looking at 65-70 since ideally 60-65 are the aca years so gotta keep that magi low low low.

Speaking as an insurance agent, if you’re u der 60 right now, I wouldn’t be planning with the above in mind. Stuff is going to change, perhaps drastically. The ACA (and its subsidies) are in effect today, but that might not be the case 2-3 years from now. 5-10+ years away is too far to be planning around it.
Absolutely. Nothing is in stone. All I do is plan based upon what I know now (whether its aca subsides, tax rates, ss benefits, etc) and adjust accordingly. There's a lot of wiggle room in my retirement plan.

I guess what I meant to say is that while of course there should always be room for change and adaptation - there are certain things that we can be extremely confident we’ll still have in 10-20 years when planning for one’s retirement. Things like a progressive tax system, a standard deduction, tax deductions, Medicare, some type/amount of social security. Then there are things we can be fairly confident of - tax free withdrawals from roth accounts and from HSA accounts for eligible expenses. There are things that may or may not still be around - like the ACA in its current form, and the subsidies for them. I have much less confidence in those for my planning than other things.
Is medicaid an option if aca subsidies go away or does the quality of care that comes with that something you really want to avoid? Obviously need to have enough non-taxable income to qualify and then to go through the usual analysis of the financial implications of taking such an approach.

I mean, I guess, but Medicaid quality of care may leave a lot to be desired with many docs not accepting it. There would also be (under current rules) some financial hoops to jump through to qualify, and that’s assuming those rules don’t change. I could see some means based testing coming (asset based rather than income based).
 
OK I have a SSI question for the experts here. I'm grappling with taking it now or waiting. Here's my situation I'm 67.5 yrs old, not married, good health & currently working at minimal stress free job I have well enough in brokerage accounts to retire ( but never think its enough 1.5 mil) mostly debt free. I'll make additional $230 per month till I reach 70 at yearly adjustments ($3,455 max). I'd like to quit work. Would you take now $2,880 per month or wait it out. This is a serious question but need a bit if prodding. My broker is says yes all day long. Thanks for the help
Also where do you find out break even calculation?

Not a full answer, but wouldn’t you get a bit more per month at 68, just a few months from now? If nothing g else, wait till then.
Each month I wait I get delayed credit amount of approx $20 per month so at 68.5 next Jan it goes to about $3,100

Huh, I just learned something. I’d always assumed those delayed credits hit annually, not monthly. Thanks for that.

So if I understand your question - take $2,880 a month now (at 67.5). Or wait a year and get 3,100 (at 68.5). Or wait 2.5 years and get 3,455?

Takes 13 years to make up waiting a year. Takes 12.5 years to make up waiting 2.5 years. How long do you plan of living?
 
OK I have a SSI question for the experts here. I'm grappling with taking it now or waiting. Here's my situation I'm 67.5 yrs old, not married, good health & currently working at minimal stress free job I have well enough in brokerage accounts to retire ( but never think its enough 1.5 mil) mostly debt free. I'll make additional $230 per month till I reach 70 at yearly adjustments ($3,455 max). I'd like to quit work. Would you take now $2,880 per month or wait it out. This is a serious question but need a bit if prodding. My broker is says yes all day long. Thanks for the help
Also where do you find out break even calculation?

Not a full answer, but wouldn’t you get a bit more per month at 68, just a few months from now? If nothing g else, wait till then.
Each month I wait I get delayed credit amount of approx $20 per month so at 68.5 next Jan it goes to about $3,100

Huh, I just learned something. I’d always assumed those delayed credits hit annually, not monthly. Thanks for that.

So if I understand your question - take $2,880 a month now (at 67.5). Or wait a year and get 3,100 (at 68.5). Or wait 2.5 years and get 3,455?

Takes 13 years to make up waiting a year. Takes 12.5 years to make up waiting 2.5 years. How long do you plan of living?
Thats after FRA.
Health is good, parents lived to 90. Financially I'm OK, at least broker says. Your bump is 8% after FRA
 
OK I have a SSI question for the experts here. I'm grappling with taking it now or waiting. Here's my situation I'm 67.5 yrs old, not married, good health & currently working at minimal stress free job I have well enough in brokerage accounts to retire ( but never think its enough 1.5 mil) mostly debt free. I'll make additional $230 per month till I reach 70 at yearly adjustments ($3,455 max). I'd like to quit work. Would you take now $2,900 per month or wait it out. This is a serious question but need a bit if prodding. My broker is says yes all day long. Thanks for the help
Also where do you find out break even calculation?
If I didn't want to work, I'd definitely retire.

At $1.5m, a 5% withdrawal rate would be $75k/year, or $6,250/month. Is that enough for you? If so, you could quit and still wait on max SS. Or, take the $2,900 now and be at $9,150/month. Is $230/month in 2.5 years going to make a big difference to your month-to-month when you're already in the $9k range?
 
Those of you planning on starting SS at 62, I assume you will be fully retired without earned income?
If things go well, I’ll be using from 60-70 for massive Roth conversions. Max SS at 70 as a nice insurance policy.
Just looking at 65-70 since ideally 60-65 are the aca years so gotta keep that magi low low low.

Speaking as an insurance agent, if you’re u der 60 right now, I wouldn’t be planning with the above in mind. Stuff is going to change, perhaps drastically. The ACA (and its subsidies) are in effect today, but that might not be the case 2-3 years from now. 5-10+ years away is too far to be planning around it.
Absolutely. Nothing is in stone. All I do is plan based upon what I know now (whether its aca subsides, tax rates, ss benefits, etc) and adjust accordingly. There's a lot of wiggle room in my retirement plan.

I guess what I meant to say is that while of course there should always be room for change and adaptation - there are certain things that we can be extremely confident we’ll still have in 10-20 years when planning for one’s retirement. Things like a progressive tax system, a standard deduction, tax deductions, Medicare, some type/amount of social security. Then there are things we can be fairly confident of - tax free withdrawals from roth accounts and from HSA accounts for eligible expenses. There are things that may or may not still be around - like the ACA in its current form, and the subsidies for them. I have much less confidence in those for my planning than other things.
Is medicaid an option if aca subsidies go away or does the quality of care that comes with that something you really want to avoid? Obviously need to have enough non-taxable income to qualify and then to go through the usual analysis of the financial implications of taking such an approach.

I mean, I guess, but Medicaid quality of care may leave a lot to be desired with many docs not accepting it. There would also be (under current rules) some financial hoops to jump through to qualify, and that’s assuming those rules don’t change. I could see some means based testing coming (asset based rather than income based).
Yeah, the quality of care would be my concern. With private insurance ranging from 20-30k without subsidies for a couple, I might be willing to accept some inferior care.
 
Those of you planning on starting SS at 62, I assume you will be fully retired without earned income?
If things go well, I’ll be using from 60-70 for massive Roth conversions. Max SS at 70 as a nice insurance policy.
Just looking at 65-70 since ideally 60-65 are the aca years so gotta keep that magi low low low.

Speaking as an insurance agent, if you’re u der 60 right now, I wouldn’t be planning with the above in mind. Stuff is going to change, perhaps drastically. The ACA (and its subsidies) are in effect today, but that might not be the case 2-3 years from now. 5-10+ years away is too far to be planning around it.
Absolutely. Nothing is in stone. All I do is plan based upon what I know now (whether its aca subsides, tax rates, ss benefits, etc) and adjust accordingly. There's a lot of wiggle room in my retirement plan.

I guess what I meant to say is that while of course there should always be room for change and adaptation - there are certain things that we can be extremely confident we’ll still have in 10-20 years when planning for one’s retirement. Things like a progressive tax system, a standard deduction, tax deductions, Medicare, some type/amount of social security. Then there are things we can be fairly confident of - tax free withdrawals from roth accounts and from HSA accounts for eligible expenses. There are things that may or may not still be around - like the ACA in its current form, and the subsidies for them. I have much less confidence in those for my planning than other things.
Is medicaid an option if aca subsidies go away or does the quality of care that comes with that something you really want to avoid? Obviously need to have enough non-taxable income to qualify and then to go through the usual analysis of the financial implications of taking such an approach.

I mean, I guess, but Medicaid quality of care may leave a lot to be desired with many docs not accepting it. There would also be (under current rules) some financial hoops to jump through to qualify, and that’s assuming those rules don’t change. I could see some means based testing coming (asset based rather than income based).
Yeah, the quality of care would be my concern. With private insurance ranging from 20-30k without subsidies for a couple, I might be willing to accept some inferior care.

That’s unsubsidized with the ACA. If subsidies go away, the ACA itself might not be too far behind. Meaning carriers could again sell non ACA individual policies (rates based on health/pre existing conditions), and if healthy the rates could be half of what you stated.
 
Those of you planning on starting SS at 62, I assume you will be fully retired without earned income?
If things go well, I’ll be using from 60-70 for massive Roth conversions. Max SS at 70 as a nice insurance policy.
Just looking at 65-70 since ideally 60-65 are the aca years so gotta keep that magi low low low.

Speaking as an insurance agent, if you’re u der 60 right now, I wouldn’t be planning with the above in mind. Stuff is going to change, perhaps drastically. The ACA (and its subsidies) are in effect today, but that might not be the case 2-3 years from now. 5-10+ years away is too far to be planning around it.
Absolutely. Nothing is in stone. All I do is plan based upon what I know now (whether its aca subsides, tax rates, ss benefits, etc) and adjust accordingly. There's a lot of wiggle room in my retirement plan.

I guess what I meant to say is that while of course there should always be room for change and adaptation - there are certain things that we can be extremely confident we’ll still have in 10-20 years when planning for one’s retirement. Things like a progressive tax system, a standard deduction, tax deductions, Medicare, some type/amount of social security. Then there are things we can be fairly confident of - tax free withdrawals from roth accounts and from HSA accounts for eligible expenses. There are things that may or may not still be around - like the ACA in its current form, and the subsidies for them. I have much less confidence in those for my planning than other things.
Is medicaid an option if aca subsidies go away or does the quality of care that comes with that something you really want to avoid? Obviously need to have enough non-taxable income to qualify and then to go through the usual analysis of the financial implications of taking such an approach.

I mean, I guess, but Medicaid quality of care may leave a lot to be desired with many docs not accepting it. There would also be (under current rules) some financial hoops to jump through to qualify, and that’s assuming those rules don’t change. I could see some means based testing coming (asset based rather than income based).
Yeah, the quality of care would be my concern. With private insurance ranging from 20-30k without subsidies for a couple, I might be willing to accept some inferior care.

That’s unsubsidized with the ACA. If subsidies go away, the ACA itself might not be too far behind. Meaning carriers could again sell non ACA individual policies (rates based on health/pre existing conditions), and if healthy the rates could be half of what you stated.
That sounds good. I was thinking worst case $30k if the aca goes away but if you're saying it would just be $15k (maybe a $10k difference compared to the aca option), that's certainly easy to manage since its only just 5 years we're talking about. It would be nice not having to manipulate my taxable income to get these subsidies.
 
It sounds like I cant exceed 23.5+7.5 across both the 401k and Roth 401k? So if I max out 401k, then I cant touch Roth 401k. Correct?

Any benefit to splitting here? Is there a case where all of it should not go into a traditional 401k?

As a someone referenced there are actually multiple 401K limits. For 2025 those are:

Under 50 employee pre-tax and Roth contribution - $23,500
Including after-tax and employer contributions -$70,000
Ages 50-59 or 64+ employee "catch-up" contribution - an additional $7,500 on top of each of the above.
Ages 60-63 - catch-up contribution goes up to $11,250

Does your company offer after-tax contributions to a 401K with an in-plan Roth conversion? If you're looking to save more as you referenced and your plan offers it, you can max out a traditional 401K up to $31,000, then contribute up to another $39,000 (minus any employer contribution) after-tax. If your plan doesn't offer the in-plan Roth conversion I probably wouldn't bother, just save in a taxable brokerage account instead.
 
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Reactions: JAA
OK I have a SSI question for the experts here. I'm grappling with taking it now or waiting. Here's my situation I'm 67.5 yrs old, not married, good health & currently working at minimal stress free job I have well enough in brokerage accounts to retire ( but never think its enough 1.5 mil) mostly debt free. I'll make additional $230 per month till I reach 70 at yearly adjustments ($3,455 max). I'd like to quit work. Would you take now $2,900 per month or wait it out. This is a serious question but need a bit if prodding. My broker is says yes all day long. Thanks for the help
Also where do you find out break even calculation?
Is the $1.5M all in regular brokerage accounts or is some/all of it in traditional 401K or IRA?

How much do you need per month to cover your needs and wants?
 
Those of you planning on starting SS at 62, I assume you will be fully retired without earned income?
If things go well, I’ll be using from 60-70 for massive Roth conversions. Max SS at 70 as a nice insurance policy.
Just looking at 65-70 since ideally 60-65 are the aca years so gotta keep that magi low low low.

Speaking as an insurance agent, if you’re u der 60 right now, I wouldn’t be planning with the above in mind. Stuff is going to change, perhaps drastically. The ACA (and its subsidies) are in effect today, but that might not be the case 2-3 years from now. 5-10+ years away is too far to be planning around it.
Absolutely. Nothing is in stone. All I do is plan based upon what I know now (whether its aca subsides, tax rates, ss benefits, etc) and adjust accordingly. There's a lot of wiggle room in my retirement plan.

I guess what I meant to say is that while of course there should always be room for change and adaptation - there are certain things that we can be extremely confident we’ll still have in 10-20 years when planning for one’s retirement. Things like a progressive tax system, a standard deduction, tax deductions, Medicare, some type/amount of social security. Then there are things we can be fairly confident of - tax free withdrawals from roth accounts and from HSA accounts for eligible expenses. There are things that may or may not still be around - like the ACA in its current form, and the subsidies for them. I have much less confidence in those for my planning than other things.
Is medicaid an option if aca subsidies go away or does the quality of care that comes with that something you really want to avoid? Obviously need to have enough non-taxable income to qualify and then to go through the usual analysis of the financial implications of taking such an approach.

I mean, I guess, but Medicaid quality of care may leave a lot to be desired with many docs not accepting it. There would also be (under current rules) some financial hoops to jump through to qualify, and that’s assuming those rules don’t change. I could see some means based testing coming (asset based rather than income based).
Yeah, the quality of care would be my concern. With private insurance ranging from 20-30k without subsidies for a couple, I might be willing to accept some inferior care.

That’s unsubsidized with the ACA. If subsidies go away, the ACA itself might not be too far behind. Meaning carriers could again sell non ACA individual policies (rates based on health/pre existing conditions), and if healthy the rates could be half of what you stated.
That sounds good. I was thinking worst case $30k if the aca goes away but if you're saying it would just be $15k (maybe a $10k difference compared to the aca option), that's certainly easy to manage since its only just 5 years we're talking about. It would be nice not having to manipulate my taxable income to get these subsidies.

Well, I’m saying it could be 15k if carriers are able to go back to those types of policies, and you’re healthy enough to obtain those lower rates.
 
OK I have a SSI question for the experts here. I'm grappling with taking it now or waiting. Here's my situation I'm 67.5 yrs old, not married, good health & currently working at minimal stress free job I have well enough in brokerage accounts to retire ( but never think its enough 1.5 mil) mostly debt free. I'll make additional $230 per month till I reach 70 at yearly adjustments ($3,455 max). I'd like to quit work. Would you take now $2,900 per month or wait it out. This is a serious question but need a bit if prodding. My broker is says yes all day long. Thanks for the help
Also where do you find out break even calculation?
Is the $1.5M all in regular brokerage accounts or is some/all of it in traditional 401K or IRA?

How much do you need per month to cover your needs and wants?
79k IRA taking RMD currently. 60/40 stocks, annuity, the ira and 600k in liquid account earning 4% all in brokerage account. Forgot to mention no mortgage on a 500k home.
 
OK I have a SSI question for the experts here. I'm grappling with taking it now or waiting. Here's my situation I'm 67.5 yrs old, not married, good health & currently working at minimal stress free job I have well enough in brokerage accounts to retire ( but never think its enough 1.5 mil) mostly debt free. I'll make additional $230 per month till I reach 70 at yearly adjustments ($3,455 max). I'd like to quit work. Would you take now $2,900 per month or wait it out. This is a serious question but need a bit if prodding. My broker is says yes all day long. Thanks for the help
Also where do you find out break even calculation?
Is the $1.5M all in regular brokerage accounts or is some/all of it in traditional 401K or IRA?

How much do you need per month to cover your needs and wants?
79k IRA taking RMD currently. 60/40 stocks, annuity, the ira and 600k in liquid account earning 4% all in brokerage account. Forgot to mention no mortgage on a 500k home.
Retire now.

Imho

Adding more :)
Do you want to travel a lot in retirement (even 1 big trip a year)? If so, definitely retire while you’re “young” and healthy. I’ve seen too many relatives quickly downturn in health and mobility in their mid-70s, so I don’t plan on taking that chance and I’m personally targeting a retirement age of 63 (I’m 57 now). My wife and I want to downsize, kids will be young/mid 20s at that point, and we want to travel.
 
OK I have a SSI question for the experts here. I'm grappling with taking it now or waiting. Here's my situation I'm 67.5 yrs old, not married, good health & currently working at minimal stress free job I have well enough in brokerage accounts to retire ( but never think its enough 1.5 mil) mostly debt free. I'll make additional $230 per month till I reach 70 at yearly adjustments ($3,455 max). I'd like to quit work. Would you take now $2,900 per month or wait it out. This is a serious question but need a bit if prodding. My broker is says yes all day long. Thanks for the help
Also where do you find out break even calculation?
Is the $1.5M all in regular brokerage accounts or is some/all of it in traditional 401K or IRA?

How much do you need per month to cover your needs and wants?
79k IRA taking RMD currently. 60/40 stocks, annuity, the ira and 600k in liquid account earning 4% all in brokerage account. Forgot to mention no mortgage on a 500k home.
Retire now.

Imho

Adding more :)
Do you want to travel a lot in retirement (even 1 big trip a year)? If so, definitely retire while you’re “young” and healthy. I’ve seen too many relatives quickly downturn in health and mobility in their mid-70s, so I don’t plan on taking that chance and I’m personally targeting a retirement age of 63 (I’m 57 now). My wife and I want to downsize, kids will be young/mid 20s at that point, and we want to travel.
Thanks for the input. My biggest concern is the 1.5 enough. If I sell the home and downsize to smaller I could probably add another 200k to that amount.
 
OK I have a SSI question for the experts here. I'm grappling with taking it now or waiting. Here's my situation I'm 67.5 yrs old, not married, good health & currently working at minimal stress free job I have well enough in brokerage accounts to retire ( but never think its enough 1.5 mil) mostly debt free. I'll make additional $230 per month till I reach 70 at yearly adjustments ($3,455 max). I'd like to quit work. Would you take now $2,900 per month or wait it out. This is a serious question but need a bit if prodding. My broker is says yes all day long. Thanks for the help
Also where do you find out break even calculation?
Is the $1.5M all in regular brokerage accounts or is some/all of it in traditional 401K or IRA?

How much do you need per month to cover your needs and wants?
79k IRA taking RMD currently. 60/40 stocks, annuity, the ira and 600k in liquid account earning 4% all in brokerage account. Forgot to mention no mortgage on a 500k home.
Retire now.

Imho

Adding more :)
Do you want to travel a lot in retirement (even 1 big trip a year)? If so, definitely retire while you’re “young” and healthy. I’ve seen too many relatives quickly downturn in health and mobility in their mid-70s, so I don’t plan on taking that chance and I’m personally targeting a retirement age of 63 (I’m 57 now). My wife and I want to downsize, kids will be young/mid 20s at that point, and we want to travel.
Thanks for the input. My biggest concern is the 1.5 enough. If I sell the home and downsize to smaller I could probably add another 200k to that amount.
Where do you live?

I live in the SF Bay Area so 1.5 isn’t enough :)
 
An article I posted on Linkedin and my socials on the BRRRR Method and thought some might find it interesting/helpful.
The BRRRR method—Buy, Rehab, Rent, Refinance, Repeat—has gained popularity among real estate investors as a way to build wealth by recycling investment capital. This method enables investors to scale their portfolios while creating steady streams of passive income. To succeed, however, it is essential to understand the intricacies of mortgage lending, which is central to each step of the process. Let’s dive into how the BRRRR strategy works and explore the financing options available at every stage.
1. Buy: Acquiring the Right Property
To begin, your focus is on finding a property that offers room for improvement and value growth. Ideal candidates are often distressed homes, foreclosures, or fixer-uppers that can be purchased below market value. When evaluating properties, it is important to focus on high-demand rental areas and calculate the Loan-to-Value (LTV) ratio. This ensures that the combined costs of purchase and rehab do not exceed 70-75% of the property’s post-renovation value. The goal is to build equity from the outset by selecting properties with significant appreciation potential. The 70-75% is important as these are the maximum LTV's allowed on cash out refinancing on investment properties for conventional loans. 75% for 1 unit and 70% for 2-4 units.
To finance the purchase, investors have several options. Conventional loans offer competitive interest rates and will require 15-25% down payment for investment properties based on units. Hard money loans are a popular choice for distressed properties due to their quick approval process, though they come with higher interest rates and shorter repayment terms. FHA 203(k) and conventional rehab loans provide a unique option by combining purchase and renovation costs, but they are limited to owner-occupied properties. Further, there are non-QM loans available that specialize in this area that may be available.
The FHA 203(k) program has specific requirements. Eligible properties include one- to four-unit residential homes, certain condominiums, mixed-use buildings (with restrictions), and manufactured homes that meet FHA criteria. While these loans are exclusively for primary residences, they come in two forms: Limited 203(k) loans for minor improvements and Standard 203(k) loans for larger projects requiring a HUD-approved consultant. Renovation funds are held in escrow and disbursed as work progresses, and all improvements must meet FHA minimum property standards.
2. Rehab: Adding Value to the Property
Renovating the property is a crucial step in the BRRRR process, as it increases the property’s value and prepares it for rental. Common upgrades include modernizing kitchens and bathrooms, replacing flooring, and addressing structural issues. Successful renovations depend on adhering to a strict budget and timeline while prioritizing improvements that yield the highest return on investment, such as energy-efficient upgrades and enhanced curb appeal.
Investors can finance renovations in several ways. Hard money loans often cover both purchase and rehab costs, though they require strict oversight and phased funding. For those using their own funds, cash or savings eliminate borrowing costs but reduce liquidity for future investments. Along with FHA203(k), conventional rehab loans, such as Fannie Mae’s HomeStyle Renovation or Freddie Mac’s CHOICERenovation mortgages, are excellent options as they allow financing for both purchase and renovation. These loans are available primary residences, second homes, and even investment properties. For example, Fannie Mae’s program permits one-unit investment properties, while Freddie Mac’s requires primary residences to be occupied within 60 days of the final renovation disbursement. Alternatively, experienced investors may use a Home Equity Line of Credit (HELOC) on an existing property to finance improvements.
3. Rent: Generating Cash Flow
Once renovations are complete, renting out the property generates income to cover mortgage payments, property expenses, and potentially provide positive cash flow. Securing reliable tenants is essential, which makes thorough tenant screening a critical step. Pricing rent competitively ensures consistent occupancy, while professional property management can help streamline operations for investors managing multiple properties.
When applying for future loans, rental income plays a significant role in qualifying. Lenders typically consider 75% of the gross rental income to account for potential vacancies and expenses. Accurate documentation, such as signed lease agreements and rental history, is necessary to demonstrate income reliability.
4. Refinance: Unlocking Your Equity
Refinancing is the linchpin of the BRRRR method, allowing investors to recover their initial investment and reinvest in new opportunities. This step involves replacing short-term financing with a long-term loan and pulling out a portion of the property’s equity. The amount that may be accessed will vary depending on the property, loan program and lender. It is important to discuss with your lender the plan with refinancing out of the property’s post-renovation value to be clear on what you can and can not do. Keep in mind, not all lenders are equal and mortgage brokers typically have the most flexibility by accessing multiple lenders to best suit your needs.
Cash-out refinancing is a common choice, enabling investors to withdraw equity as cash while securing competitive interest rates. With rentals, another option is the Debt Service Coverage Ratio (DSCR) loan, which is tailored for income-generating properties. Unlike traditional loans, DSCR loans focus on the property’s rental income rather than the borrower’s personal income. These loans are often easier on the borrower as documentation is lessened by not providing personal W2's, 1099's and tax returns. The ability to lend is unlocked as your personal income and liabilities are not taken into consideration.
5. Repeat: Scaling Your Portfolio
The final step is to reinvest the equity extracted during refinancing into another property, repeating the process to scale your portfolio. To avoid over-leveraging, it’s essential to maintain healthy debt-to-income ratios and diversify your investments across different property types or locations. Staying informed about market trends and rental demand ensures that each new investment contributes to long-term financial growth.
The Benefits and Challenges of the BRRRR Method
The BRRRR method offers significant advantages. By recycling your capital, you can grow your portfolio rapidly while increasing equity through strategic renovations. Rental properties generate ongoing passive income and offer valuable tax benefits, including deductions for expenses and depreciation.
However, challenges remain. The high costs associated with hard money loans can erode profits if refinancing is delayed. Market fluctuations may impact property values or rental demand, while unexpected renovation costs can reduce returns. Additionally, some lenders’ seasoning requirements may tie up your capital longer than anticipated.
Make Financing Work for You
The BRRRR method is a powerful strategy for ambitious real estate investors, but its success depends on careful planning and informed financing decisions. By leveraging tools such as FHA 203(k) loans, conventional rehab loans, cash-out refinancing, and DSCR loans, you can navigate each stage of the process effectively. With a clear understanding of mortgage options and a commitment to disciplined execution, the BRRRR method can help you build a profitable real estate portfolio and achieve long-term financial freedom.
 
OK I have a SSI question for the experts here. I'm grappling with taking it now or waiting. Here's my situation I'm 67.5 yrs old, not married, good health & currently working at minimal stress free job I have well enough in brokerage accounts to retire ( but never think its enough 1.5 mil) mostly debt free. I'll make additional $230 per month till I reach 70 at yearly adjustments ($3,455 max). I'd like to quit work. Would you take now $2,900 per month or wait it out. This is a serious question but need a bit if prodding. My broker is says yes all day long. Thanks for the help
Also where do you find out break even calculation?
SSI benefits are actuarily equal at all ages. I'd totally pull the plug. Time is your most valuable resource.
 
SSI benefits are actuarily equal at all ages
love seeing it put like this.

thanks
I'll add an addendum - it's actuarily equal per individual. If you're married the interplay between the two people along with spousal benefits and survivor benefits may definitely tilt the results in a specific direction. For a single person, though, it's a pretty straight up problem.
 
I have a tax question which I think I know but looking for confirmation: I have an inherited IRA which needs to be drained over the ten years after it was inherited. For 2024, I withdrew as much as I thought I could while still remaining in the 12% tax bracket. But it turns out that I still have a little room, and could take another chunk while still being at the 12% rate (which I don't mind paying now.) The issue is that it is February 2025. Is it allowable to take a distribution from an inherited IRA in early 2025 but have it count towards the 2024 tax bill? I think the answer is no, but wanted to be sure.
 
I have a tax question which I think I know but looking for confirmation: I have an inherited IRA which needs to be drained over the ten years after it was inherited. For 2024, I withdrew as much as I thought I could while still remaining in the 12% tax bracket. But it turns out that I still have a little room, and could take another chunk while still being at the 12% rate (which I don't mind paying now.) The issue is that it is February 2025. Is it allowable to take a distribution from an inherited IRA in early 2025 but have it count towards the 2024 tax bill? I think the answer is no, but wanted to be sure.
I agree with no.
 
I have a tax question which I think I know but looking for confirmation: I have an inherited IRA which needs to be drained over the ten years after it was inherited. For 2024, I withdrew as much as I thought I could while still remaining in the 12% tax bracket. But it turns out that I still have a little room, and could take another chunk while still being at the 12% rate (which I don't mind paying now.) The issue is that it is February 2025. Is it allowable to take a distribution from an inherited IRA in early 2025 but have it count towards the 2024 tax bill? I think the answer is no, but wanted to be sure.
I agree with no.
I have no clue but it would surprise me on a withdrawal. It’s not the same as giving people time to make contributions to an IRA and get tax credit for the prior year.
 
I have a tax question which I think I know but looking for confirmation: I have an inherited IRA which needs to be drained over the ten years after it was inherited. For 2024, I withdrew as much as I thought I could while still remaining in the 12% tax bracket. But it turns out that I still have a little room, and could take another chunk while still being at the 12% rate (which I don't mind paying now.) The issue is that it is February 2025. Is it allowable to take a distribution from an inherited IRA in early 2025 but have it count towards the 2024 tax bill? I think the answer is no, but wanted to be sure.
It is a no. Because one issue that pops up is if someone dies in late December without having taken their RMD yet for the year, the heir has to scramble to get it done by 12/31 and may not even know it.
 
I finally convinced my MIL that she should stop paying a Fidelity advisor to manage her IRA and let me do it instead of paying some robo-advisor 2% every year.

Any advice on an easy asset allocation for an 80 year old with a modest sum in an IRA? She gets RMD every month.
 
I finally convinced my MIL that she should stop paying a Fidelity advisor to manage her IRA and let me do it instead of paying some robo-advisor 2% every year.

Any advice on an easy asset allocation for an 80 year old with a modest sum in an IRA? She gets RMD every month.

In general I'd keep it simple with a few ETFs, this should get updated again soon but it's a good starting point for best-in-class ETFs. But what the allocation is (stocks, bonds, alts, etc) depends on a bunch of things starting with her expenses and other income (SS, annuities, pension). What's the plan for LTC if needed? Paid off house or other assets?

If all of her expenses are met by guaranteed income sources you can be more aggressive in the IRA, but you might not need to. If those RMDs are a crucial part of her ability to live, you probably want to be pretty conservative.

I'd also be curious what Fidelity already had her in.
 
I finally convinced my MIL that she should stop paying a Fidelity advisor to manage her IRA and let me do it instead of paying some robo-advisor 2% every year.

Any advice on an easy asset allocation for an 80 year old with a modest sum in an IRA? She gets RMD every month.
A divorce is in the balance. Don't screw up.
 
starting with her expenses and other income (SS, annuities, pension). What's the plan for LTC if needed? Paid off house or other assets?
She lives with us. No other assets than this modest IRA. She contributes the RMD + SS check to the household expenses. My wife and I handle all her finances now. We are committed to taking care of her for the remainder of her years. If she lives long enough, the IRA will run dry, but she's not drawing it down much right now.
 
I finally convinced my MIL that she should stop paying a Fidelity advisor to manage her IRA and let me do it instead of paying some robo-advisor 2% every year.

Any advice on an easy asset allocation for an 80 year old with a modest sum in an IRA? She gets RMD every month.

In general I'd keep it simple with a few ETFs, this should get updated again soon but it's a good starting point for best-in-class ETFs. But what the allocation is (stocks, bonds, alts, etc) depends on a bunch of things starting with her expenses and other income (SS, annuities, pension). What's the plan for LTC if needed? Paid off house or other assets?

If all of her expenses are met by guaranteed income sources you can be more aggressive in the IRA, but you might not need to. If those RMDs are a crucial part of her ability to live, you probably want to be pretty conservative.

I'd also be curious what Fidelity already had her in.
You can't set up automatic RMDs with ETFs. I'd go mutual fund equivalent for that reason.
 
I finally convinced my MIL that she should stop paying a Fidelity advisor to manage her IRA and let me do it instead of paying some robo-advisor 2% every year.

Any advice on an easy asset allocation for an 80 year old with a modest sum in an IRA? She gets RMD every month.
Love this. “MIL, you don’t need to pay 2% to Fidelity when I can do it better for free”. FFA, what should I do?
 
I finally convinced my MIL that she should stop paying a Fidelity advisor to manage her IRA and let me do it instead of paying some robo-advisor 2% every year.

Any advice on an easy asset allocation for an 80 year old with a modest sum in an IRA? She gets RMD every month.
Love this. “MIL, you don’t need to pay 2% to Fidelity when I can do it better for free”. FFA, what should I do?
I am sure he has a pretty good idea of what to do but is just putting in extra work to make sure he is doing the best with it.
 
You can't set up automatic RMDs with ETFs. I'd go mutual fund equivalent for that reason.
Interesting, is that true across platforms? I know with Fidelity you couldn't do automated investing in ETFs and you had to use MFs in the past. But that's not the case anymore. Curious if it's the same for RMDs.

I'd also think unless you had all of your investments in one fund or held enough cash at all times to cover the RMD, you wouldn't necessarily want to automate it but be able to choose which fund to sell to take the RMD. But I'm over 20 years away from RMDs so obviously don't know the details of how the transactions actually occur or the options one has.
 
You can't set up automatic RMDs with ETFs. I'd go mutual fund equivalent for that reason.
Interesting, is that true across platforms? I know with Fidelity you couldn't do automated investing in ETFs and you had to use MFs in the past. But that's not the case anymore. Curious if it's the same for RMDs.

I'd also think unless you had all of your investments in one fund or held enough cash at all times to cover the RMD, you wouldn't necessarily want to automate it but be able to choose which fund to sell to take the RMD. But I'm over 20 years away from RMDs so obviously don't know the details of how the transactions actually occur or the options one has.
I don’t know but I’d think M1 lets you automate with ETFs.
 
You can't set up automatic RMDs with ETFs. I'd go mutual fund equivalent for that reason.
Interesting, is that true across platforms? I know with Fidelity you couldn't do automated investing in ETFs and you had to use MFs in the past. But that's not the case anymore. Curious if it's the same for RMDs.

I'd also think unless you had all of your investments in one fund or held enough cash at all times to cover the RMD, you wouldn't necessarily want to automate it but be able to choose which fund to sell to take the RMD. But I'm over 20 years away from RMDs so obviously don't know the details of how the transactions actually occur or the options one has.
I thought it was that way everywhere, but not sure.
 
I finally convinced my MIL that she should stop paying a Fidelity advisor to manage her IRA and let me do it instead of paying some robo-advisor 2% every year.

Any advice on an easy asset allocation for an 80 year old with a modest sum in an IRA? She gets RMD every month.
Love this. “MIL, you don’t need to pay 2% to Fidelity when I can do it better for free”. FFA, what should I do?
Just wanted some other inputs. Their returns weren't great IMO and I felt they were overly complicated to seem like they were "doing things". A simpler approach would probably yield similar results but not have to pay 2% to do it.
 
I finally convinced my MIL that she should stop paying a Fidelity advisor to manage her IRA and let me do it instead of paying some robo-advisor 2% every year.

Any advice on an easy asset allocation for an 80 year old with a modest sum in an IRA? She gets RMD every month.
Love this. “MIL, you don’t need to pay 2% to Fidelity when I can do it better for free”. FFA, what should I do?
Just wanted some other inputs. Their returns weren't great IMO and I felt they were overly complicated to seem like they were "doing things". A simpler approach would probably yield similar results but not have to pay 2% to do it.

Seems like keeping the next few years in short term bonds or MM would be appropriate then. That's not going to give you a "great" return, but not sure why you're focused on that with money that's coming out in the next 1-2-3 years. But hell, losing the 2% fee and having it in a Fidelity MM currently paying 4.02% you might be better off than you were.

Or, as it seems like from above you're effectively taking responsibility for her care, you can invest it however you would if it was your money. The RMD aspect complicates that a bit, but depending on how important that contribution is to your household budget you could be more aggressive. Pick an allocation, 70/30, 60/40, whatever, and pick a couple of ETFs to accomplish it.

What would I do? Probably something like a Golden Butterfly. A bunch of other portfolios on that site here.
 
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What would I do? Probably something like a Golden Butterfly. A bunch of other portfolios on that site here.
Eh - we've talked about this one. I don't believe the smooth return profile of this extrapolated into the future. It just doesn't pass the smell test. And the return profile on commodities over the years is awful. Something like the Coffeehouse one is probably more realistic and a better long term choice. All IMO, of course.
 
What would I do? Probably something like a Golden Butterfly. A bunch of other portfolios on that site here.
Eh - we've talked about this one. I don't believe the smooth return profile of this extrapolated into the future. It just doesn't pass the smell test. And the return profile on commodities over the years is awful. Something like the Coffeehouse one is probably more realistic and a better long term choice. All IMO, of course.
“Believe” and “smell test” don’t show up in most of the research I read ;).

I was using that as an example with a link to multiple portfolios to explore. My own goal portfolio for decumulation will be closer to a Golden Ratio with 10-15% gold. But hey, a 60/40 or coffeehouse are totally reasonable, too, and more mainstream if that’s your thing.

I totally get many people want nothing to do with any commodities, even gold. So pick a portfolio that you’re comfortable with and, most importantly, can stick with.
 
What would I do? Probably something like a Golden Butterfly. A bunch of other portfolios on that site here.
Eh - we've talked about this one. I don't believe the smooth return profile of this extrapolated into the future. It just doesn't pass the smell test. And the return profile on commodities over the years is awful. Something like the Coffeehouse one is probably more realistic and a better long term choice. All IMO, of course.
“Believe” and “smell test” don’t show up in most of the research I read ;).

I was using that as an example with a link to multiple portfolios to explore. My own goal portfolio for decumulation will be closer to a Golden Ratio with 10-15% gold. But hey, a 60/40 or coffeehouse are totally reasonable, too, and more mainstream if that’s your thing.

I totally get many people want nothing to do with any commodities, even gold. So pick a portfolio that you’re comfortable with and, most importantly, can stick with.
Core four here for decumulation. Other than the bonds and I’ll need to double our REITs, we’re basically there now.
  • 48% Domestic Stocks
  • 24% International Stocks
  • 20% Intermediate Bonds
  • 8% REITs
 
What would I do? Probably something like a Golden Butterfly. A bunch of other portfolios on that site here.
Eh - we've talked about this one. I don't believe the smooth return profile of this extrapolated into the future. It just doesn't pass the smell test. And the return profile on commodities over the years is awful. Something like the Coffeehouse one is probably more realistic and a better long term choice. All IMO, of course.
“Believe” and “smell test” don’t show up in most of the research I read ;).

I was using that as an example with a link to multiple portfolios to explore. My own goal portfolio for decumulation will be closer to a Golden Ratio with 10-15% gold. But hey, a 60/40 or coffeehouse are totally reasonable, too, and more mainstream if that’s your thing.

I totally get many people want nothing to do with any commodities, even gold. So pick a portfolio that you’re comfortable with and, most importantly, can stick with.
Core four here for decumulation. Other than the bonds and I’ll need to double our REITs, we’re basically there now.
  • 48% Domestic Stocks
  • 24% International Stocks
  • 20% Intermediate Bonds
  • 8% REITs
Makes sense to me!
 
What would I do? Probably something like a Golden Butterfly. A bunch of other portfolios on that site here.
Eh - we've talked about this one. I don't believe the smooth return profile of this extrapolated into the future. It just doesn't pass the smell test. And the return profile on commodities over the years is awful. Something like the Coffeehouse one is probably more realistic and a better long term choice. All IMO, of course.
“Believe” and “smell test” don’t show up in most of the research I read ;).

I was using that as an example with a link to multiple portfolios to explore. My own goal portfolio for decumulation will be closer to a Golden Ratio with 10-15% gold. But hey, a 60/40 or coffeehouse are totally reasonable, too, and more mainstream if that’s your thing.

I totally get many people want nothing to do with any commodities, even gold. So pick a portfolio that you’re comfortable with and, most importantly, can stick with.
Core four here for decumulation. Other than the bonds and I’ll need to double our REITs, we’re basically there now.
  • 48% Domestic Stocks
  • 24% International Stocks
  • 20% Intermediate Bonds
  • 8% REITs
This is more what I was thinking for her. Her money will keep her going until it runs out. She can't be too conservative with it IMO. Last year after management fees, the return was near 5%. That's pretty poor when all domestic stock market indices were at near record growth rates and interest rates are above 4%.
 

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