-OZ-
Footballguy
In this case, the Army provided term while in service. I’m not sure if you’d consider that stacking terms.
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Personal Finance Advice and Education! (3 Viewers)
- Thread starter No. 16
- Start date
The Z Machine
Footballguy
Speaking of life insurance policies... Is it easy to increase the policy amount? $1m in 2013 aint the same in 2024
NutterButter
Footballguy
But add in the additional retirement savings and your beneficiary will be better off than they would've been in 2013. At least that's how I look at it.
The_Man
Footballguy
I'm age 55 and have 100% of our retirement funds in an S&P 500 Index Fund (which is where they have been for like 25 years)
What's a sensible allocation at this point? Like keep 70% where it is, then 20% somewhere else and 10% in bonds or something safe?
Meanwhile, S&P up another 0.6% this morning
-OZ-
Footballguy
I’m 7 years younger and almost 100% equities (we’ll have $40k in I bonds by the end of the year) basically 30% non-US, 40% large cap US (S&P 500), 30% us small cap. I say basically because I use a 10% delta before rebalancing.
You might want more bonds if you’re within 5-7 years of retirement. We’ll be moving to 10% bonds 5 years out, up to 25% as we enter retirement. At least that’s the plan today.
matttyl
Footballguy
Depends on the carrier/policy - however every carrier will have you go back through the underwriting process.
Desert_Power
Footballguy
How far are you off to retirement? Is it all literally in 401ks or some IRAs in the mix?
The_Man
Footballguy
7 to 10 years probably
100% is in 403b with our current employer (75%) or former employer (25% - through Fidelity)
I have very high risk tolerance but want to be smart. Maybe shift 10% or something to 2034 target date retirement fund?
-OZ-
Footballguy
I personally don’t like lifecycle funds, although the company matters. I’d just add fixed income / make your own lifecycle fund.
NutterButter
Footballguy
Duck provided this link not too long ago. You can play around with different asset allocations to see how they'll perform based on history.
SFBayDuck
Footballguy
How long until retirement is one factor. How well-funded are you for your retirement is another. You can be 10 years from retirement but already have "enough", or you can be 1 year away and still be underfunded. Two very different scenarios.
Shifting a little to a target date fund won't actually change your asset allocation much. As an example I checked out a Vanguard 2035 fund, and it currently holds 30% in bonds. So if you put 10% in that, your overall allocation would be 97% equities and 3% bonds. Not moving the needle much. If you want bonds, just buy a bond fund (my preference is a US treasury fund like TLT instead of a total bond index, as it's less correlated with equities, but YMMV). Plus, that lets you control the allocation and provides more potential opportunities for rebalancing that you can control.
There are countless ways you can structure your portfolio allocation (here are 150 of them!). But if you are on track with your retirement savings and are 7-10 years, it's worth considering taking a little risk off the table by doing something like shifting to 10-15% bonds. Others would say you should already be at 30% or more in bonds. I'd say it's also very reasonable to stay in 100% S&P until you are about 5 years out. The "correct answer" for you is going to be coming up with an asset allocation plan you can stick to....and sticking to it.
Speaking of life insurance, was just notified that my 20 year term will expire next August. I will be 51.
My girls are 21 and 18.
Initial coverage was meant to pay off home, pay for two quality educations and make sure the misses was given a great head start without me.
So now what? Term rates will be greatly increased. I do have a policy through work that is one year of pay. Not bad but would like to supplement a bit more.
My girls are 21 and 18.
Initial coverage was meant to pay off home, pay for two quality educations and make sure the misses was given a great head start without me.
So now what? Term rates will be greatly increased. I do have a policy through work that is one year of pay. Not bad but would like to supplement a bit more.
-OZ-
Footballguy
What would happen if you died?
Are your wife and kids able to manage financially without your income? Close to it? If there’s a gap between what your assets / investments can cover and their needs, that’s your life insurance needs.
Your kids might not be a factor at 18 and 21, but you might want to cover college and beyond.
NutterButter
Footballguy
I told my kids they have 2 years of life insurance left to knock me off if they want to maximize their inheritance. If you don't hear from me again after that window closes, you can suspect foul play. Ha.
Juxtatarot
Footballguy
I’m 90% equity (mostly index), 10% cash at 54. I don’t plan to ever change that. The plan though is to live off investment returns perpetually at retirement which might be as soon as next year (although probably not). If spending habits increase or we have a severe bear market, my plans might change but whatever. I’ll make it through.
matttyl
Footballguy
Kinda reminds me of a (fictional) story that an older life agent told us younger guys at a sales class one day. A husband and wife were out at dinner at a fancy place one night celebrating. He leans over and tells her how much he loves her and so on, yada yada, and then states that his large life insurance policy expires the next day.
Lots of factors and you'll probably get a variety of responses. Mine would be on the conservative side which is to estimate how much your family would need if you were to pass suddenly. Even if that number is zero, if it was me, I'd probably buy a new term life policy to get me to 62 or 65 so that social security would kick in at that point. I know I'd sleep easier with an extra safety net and they're not all that expensive even at 51.
SFBayDuck
Footballguy
Interesting topic, as I haven't ever had any life insurance other than what I get through work which has typically been 2-3 of times my annual salary. But once I retire, I'll have to consider if I need to purchase my own.
The overlap with social security adds another layer. Part of planning is modeling out what happens when two players becomes one when a spouse dies. If both of you were receiving SS you lose one payment (even though that one, via survivor benefit, might be increased). Plus you go from Married Filing Jointly to Single tax status, so your brackets go up and standard deduction goes down. And your expenses aren't getting cut in half with those unless you downsize your housing to match.
Trust me, my expenses would be cut by far more than half if my wife died first.
matttyl
Footballguy
You can get a 10 year term to get you over the timeline hump. I’d be happy to run some quotes for you that you can shop against.
SFBayDuck
Footballguy
I was married to a shopper/spender. Was.
matttyl
Footballguy
Likely a dumb question, but I’ll ask anyway.
When I was a kid my great grandfather gifted me some stock. It’s had a dividend paid each and every quarter. It’s also appreciated. Each year for the past 30+ years I’ve received a 1099-DIV for the less than $100 dividend, so I haven’t really thought much about it - it’s really just been a bit of taxable income each year.
In an effort to simplify my life I’m thinking of just selling it, but I’m unsure of the tax implications. I honestly don’t know how much the original gift was, and I doubt I can come up with 30+ years of 1099s to show that I’ve already paid taxes on a large part of the gain. Is all that info kept at the brokerage? Will I only receive a 1099 for my true actual gain?
When I was a kid my great grandfather gifted me some stock. It’s had a dividend paid each and every quarter. It’s also appreciated. Each year for the past 30+ years I’ve received a 1099-DIV for the less than $100 dividend, so I haven’t really thought much about it - it’s really just been a bit of taxable income each year.
In an effort to simplify my life I’m thinking of just selling it, but I’m unsure of the tax implications. I honestly don’t know how much the original gift was, and I doubt I can come up with 30+ years of 1099s to show that I’ve already paid taxes on a large part of the gain. Is all that info kept at the brokerage? Will I only receive a 1099 for my true actual gain?
Sand
Footballguy
FINRA says "The bottom line is that the IRS expects you to maintain records that identify the cost basis of your securities. If you don't have adequate records, you might have to rely on the cost basis that your brokerage firm reports—or you may be required to treat the cost basis as zero, which could mean owing more in taxes."
Tax basis of zero is the easiest way out of it - IRS will always accept that with no complaint. If your brokerage has anything in there for basis that is better than zero. If it's paper certificates you can try to call the company's investor services and see if they can look up the certs and get you a date on when they were bought and what the stock price was on that day.
Peggy
Footballguy
Yeah, I didn't know how to reply to a 30+ year possibly paper note. I think the laws are written like that for that purpose. Now days it's all done by computer, I wouldn't know where to start other than relying on the brokerage firm. Especially in retirement accounts, all types of contributions mixed together. When I do a rollover it takes them a day or two to sort it all out in the background.
Sand
Footballguy
So it's all been dividend reinvested over the years? That makes for a zillion purchase points. In that case relying on whatever the brokerage has for you is the only way to go. Or use zero as the basis.
A retirement account would have been a blessing here as you don't have to worry about basis at all there. It's either tax free (Roth) or regular income (traditional) when you take it out.
matttyl
Footballguy
Yes, it has been. As a child, my parents did my taxes so I had no idea. Once I started doing my own my folks would send me the 1099-dog each year, and it was always small so I did t worry much about it. When I asked what it was about they said something my g-grandfather left me and to just save it. Given that it’s not only appreciated in actual stock price, but also spit out a dividend every quarter like clockwork (that’s been reinvested), it’s done pretty well, it’s just not a huge sum. I’ll see what I can dig up in my records or from brokerage and go from there.
-OZ-
Footballguy
Right, although I’m not sure how a traditional IRA would help here. Income would be taxed higher than capital gains and he wouldn’t have had the income tax benefit originally. He probably didn’t have reportable income anyway.
Sand
Footballguy
From a pain in the *** factor it's way easier. From a money point of view maybe not so much.
Dan Lambskin
Footballguy
Question: my niece received a high 5 figure life insurance payment
She has little to no debt, trying to figure out what the best way for her to invest it
She’s 26, works retail, not a great job by any means but enough to get by
Told her to keep like $10K (maybe more) for emergency savings
What should she do with the rest? Preferably something she can access fairly easily if she she needs to but still earn a decent return.
She has little to no debt, trying to figure out what the best way for her to invest it
She’s 26, works retail, not a great job by any means but enough to get by
Told her to keep like $10K (maybe more) for emergency savings
What should she do with the rest? Preferably something she can access fairly easily if she she needs to but still earn a decent return.
Nugget
Footballguy
3 months emergency fund+7K Roth 2024 + 7K Roth 2025. Remainder depends on timeframe (car, house, college debt, kids?). If it is flexible toss it in a low cost ETF in a brokerage account.
Sand
Footballguy
Open a Fidelity, etc. account and get the 10k into a money market account to get the 4.5% for the emergency fund. For the rest it's always hard to be specific without timelines, etc, but something like 60% IVV, 40% BND is a reasonable allocation. Very conservative for someone her age for long term savings, but without knowing risk tolerance and timeline it's a good standard type allocation.
Dan Lambskin
Footballguy
Thanks
Car is in good shape, might need some repairs but nothing crazy
My mom owns the house, there is still a mortgage on it, but I don’t think paying down the house would make sense. Im not positive on remaining mortgage but I don’t think it’s a lot
No college / no kids
Also assume she’s gonna have to pay some taxes on it unless that was already deducted im not sure
Sand
Footballguy
As always get a tax pro to advise, but in general life insurance payouts aren't taxable, at least federally. If there is interest accrued on the payout that part is.
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matttyl
Footballguy
As stated by Sand, life insurance proceeds are tax free (as you can’t really deduct the premiums). If the payment has garnered interest since the I shred’s passing, though, that interest is taxable.
-life insurance agent
Yo Mama
Footballguy
Question for our financial experts - love all the incredible knowledge shared here and in the retirement thread.
At my work at my current level, I have an option for deferred compensation (pre-tax). I don’t do too huge of a percentage yet while we help pay down the kids’ college loans, but I need to select a distribution option. I might defer more a couple years from now. The fund is treated like my 401k where I choose investment funds and it can grow or shrink with the market.
My current plan is to work at my current level for 3-5 more years and then look to downgrade jobs/pay for another 3 years or so to get me to retirement.
Here are my options:
1) Lump sum upon separation. This was my original selection with the thinking I use it to pay off any remaining debt and/or invest, but this would probably have the highest tax hit.
B) Upon separation, distribute the payment across the next 5-10 years. This might be interesting to set up some annual payments (paid quarterly) to help offset potential lower income when I downgrade from my current job level. With the amounts I’m deferring, I doubt it moves the needle too much from a tax bracket perspective.
iii) 5 or 10 years after separation, receive either a lump sum or 5-10 year distributions. This would give me the biggest potential tax savings to defer things until when I’m fully retired, but this income might slightly impact Roth conversions or Medicare earnings. I could set this up like a mini pension this way.
Am I overthinking things and should just keep selecting the lump sum payment upon separation? As a FBG, my retirement savings is in good shape so this doesn’t really impact my retirement timeline. Just curious on any thoughts or strategies.
Thanks in advance.
At my work at my current level, I have an option for deferred compensation (pre-tax). I don’t do too huge of a percentage yet while we help pay down the kids’ college loans, but I need to select a distribution option. I might defer more a couple years from now. The fund is treated like my 401k where I choose investment funds and it can grow or shrink with the market.
My current plan is to work at my current level for 3-5 more years and then look to downgrade jobs/pay for another 3 years or so to get me to retirement.
Here are my options:
1) Lump sum upon separation. This was my original selection with the thinking I use it to pay off any remaining debt and/or invest, but this would probably have the highest tax hit.
B) Upon separation, distribute the payment across the next 5-10 years. This might be interesting to set up some annual payments (paid quarterly) to help offset potential lower income when I downgrade from my current job level. With the amounts I’m deferring, I doubt it moves the needle too much from a tax bracket perspective.
iii) 5 or 10 years after separation, receive either a lump sum or 5-10 year distributions. This would give me the biggest potential tax savings to defer things until when I’m fully retired, but this income might slightly impact Roth conversions or Medicare earnings. I could set this up like a mini pension this way.
Am I overthinking things and should just keep selecting the lump sum payment upon separation? As a FBG, my retirement savings is in good shape so this doesn’t really impact my retirement timeline. Just curious on any thoughts or strategies.
Thanks in advance.
Peggy
Footballguy
All things equal I'd leave it deferred as long as possible, where you're still in charge of investing it, and then do roll overs into roth* during retirement at the lowest tax bracket possible. This is 100% tax avoidance game you're playing with deferred compensation. If you can take some during option B) that keeps you from jumping up to the next tax bracket that wouldn't be a bad idea either.
* I'm assuming it's within the rules to roll over deferred compensation into a roth retirement account. It should be.
Yo Mama
Footballguy
Makes sense - thanks for the input.
Peggy
Footballguy
Is he interested in learning about investing?
All About Asset Allocation by Richard Ferri. When they're young though it doesn't hurt too much to mess around and buy a couple individual stocks and learn the hard way too.
Assuming he has job of some sort with earned income and that's where that came from, should consider a Roth IRA. That's a lot of years of tax deferred growth and no taxes on withdrawal they could take advantage of if college aged.
opensourcebeer
Footballguy
A couple of anecdotes regarding my recent interactions with Fidelity.
I've had multiple retirement accounts, their credit card, and a brokerage account with them for a while. I've been using my brokerage account as a short term savings account for various home improvement projects (roof, siding, windows) with SPAXX as the core position. Lately I've noticed they are placing unbelievably long holds (30+ days) on deposits (in my case, an electronic pull from my B&M national bank) into the brokerage account with the funds available to trade, but not withdraw in the usual 3 to 5 days. I researched this a bit; bogleheads forums indicate a lot Fidelity users are experiencing the same thing and apparently it's Fidelity's reaction to some kind of on going scam. IMO it's a terrible situation to not being able to withdraw your money in a timely manner if needed.
I also worked with my adult daughter to get her the Fidelity CC and open a Roth account . Even after providing all the needed documentation, it took a couple of months and multiple calls to get them to allow her to deposit to her new Roth account from her B&M CU....and she still can't use the Roth account as an account for her CC rewards to be paid to.
To be honest it's really left a sour taste in my mouth. I was strongly considering using my brokerage account or opening a cash management account to handle the stuff I currently do with my bank....after these experiences....no way in **ll.
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NutterButter
Footballguy
Someone is finally getting an HSA. Can I get a hallelujah?
matttyl
Footballguy
Most powerful financial vehicle out there if used properly.
NutterButter
Footballguy
Now I just need a pension and I can be as cool as the rest of you
Hmm... given the issues with Fidelity, anyone else know of a good brokerage that can do HSA rolloevers? Doesn't look like Schwab or a number of other bigger players do them. Was going to go with Fidelity
matttyl
Footballguy
No pension here.
NutterButter
Footballguy
From my brief research, it looks like Fidelity is the best option for a provider that has low fees and good investment options. I'd love to hear where everyone else has their money parked.
I have Avidia Bank. It was one of the only options through my employer. I am happy with them and the investment options.
