Personal Finance Advice and Education! (8 Viewers)

[Sand]

Seems like a lot of money for something you can really do yourself (with help from here or Bogleheads if needed).  

Then again if he absolutely hates the thought of taking that on .5% is lots less than other places charge.  Unless they make it up by trying to put him into ridiculously expensive investments.

 

[ZenMaster]

Not a bad plan at all.  That's a reasonable cost to have someone do a deep dive into your situation.  I'd be interested in what their notes to you are.

I'm curious as well. We have to pull together all of our information for the meeting next Friday. They also offer asset management but for a 1% fee so I declined. He laughed and said he knew I'd be a hard sell when I mentioned Vanguard. 

I'll update after we meet with him next week.

 

[Judge Smails]

We're meeting with a planner next week and the fee is $1200. The initial meeting will be a full financial review - assets, liabilities, life insurance, will (we have one), retirement plan. It does not include asset management but we have access to him for a year to review plan, etc.

Since we're planning to retire early - hopefully in two years - we thought it would be a good idea to have an independent observer look at our plans to make sure we didn't miss anything or if there was something we didn't think about.

hmmm. Now I'm thinking about this and want to get more quotes.  Came across this article.  Says 80% of the time a plan should $1,800 to $2,400.  And a check up from time to time is up to you, but you may not need it if you stay the original course.  Amount of money managed is not really relevant.

http://www.hullfinancialplanning.com/how-much-should-a-financial-planner-cost/

 

[-OZ-]

hmmm. Now I'm thinking about this and want to get more quotes.  Came across this article.  Says 80% of the time a plan should $1,800 to $2,400.  And a check up from time to time is up to you, but you may not need it if you stay the original course.  Amount of money managed is not really relevant.

http://www.hullfinancialplanning.com/how-much-should-a-financial-planner-cost/

Has anyone here used his site - myfinancialanswers? 

 

[Random]

Has anyone used a website to set up a trust and do estate planning?  Suze Orman offers this for $250.

 

[wilked]

I'm at a point where I would like an outside person take a look at my investments and make sure that I'm not doing anything too stupid.  Is it best to work with outside financial planner, or if I have free services available from my investment outfit, should I use them?  I'm planning on doing some intro discussions with both, but just curious if there are some pifalls I need to watch out for.  I'd prefer to keep my $ where it's at (T. Rowe Price) - not because I think they are better, but I don't want to go through a big hassle just to land in a similar spot in another investment house.

I will do it for free

PM if you want a good review

 

[wilked]

Has anyone used a website to set up a trust and do estate planning?  Suze Orman offers this for $250.

No one can do a good trust for $250.  It's basic math, unless they value their time at $5-10/hr, in which case they are worthless

 

[Random]

No one can do a good trust for $250.  It's basic math, unless they value their time at $5-10/hr, in which case they are worthless

Actually you're missing the website part where 100's or 1,000s would use it.  So it would look more like $500-$1000/hr, minimum.

Math lesson aside, this is what I'm talking about.  Guess its only $90.  My guess is that its more like a template I would fill in, not Suze actually spending 20 hours putting it together.

http://www.suzeorman.com/books-kits/collections-and-kits/must-have-documents/

 

[RUSF18]

Actually you're missing the website part where 100's or 1,000s would use it.  So it would look more like $500-$1000/hr, minimum.

Math lesson aside, this is what I'm talking about.  Guess its only $90.  My guess is that its more like a template I would fill in, not Suze actually spending 20 hours putting it together.

http://www.suzeorman.com/books-kits/collections-and-kits/must-have-documents/

I'm very pro-"do it yourself" when it comes to finances but if I needed those services there is no chance I'd be looking to skimp. Get a few references from people you trust, talk to them to get a feel for things, and then you can take fees into account when comparing. 

 

[Random]

I'm very pro-"do it yourself" when it comes to finances but if I needed those services there is no chance I'd be looking to skimp. Get a few references from people you trust, talk to them to get a feel for things, and then you can take fees into account when comparing. 

Yes, me too.  And I honestly dont know anyone with a trust (that I know of).  So I'm wondering for those with one, is this just a fill in the blank type document?  if not, what else is there to it?

 

[Sand]

Amount of money managed is not really relevant.

...unless you're Chet.  

 

[PinkydaPimp]

Yes, me too.  And I honestly dont know anyone with a trust (that I know of).  So I'm wondering for those with one, is this just a fill in the blank type document?  if not, what else is there to it?

If there is a trust involved things can get super complicated.  My mother had one but due to her diligent estate planning things were much easier when she passed.  Estate planning is something that you dont want to skimp on like @RUSF18 said. 

As for the trust i think it depends on the type of trust and how complicated it is but its not(at least in my case) a fill in the blank type document. 

 

[Brony]

I'm currently doing a will and trust through a legal firm that specializes in this (referred by a friend who's an attorney).  FWIW, the cost I was quoted:

Will only: $900

Will + Trust: $1,800

Both my attorney friend and the legal firm advocated for the trust to ensure that things are handled more effectively and easily when I'm 6 feet under and that's the direction we're going (legal-wise)

 

[Brony]

While doing the will and Power of Attorney, it is thought-provoking.  I've always been in the don't-resuscitate camp, but then when you're forced to choose an option that you have to "live with", it's not as simple as choosing a topping at Chipotle.  

 

[Random]

While doing the will and Power of Attorney, it is thought-provoking.  I've always been in the don't-resuscitate camp, but then when you're forced to choose an option that you have to "live with", it's not as simple as choosing a topping at Chipotle.  

We have started our will and poa (diy) numerous times.  Always getting hung up on who gets our kids if we both go while they are still young.  I hate spending so much time thinking and debating about something that has a .00001% chance of happening.

 

[wilked]

That said, I think it is the minority of people who actually need a trust.  

For most people, simple Beneficiaries take care of most of it.  Add on the usual basic docs (will, health care proxy, POA, etc) and you are done.  

I expect as we get older we may need a trust, but for the foreseeable future (10 years) no need

 

[Brony]

That said, I think it is the minority of people who actually need a trust.  

For most people, simple Beneficiaries take care of most of it.  Add on the usual basic docs (will, health care proxy, POA, etc) and you are done.  

I expect as we get older we may need a trust, but for the foreseeable future (10 years) no need

I just did whatever one allows me to put in a clause where my kids have to do some big hurdle to earn their inheritance like learn to juggle flames or do a good deed every day for a year.   80's TV and movies made it seem like this was an important thing to consider. 

 

[Random]

That said, I think it is the minority of people who actually need a trust.  

For most people, simple Beneficiaries take care of most of it.  Add on the usual basic docs (will, health care proxy, POA, etc) and you are done.  

I expect as we get older we may need a trust, but for the foreseeable future (10 years) no need

Agree.  But in the mean time, would a $90 DIY trust be better than no trust?

 

[Instinctive]

Agree.  But in the mean time, would a $90 DIY trust be better than no trust?

I wouldn't think so. Set up wrong, you may end up putting the assets out of reach of the people you want to benefit.

 

[Rick James]

Any thoughts on pulling Roth contributions out in order to hit a 20% down payment for a house? I feel like my wife and I are in great shape with our accounts -- about $140k between the two of us, both 32 years old. Would it be a huge mistake to take 25k out for a house (combined with our current savings)?

 

[Binky The Doormat]

Any thoughts on pulling Roth contributions out in order to hit a 20% down payment for a house? I feel like my wife and I are in great shape with our accounts -- about $140k between the two of us, both 32 years old. Would it be a huge mistake to take 25k out for a house (combined with our current savings)?




 

Why do you have to have 20% down on the house these days?  I would keep hammering the Roth.

 

[wilked]

I wouldn't think so. Set up wrong, you may end up putting the assets out of reach of the people you want to benefit.

Agreed.  You could well do more damage then good

 

[wilked]

Any thoughts on pulling Roth contributions out in order to hit a 20% down payment for a house? I feel like my wife and I are in great shape with our accounts -- about $140k between the two of us, both 32 years old. Would it be a huge mistake to take 25k out for a house (combined with our current savings)?

How long does it take you to save $25K?  Is that 1 year?  2 Years?  6 months?

 

[Rick James]

Why do you have to have 20% down on the house these days?  I would keep hammering the Roth.

Just to avoid PMI I suppose.

 

[Steve Tasker]

Agree.  But in the mean time, would a $90 DIY trust be better than no trust?

Probably not, imo.

 

[Rick James]

How long does it take you to save $25K?  Is that 1 year?  2 Years?  6 months?

Roughly 6-8 months. Our lease is up in December. I was going to extend one more year but the landlord is going to sell the place so we might have to move. That's put us on an accelerated schedule to save up for a house. 

Cash flow is very good. We only have 10k saved up now because we use most of our spare cash to pay down student loans. We could have a total of about 40k saved up by December. That's 20% on a 200k house. We live in and around Atlanta so that doesn't buy much.

 

[Sand]

Just to avoid PMI I suppose.

PMI is a pretty big expense.  If your PMI payment is $100 a month then you're getting about 5% return per year on the Roth monies removed.  That's not horrible.  I'd probably lean toward keeping the money in the tax shelter as it compounds much quicker there, but depending on the details it's worth considering.

 

[Gawain]

What's the minimum amount where a trust can be worthwhile? My mom is 75 and currently doesn't have a will. I'm her only kid. Her parents died intestate and she is planning to do the same. Likely has 300k of assets and doesn't spend more than her SS and a small pension per month. She is still working and mentioned delaying retirement again.

I have a wife and daughter. Want to make sure that if I die before my mom she passes to my kid. But if intestate and kid is still a minor, doesn't a trust have to be established?

 

[wilked]

Roughly 6-8 months. Our lease is up in December. I was going to extend one more year but the landlord is going to sell the place so we might have to move. That's put us on an accelerated schedule to save up for a house. 

Cash flow is very good. We only have 10k saved up now because we use most of our spare cash to pay down student loans. We could have a total of about 40k saved up by December. That's 20% on a 200k house. We live in and around Atlanta so that doesn't buy much.

401K loan would be preferable to Roth loan.  401K loan you can replenish, Roth you cannot

I would say your decision is this:

1. Go with an 80/10/10 loan.  Might be a bit higher of a rate but you might be surprised that it is not much.  You can always refi later

2. 401K loan - before you do you need to be reasonably certain your job won't change in the next year, and need to have an emergency plan in case you lose the job and the balance comes due (in this case I would think the Roth would be that plan)

I personally find Roth space MUCH too valuable to rob for a house

 

[Rick James]

401K loan would be preferable to Roth loan.  401K loan you can replenish, Roth you cannot

I would say your decision is this:

1. Go with an 80/10/10 loan.  Might be a bit higher of a rate but you might be surprised that it is not much.  You can always refi later

2. 401K loan - before you do you need to be reasonably certain your job won't change in the next year, and need to have an emergency plan in case you lose the job and the balance comes due (in this case I would think the Roth would be that plan)

I personally find Roth space MUCH too valuable to rob for a house

Thanks I will explore these. One question - the largest portion of my wife's retirement is in a Roth 401k. Would this change your advice at all? 

 

[-OZ-]

We have started our will and poa (diy) numerous times.  Always getting hung up on who gets our kids if we both go while they are still young.  I hate spending so much time thinking and debating about something that has a .00001% chance of happening.

If it helps, the chances are at least double that. 

 

[Binky The Doormat]

Thanks I will explore these. One question - the largest portion of my wife's retirement is in a Roth 401k. Would this change your advice at all? 

I wouldn't, except for that giving me a woody.  

 

[BeTheMatch]

401K loan would be preferable to Roth loan.  401K loan you can replenish, Roth you cannot

I would say your decision is this:

1. Go with an 80/10/10 loan.  Might be a bit higher of a rate but you might be surprised that it is not much.  You can always refi later

2. 401K loan - before you do you need to be reasonably certain your job won't change in the next year, and need to have an emergency plan in case you lose the job and the balance comes due (in this case I would think the Roth would be that plan)

I personally find Roth space MUCH too valuable to rob for a house

Not a big fan of the "you can always refi later" advice.

 

[mquinnjr]

I wouldn't, except for that giving me a woody.  

I'm slowly converting my max out from traditional to Roth, holding the take-home budget steady. We also have a defined benefit pension, I'm never leaving my job even if it means I'm a Sr. Analyst in my 50's, or they freeze the pension accruals.

 

[Binky The Doormat]

I'm slowly converting my max out from traditional to Roth, holding the take-home budget steady. We also have a defined benefit pension, I'm never leaving my job even if it means I'm a Sr. Analyst in my 50's, or they freeze the pension accruals.




 

Do you work for a utility?

 

[mquinnjr]

Do you work for a utility?

FP&A in Healthcare.

 

[wilked]

Thanks I will explore these. One question - the largest portion of my wife's retirement is in a Roth 401k. Would this change your advice at all? 

No, principles still hold 

 

[Sand]

I wouldn't, except for that giving me a woody.  

A Roth 401k isn't the best retirement vehicle, so maybe just half a woody?

 

[Binky The Doormat]

I wouldn't, except for that giving me a woody.  

A Roth 401k isn't the best retirement vehicle, so maybe just half a woody?




 

Her money is already there and not taxable.  We aren't talking about saving strategies.  

What I wouldn't give to have most of my money in Roth accounts and not have to pay taxes on it when I get it out.  

 

[mquinnjr]

Her money is already there and not taxable.  We aren't talking about saving strategies.  

What I wouldn't give to have most of my money in Roth accounts and not have to pay taxes on it when I get it out.  

That's my thought too. If you can afford to forego the tax savings of a traditional 401k now in your take-home monthly budget and feel that your tax rate will rise as you advance in your career as earnings go up coincidentally, why not go Roth 401k? 

 

[eoMMan]

That's my thought too. If you can afford to forego the tax savings of a traditional 401k now in your take-home monthly budget and feel that your tax rate will rise as you advance in your career as earnings go up coincidentally, why not go Roth 401k? 

Well, if you're older and in your prime earning years now....and there's a good chance your retirement age tax bracket will be lower...

You're better with a traditional IRA or 401k and take the tax deduction now..

 

[Doctor Detroit]

That's my thought too. If you can afford to forego the tax savings of a traditional 401k now in your take-home monthly budget and feel that your tax rate will rise as you advance in your career as earnings go up coincidentally, why not go Roth 401k? 

Well, if you're older and in your prime earning years now....and there's a good chance your retirement age tax bracket will be lower...

You're better with a traditional IRA or 401k and take the tax deduction now..

This is where the rubber meets the road.  A few folks I know have asked my for advice recently and they prefer Roth, but their situation dictates traditional because they are teetering on the tax rate border.  What people need to do is understand that they should contribute just enough to traditional to stay in their current tax bracket, not got all Roth 401k because it'll be tax free upon withdrawal.  The gubment is going to get your taxes, today or tomorrow and for those of us with ascending careers and many years left of earning, it usually is beneficial to use the traditional and pay the taxes later.  If you are loaded now or are going to receive a substantial windfall via family down the road, then Roth makes sense.  Makes sense if you are under 30 and so far away from retirement that you have no idea what tax bracket you might be in. 

I'm fighting off a tax bracket change myself, but know that I'll be in this tax bracket or lower when I retire.  So I put it all in traditional, although I still fund my Roth IRA (have been since it was created). 

 

[NutterButter]

This is where the rubber meets the road.  A few folks I know have asked my for advice recently and they prefer Roth, but their situation dictates traditional because they are teetering on the tax rate border.  What people need to do is understand that they should contribute just enough to traditional to stay in their current tax bracket, not got all Roth 401k because it'll be tax free upon withdrawal.  The gubment is going to get your taxes, today or tomorrow and for those of us with ascending careers and many years left of earning, it usually is beneficial to use the traditional and pay the taxes later.  If you are loaded now or are going to receive a substantial windfall via family down the road, then Roth makes sense.  Makes sense if you are under 30 and so far away from retirement that you have no idea what tax bracket you might be in. 

I'm fighting off a tax bracket change myself, but know that I'll be in this tax bracket or lower when I retire.  So I put it all in traditional, although I still fund my Roth IRA (have been since it was created). 

What's the big deal about a tax bracket change?  Aren't you just paying that new tax rate on the money you earn in that tax bracket range as its a graduated system?  Its not like you going from paying one rate on all your money to the next rate on all your money.   

 

[Doctor Detroit]

This is where the rubber meets the road.  A few folks I know have asked my for advice recently and they prefer Roth, but their situation dictates traditional because they are teetering on the tax rate border.  What people need to do is understand that they should contribute just enough to traditional to stay in their current tax bracket, not got all Roth 401k because it'll be tax free upon withdrawal.  The gubment is going to get your taxes, today or tomorrow and for those of us with ascending careers and many years left of earning, it usually is beneficial to use the traditional and pay the taxes later.  If you are loaded now or are going to receive a substantial windfall via family down the road, then Roth makes sense.  Makes sense if you are under 30 and so far away from retirement that you have no idea what tax bracket you might be in. 

I'm fighting off a tax bracket change myself, but know that I'll be in this tax bracket or lower when I retire.  So I put it all in traditional, although I still fund my Roth IRA (have been since it was created). 

What's the big deal about a tax bracket change?  Aren't you just paying that new tax rate on the money you earn in that tax bracket range as its a graduated system?  Its not like you going from paying one rate on all your money to the next rate on all your money.   

Because you can't predict future tax rates, so you play the game for what it is now.  Why would I pay 5% more in taxes now if I don't have to?  Also the whole thing with people thinking the Roth exemption will eventually be stripped when the government needs money, and they tax you twice.  It's the whole bird in the hand is better analogy. 

 

[eoMMan]

I'm a big fan of doing both Roth and traditional, if you can. This will give you a lot of flexibility come retirement time.

 

[NutterButter]

Because you can't predict future tax rates, so you play the game for what it is now.  Why would I pay 5% more in taxes now if I don't have to?  Also the whole thing with people thinking the Roth exemption will eventually be stripped when the government needs money, and they tax you twice.  It's the whole bird in the hand is better analogy. 

I was just talking about you saying you were fighting off a tax bracket change as if that was a bad thing in and of itself.   If that's not what you were saying, then never mind.  

 

[ghostguy123]

I'm a big fan of doing both Roth and traditional, if you can. This will give you a lot of flexibility come retirement time.

I would think this would make the most sense.  You can draw a lower tax bracket amount out of the traditional, then use the Roth if you need extra funds. 

 

[rascal]

My plan is to hedge my bet on both scenarios as I don't know what to expect in the future.  I'm 37 years old and have $225K in a traditional 401(k).  Last year I started putting my 13% (including employeer) into roth 401(k).  My plan is to build that up to about the same amount and then re-evaluate my scenario.  My $.0000002.

 

[Binky The Doormat]

My plan is to hedge my bet on both scenarios as I don't know what to expect in the future.  I'm 37 years old and have $225K in a traditional 401(k).  Last year I started putting my 13% (including employeer) into roth 401(k).  My plan is to build that up to about the same amount and then re-evaluate my scenario.  My $.0000002.




 

Sounds great!  I think the roth max is $5.5K/yr though isn't it?  If so, you can max out your regular 401K and then move to your Roth IRA.  

 

[mquinnjr]

This is where the rubber meets the road.  A few folks I know have asked my for advice recently and they prefer Roth, but their situation dictates traditional because they are teetering on the tax rate border.  What people need to do is understand that they should contribute just enough to traditional to stay in their current tax bracket, not got all Roth 401k because it'll be tax free upon withdrawal.  The gubment is going to get your taxes, today or tomorrow and for those of us with ascending careers and many years left of earning, it usually is beneficial to use the traditional and pay the taxes later.  If you are loaded now or are going to receive a substantial windfall via family down the road, then Roth makes sense.  Makes sense if you are under 30 and so far away from retirement that you have no idea what tax bracket you might be in. 

I'm fighting off a tax bracket change myself, but know that I'll be in this tax bracket or lower when I retire.  So I put it all in traditional, although I still fund my Roth IRA (have been since it was created). 

Yeah my pension payments will be all taxable ordinary income, so I'm building Roth to split the difference down the road as if I end up a lifer at my company (I'll 10 times out of 10 concede jumping for promotions just to keep my current benefits), just the pension ordinary income will take me through brackets replacing ~60% of my income. I think the point here is every situation is different, so plan as best you can. No one has a magic wand and can call it exactly, do what fits you best and is effectively a hedge. Do you. 

ETA: Also consider in retirement any opportunity to be in a tax bracket with favorable capital gains tax treatment/rates is