The “I want to retire soon” thread (1 Viewer)

[-OZ-]

401k conversion to Roth between ages 55 and 59.5

As long as it's a direct conversion without taxes being held no penalty right? And this has to be allowed by your employer's plan?

That sounds right. I think you can even have the taxes held from the conversion - but don’t. Pay the taxes with other money.

FWIW, I can’t convert while still working and get a better pension at 60 or 62 than if I left earlier. We’ll use our traditional funds in our 60s before collecting SS. We only have slightly over half a million in traditional accounts right now, probably 1.5 - 2 at retirement (12-15 years away). I suppose we could convert some during those ten years but we’ll see what makes sense during our go go years.

 

[Peggy]

401k conversion to Roth between ages 55 and 59.5

As long as it's a direct conversion without taxes being held no penalty right? And this has to be allowed by your employer's plan?

That sounds right. I think you can even have the taxes held from the conversion - but don’t. Pay the taxes with other money.

Right. I think if you withhold taxes that amount gets hit with the 10% penalty.

 

[-OZ-]

401k conversion to Roth between ages 55 and 59.5

As long as it's a direct conversion without taxes being held no penalty right? And this has to be allowed by your employer's plan?

That sounds right. I think you can even have the taxes held from the conversion - but don’t. Pay the taxes with other money.

Right. I think if you withhold taxes that amount gets hit with the 10% penalty.

I’m Not Sure If It does but even if it didn’t, that’s money you’re taking from your Roth IRA.

 

[NutterButter]

Speaking of Roth IRAs, had a productive couple days:

1. Filed delinquent 8606s for me and my wife for 2018 and 2019
2. Funded Traditional IRAs for each of us for $7k for this year, after tax
3. Converted to Roth IRA funds
4. Made a reminder for every week starting 3rd week of Jan to include an 8606 for each of us with tax return for this year

I remember getting that lovely letter from the IRS a couple of years after doing my first conversion. Its pretty remarkable that you even have to submit that. They have or can get all the info from the IRA provider.

 

[Sand]

*I think there is actually another 5-year rule for inherited Roths, but obviously that's not in play here and I don't really know what that one refers to.

I don't know of a 5 year rule here, just the 10 year rule now in place (that the IRS has made hideously complicated).

get the RMDs down into the lowest tax bracket possible. That's what I plan to do.

Makes sense. Not an option for us
Although we’ll probably stay in the 22% (if rates don’t revert)

Let's all cry a river for the guy with a federal pension.

 

[matttyl]

*I think there is actually another 5-year rule for inherited Roths, but obviously that's not in play here and I don't really know what that one refers to.

I don't know of a 5 year rule here, just the 10 year rule now in place (that the IRS has made hideously complicated).

get the RMDs down into the lowest tax bracket possible. That's what I plan to do.

Makes sense. Not an option for us
Although we’ll probably stay in the 22% (if rates don’t revert)

Let's all cry a river for the guy with a federal pension.

You just have to fully liquidate all funds from an inherited IRA (either Roth or traditional) within 10 years of the year following the death of the original owner, right?

Gets complicated if the original owner needed to take RMDs.

 

[-OZ-]

Let's all cry a river for the guy with a federal pension

Two pensions.

Of course that comes with being underpaid for my careers.

 

[Sand]

*I think there is actually another 5-year rule for inherited Roths, but obviously that's not in play here and I don't really know what that one refers to.

I don't know of a 5 year rule here, just the 10 year rule now in place (that the IRS has made hideously complicated).

get the RMDs down into the lowest tax bracket possible. That's what I plan to do.

Makes sense. Not an option for us
Although we’ll probably stay in the 22% (if rates don’t revert)

Let's all cry a river for the guy with a federal pension.

You just have to fully liquidate all funds from an inherited IRA (either Roth or traditional) within 10 years of the year following the death of the original owner, right?

Gets complicated if the original owner needed to take RMDs.

The IRS just issued final rules for this. I've just seen a few articles about how complicated they are. It doesn't affect me, luckily.

 

[SFBayDuck]

I don't know of a 5 year rule here, just the 10 year rule now in place (that the IRS has made hideously complicated).

Found it - there is/was a 5-year rule for people who died before 2020, so some people are still working within that framework. For people who died 2020 and after it's now a 10-year rule (and yes they just, after several years, released updated guidance on that in the past few weeks).

 

[Sand]

I don't know of a 5 year rule here, just the 10 year rule now in place (that the IRS has made hideously complicated).

Found it - there is/was a 5-year rule for people who died before 2020, so some people are still working within that framework. For people who died 2020 and after it's now a 10-year rule (and yes they just, after several years, released updated guidance on that in the past few weeks).

That 5 year rule made no sense unless it was tiny. In general it was always very advantageous to use your own life expectancy in these.

 

[ConstruxBoy]

Let's all cry a river for the guy with a federal pension

Two pensions.

Of course that comes with being underpaid for my careers.

So you were reincarnated?!? What was it like?

 

[-OZ-]

Let's all cry a river for the guy with a federal pension

Two pensions.

Of course that comes with being underpaid for my careers.

So you were reincarnated?!? What was it like?

Well yeah but that’s a whole different story.
Military to civ.

 

[Orange&Blue]

just found out wife is in a family trust and will get $2k/month indefinitely. retirement just got closer.

With pension, I'm sitting at 57% of my salary without social or 401(k). Add in 401(k) in at current value (32% of which is in roth accounts), assume a 4% withdraw rate, and I'm at 85% of my current salary.

Retiring at 60 for sure. Just 16 more years.

 

[Gally]

just found out wife is in a family trust and will get $2k/month indefinitely. retirement just got closer.

When does that start? If it starts now, just pump all that into an investment and that 16 years can drop drastically.

 

[Orange&Blue]

just found out wife is in a family trust and will get $2k/month indefinitely. retirement just got closer.

When does that start? If it starts now, just pump all that into an investment and that 16 years can drop drastically.

not for a while

 

[Sand]

just found out wife is in a family trust and will get $2k/month indefinitely. retirement just got closer.

When does that start? If it starts now, just pump all that into an investment and that 16 years can drop drastically.

not for a while

Still, that's like getting another SS payment. Pretty awesome.

 

[Sand]

Interesting graph on how retirement cohorts have been working. Moral of the story - don't retire in 2000.

https://cdn.imgpile.com/f/Gyow71.png

 

[Desert_Power]

Interesting graph on how retirement cohorts have been working. Moral of the story - don't retire in 2000.

https://cdn.imgpile.com/f/Gyow71.png

I know a couple of folks that are in that 2021-2022 scenario. Not bad, but not ideal.

 

[SayWhat?]

Interesting graph on how retirement cohorts have been working. Moral of the story - don't retire in 2000.

https://cdn.imgpile.com/f/Gyow71.png

Don’t retire in 2000…but if you do, just don’t be 100% in stocks.

 

[-OZ-]

just don’t be 100% in stocks.

Good advice when you retire for any year.

 

[Steve Tasker]

Interesting graph on how retirement cohorts have been working. Moral of the story - don't retire in 2000.

https://cdn.imgpile.com/f/Gyow71.png

I'm not entirely sure I understand this graph, but if I am reading it correctly, people who retired in the year 2000 with this hypothetical portfolio have maybe 5 years of spending left in their accounts as we sit here today? It's clearly a worse result than the other scenarios here, but if you retired in 2000 at age 60 let's say, you're 84 now. 5-ish years of spending left in the accounts might not be untenable. Father Time is undefeated.

 

[jamny]

In working with various calculators and worksheets, there isn't always an option to include a spouse's age and SS start date. I know firecalc does. But something like the Variable Percentage Withdrawal worksheet does not. Do you just use the youngest age of the 2 in a calculation? My wife is 6 years younger so it does skew things a bit.

nm...just saw this in the link I provided: for a couple, the age of the younger spouse

 

[jamny]

Not sure if it's been posted before but I found this interesting, including the replies:

The Silliness of the Safe Withdrawal Rate Movement​

 

[matttyl]

Not sure if it's been posted before but I found this interesting, including the replies:

The Silliness of the Safe Withdrawal Rate Movement​

One question I’ve had about this 4% rule - or at least the theory behind it….

For simple math sake, assume you retire with $1M and implement the 4% rule. Year 1 you withdrawal your $40k. But let’s say your portfolio actually did very well and even with that withdrawal still grew to $1.2M. Does the rule allow you to “reset” and start a new 4% withdrawal strategy now based on $1.2M (48k/yr)?

 

[jamny]

Not sure if it's been posted before but I found this interesting, including the replies:

The Silliness of the Safe Withdrawal Rate Movement​

One question I’ve had about this 4% rule - or at least the theory behind it….

For simple math sake, assume you retire with $1M and implement the 4% rule. Year 1 you withdrawal your $40k. But let’s say your portfolio actually did very well and even with that withdrawal still grew to $1.2M. Does the rule allow you to “reset” and start a new 4% withdrawal strategy now based on $1.2M (48k/yr)?

To me, trying to remain flexible is key.
The ratcheting 4% rule is that when your portfolio goes up 50%, you increase your withdrawal by 10% but only doing it after a set time, like every 3 years. It's interesting but still seems a bit conservative. I'm considering more like what you propose but only doing it like every 3-5 years to allow a possible downturn. But that goes against what the strict 4% rule allows in their equations.
Also consider a guardrails approach:

One method introduced by Jonathan Guyton and William Klinger in 2006 is the "guardrails" framework. With this approach, an initial portfolio withdrawal rate is selected and, if market returns are strong (and the withdrawal rate falls 20% lower than the initial rate), dollar withdrawals are increased by 10% (providing more income than would a static withdrawal approach). On the other hand, in a time of weak market returns (that resulted in the withdrawal rate rising 20% higher than the initial rate), dollar withdrawals would be reduced by 10% (to avoid exhausting the portfolio). Compared to static withdrawal strategies, this approach not only provides an explicit plan for adjustments to keep retirees from spending too much or too little, but also gives retired clients an idea of what spending changes they would need to make if a market downturn were to occur.

 

[IvanKaramazov]

Not sure if it's been posted before but I found this interesting, including the replies:

The Silliness of the Safe Withdrawal Rate Movement​

This seems like extremely good advice. Okay, I'm biased because I was already thinking along these lines anyway, but still.

Few who have looked at this problem seriously actually advocate for a systematic withdrawal plan based solely on the initial portfolio value that never changes over the following decades. Most recommend a variable withdrawal plan based on returns as you go along. Whether you want to formalize that or just eyeball it like Taylor is up to you. In essence, the risk is SORR, i.e., the idea that you get terrible returns in the first few years of retirement. If that happens, you stick with something like 4% or even less. If it doesn't happen, you can spend 5%, 6%, or even more and be fine.

But you don't have to stick with the same stupid withdrawal rate for 30 years if your first three years go terribly. Just like you adjusted your spending to your income during your working years, you can do the same during your retirement years. If your retirement spending is 100% fixed and predetermined, you probably retired too early with too little money. It's one thing if you were forced to do that, but if you did that voluntarily, that's on you.

My advice on retirement spending is this:

Start at something around 4% of the portfolio value and adjust as you go.

When I'm doing my planning, I use the 4% rule as a general rule of thumb, and as a guideline for whether my plan makes basic surface-level sense or not. (Obviously monte carlos are great for stress testing). But actual market returns are going to matter way more than my withdrawal rate, and those are exogenous whereas I can more or less control my withdrawals. I just can't get myself to worry too much about 4% vs. 5% vs. 3%. Of course I'll adjust on the fly as I go.

 

[jamny]

Another good related quote from the same website

1) Nobody Uses A Strict SWR Approach In Retirement​

I know lots of retirees, but I don't know any of them using what I would call a “strict SWR approach” to their retirement distributions. In practice, nobody multiplies their initial portfolio value by a certain percentage, adjusted for inflation, and then blindly withdraws and spends that exact amount year after year. Just like during the accumulation stage, the retirees I know adjust as they go. If the portfolio is doing well, they take a few more trips, spend more on the grandkids, and give more to charity. If it is doing poorly, they hunker down and spend less. It isn't rocket science. People did it for years before the Trinity Study ever came out (not to mention that most retirees have no idea what the Trinity Study is.) If you really look at the data, the median outcome using a 3-4% withdrawal rate shows the retiree dying with a portfolio LARGER than the one they started with. Being overly cautious and mechanical has consequences too- i.e. spending too little. You can't take it with you.

 

[Sand]

Not sure if it's been posted before but I found this interesting, including the replies:

The Silliness of the Safe Withdrawal Rate Movement​

I'll be on the Bogleheads Variable Percentage Withdrawal train, at least a modified one that's a hair more conservative than the straight amortization table. It's more realistic than the straight 4% rule, which no one uses. Something realistic has to be dynamic.

I use the 4% rule as a general rule of thumb,

I use a simple table - if my investments do nothing but match inflation what distribution amount (offset by SS, I have no pension) gets me 40 years until it hits zero? If my budget can handle that I'm good to go.

Of course, I just replaced my roof yesterday, so we'll see how this year's expenses pile up...

 

[stbugs]

Interesting graph on how retirement cohorts have been working. Moral of the story - don't retire in 2000.

https://cdn.imgpile.com/f/Gyow71.png

2000 would have been tough but they would have also had a very nice set of returns in their higher earnings years for 20 or so years. The double whammy was that as soon as the market was finally back at peak 2000 levels, 2007+ happened. They basically took out 12 years of retirement spending between 0% and 50% lower prices than they retired with in 2000.

Feels like about 7 years from now will be a decent time to retire for us. Feel like we are going to have a decent drop soon and that will allow a few years of accumulation at a discount and then maybe some decent returns without a big drop for a while.*

* Timings were researched based on past market returns and gaps between recessions/large market drops and then completely pulled right out of my *** into thin air.

 

[Peggy]

I use the 4% rule based off what we spend now to set a budget. conservatively. What we withdrawal depends on what we need and whether we make budget or not and I will only take action (spend less) if we have a period of not meeting budget corresponding to periods of the market that doesn't make up (outperform) any over spending. Otherwise I'm not withdrawing any more than I need to spend. That's how I think about it anyways. In the future if that leads (hopefully) to getting way ahead maybe we will start to look at more traveling and life experiences.

 

[-OZ-]

Not sure if it's been posted before but I found this interesting, including the replies:

The Silliness of the Safe Withdrawal Rate Movement​

This seems like extremely good advice. Okay, I'm biased because I was already thinking along these lines anyway, but still.

Few who have looked at this problem seriously actually advocate for a systematic withdrawal plan based solely on the initial portfolio value that never changes over the following decades. Most recommend a variable withdrawal plan based on returns as you go along. Whether you want to formalize that or just eyeball it like Taylor is up to you. In essence, the risk is SORR, i.e., the idea that you get terrible returns in the first few years of retirement. If that happens, you stick with something like 4% or even less. If it doesn't happen, you can spend 5%, 6%, or even more and be fine.

But you don't have to stick with the same stupid withdrawal rate for 30 years if your first three years go terribly. Just like you adjusted your spending to your income during your working years, you can do the same during your retirement years. If your retirement spending is 100% fixed and predetermined, you probably retired too early with too little money. It's one thing if you were forced to do that, but if you did that voluntarily, that's on you.

My advice on retirement spending is this:

Start at something around 4% of the portfolio value and adjust as you go.

When I'm doing my planning, I use the 4% rule as a general rule of thumb, and as a guideline for whether my plan makes basic surface-level sense or not. (Obviously monte carlos are great for stress testing). But actual market returns are going to matter way more than my withdrawal rate, and those are exogenous whereas I can more or less control my withdrawals. I just can't get myself to worry too much about 4% vs. 5% vs. 3%. Of course I'll adjust on the fly as I go.

Although I use a higher target, the 4% “rule” or whatever target you use should just be used to assess when you could retire fairly safely. Flexibility is the key.

 

[jamny]

Has anyone looked into annuities?
Most of them seem loaded with hidden fees and other charges but a Single Premium Immediate Annuity (SPIA) seems like a great option for the second half of your retirement to combine with SS and set a floor on monthly payments.

 

[Sand]

Has anyone looked into annuities?
Most of them seem loaded with hidden fees and other charges but a Single Premium Immediate Annuity (SPIA) seems like a great option for the second half of your retirement to combine with SS and set a floor on monthly payments.

No, but there are a lot of articles out there about this exact thing. What I've seen matches your comments - use late in life, use only a portion of your stash.

 

[SFBayDuck]

Has anyone looked into annuities?
Most of them seem loaded with hidden fees and other charges but a Single Premium Immediate Annuity (SPIA) seems like a great option for the second half of your retirement to combine with SS and set a floor on monthly payments.

No, but there are a lot of articles out there about this exact thing. What I've seen matches your comments - use late in life, use only a portion of your stash.

Agreed, haven't looked into them much but the consensus among people I tend to trust aligns with this - most are complicated and expensive, but a SPIA (combined with SS) to cover your base expenses is worth exploring.

 

[jamny]

Has anyone looked into annuities?
Most of them seem loaded with hidden fees and other charges but a Single Premium Immediate Annuity (SPIA) seems like a great option for the second half of your retirement to combine with SS and set a floor on monthly payments.

No, but there are a lot of articles out there about this exact thing. What I've seen matches your comments - use late in life, use only a portion of your stash.

Agreed, haven't looked into them much but the consensus among people I tend to trust aligns with this - most are complicated and expensive, but a SPIA (combined with SS) to cover your base expenses is worth exploring.

From the little I've looked into it so far, it looks like something you should consider before turning 75 if you want the best options. I've seen comments on using an SPIA to allow you to hold out to 70 before collecting SS.

 

[matttyl]

Has anyone looked into annuities?
Most of them seem loaded with hidden fees and other charges but a Single Premium Immediate Annuity (SPIA) seems like a great option for the second half of your retirement to combine with SS and set a floor on monthly payments.

I can sell them, and do a bit with older individuals looking for a floor on their interest rate (some now at 4-5%). They can be complicated for sure, and have fees, but those complications can have benefits.

One very complicated benefit rider that I used to use a bit was a GMIB - or guaranteed minimum income benefit. Pretty much said that as a floor, you’d have a 5-6% return on your contract for what that would purchase as a SPIA in the future. Say you “invest” $100k in your annuity (with that rider), after 10 years the contract value could be anything, depends on the returns. But as a floor you’d have the ability to annuitize $179k (100k @ 6% for 10 years) as an absolute worst case scenario. That was very attractive for folks age 60+.

SPIAs a pretty cool, so long as the rates they are using are decent. Recently they haven’t been (historically speaking) because interest rates had been low, though that’s obviously changing with the times. They are also flexible in their nature - you can have a spia that’s “my lifetime with a minimum of 10 years” (in case you pass away in year 2 for instance).

 

[jamny]

Has anyone looked into annuities?
Most of them seem loaded with hidden fees and other charges but a Single Premium Immediate Annuity (SPIA) seems like a great option for the second half of your retirement to combine with SS and set a floor on monthly payments.

I can sell them, and do a bit with older individuals looking for a floor on their interest rate (some now at 4-5%). They can be complicated for sure, and have fees, but those complications can have benefits.

One very complicated benefit rider that I used to use a bit was a GMIB - or guaranteed minimum income benefit. Pretty much said that as a floor, you’d have a 5-6% return on your contract for what that would purchase as a SPIA in the future. Say you “invest” $100k in your annuity (with that rider), after 10 years the contract value could be anything, depends on the returns. But as a floor you’d have the ability to annuitize $179k (100k @ 6% for 10 years) as an absolute worst case scenario. That was very attractive for folks age 60+.

SPIAs a pretty cool, so long as the rates they are using are decent. Recently they haven’t been (historically speaking) because interest rates had been low, though that’s obviously changing with the times. They are also flexible in their nature - you can have a spia that’s “my lifetime with a minimum of 10 years” (in case you pass away in year 2 for instance).

Just to be clear on the bolded. You couldn't touch the initial 100k and wouldn't get payouts but after 10 years, you'd have 179k and would be obligated to put that into another annuity?

 

[matttyl]

Has anyone looked into annuities?
Most of them seem loaded with hidden fees and other charges but a Single Premium Immediate Annuity (SPIA) seems like a great option for the second half of your retirement to combine with SS and set a floor on monthly payments.

I can sell them, and do a bit with older individuals looking for a floor on their interest rate (some now at 4-5%). They can be complicated for sure, and have fees, but those complications can have benefits.

One very complicated benefit rider that I used to use a bit was a GMIB - or guaranteed minimum income benefit. Pretty much said that as a floor, you’d have a 5-6% return on your contract for what that would purchase as a SPIA in the future. Say you “invest” $100k in your annuity (with that rider), after 10 years the contract value could be anything, depends on the returns. But as a floor you’d have the ability to annuitize $179k (100k @ 6% for 10 years) as an absolute worst case scenario. That was very attractive for folks age 60+.

SPIAs a pretty cool, so long as the rates they are using are decent. Recently they haven’t been (historically speaking) because interest rates had been low, though that’s obviously changing with the times. They are also flexible in their nature - you can have a spia that’s “my lifetime with a minimum of 10 years” (in case you pass away in year 2 for instance).

Just to be clear on the bolded. You couldn't touch the initial 100k and wouldn't get payouts but after 10 years, you'd have 179k and would be obligated to put that into another annuity?

No, You could touch it at any time (but too much and it would impact that rider). You could annuitize your floor anytime after at least 7 years on most I sold (I just used 10 in the example above). In my example the $179k would be your floor (and would continue to grow at 6% a year), so you’re under no obligation to do anything. This type of rider is no longer available with most carriers, or been altered quite a bit. I even had the carrier reach out to contract owners offering to pay them money in return for them dropping the rider (as it can be an extremely powerful tool if used correctly).

 

[jamny]

Has anyone looked into annuities?
Most of them seem loaded with hidden fees and other charges but a Single Premium Immediate Annuity (SPIA) seems like a great option for the second half of your retirement to combine with SS and set a floor on monthly payments.

I can sell them, and do a bit with older individuals looking for a floor on their interest rate (some now at 4-5%). They can be complicated for sure, and have fees, but those complications can have benefits.

One very complicated benefit rider that I used to use a bit was a GMIB - or guaranteed minimum income benefit. Pretty much said that as a floor, you’d have a 5-6% return on your contract for what that would purchase as a SPIA in the future. Say you “invest” $100k in your annuity (with that rider), after 10 years the contract value could be anything, depends on the returns. But as a floor you’d have the ability to annuitize $179k (100k @ 6% for 10 years) as an absolute worst case scenario. That was very attractive for folks age 60+.

SPIAs a pretty cool, so long as the rates they are using are decent. Recently they haven’t been (historically speaking) because interest rates had been low, though that’s obviously changing with the times. They are also flexible in their nature - you can have a spia that’s “my lifetime with a minimum of 10 years” (in case you pass away in year 2 for instance).

Just to be clear on the bolded. You couldn't touch the initial 100k and wouldn't get payouts but after 10 years, you'd have 179k and would be obligated to put that into another annuity?

No, You could touch it at any time (but too much and it would impact that rider). You could annuitize your floor anytime after at least 7 years on most I sold (I just used 10 in the example above). In my example the $179k would be your floor (and would continue to grow at 6% a year), so you’re under no obligation to do anything. This type of rider is no longer available with most carriers, or been altered quite a bit. I even had the carrier reach out to contract owners offering to pay them money in return for them dropping the rider (as it can be an extremely powerful tool if used correctly).

I can see why!

 

[matttyl]

Has anyone looked into annuities?
Most of them seem loaded with hidden fees and other charges but a Single Premium Immediate Annuity (SPIA) seems like a great option for the second half of your retirement to combine with SS and set a floor on monthly payments.

I can sell them, and do a bit with older individuals looking for a floor on their interest rate (some now at 4-5%). They can be complicated for sure, and have fees, but those complications can have benefits.

One very complicated benefit rider that I used to use a bit was a GMIB - or guaranteed minimum income benefit. Pretty much said that as a floor, you’d have a 5-6% return on your contract for what that would purchase as a SPIA in the future. Say you “invest” $100k in your annuity (with that rider), after 10 years the contract value could be anything, depends on the returns. But as a floor you’d have the ability to annuitize $179k (100k @ 6% for 10 years) as an absolute worst case scenario. That was very attractive for folks age 60+.

SPIAs a pretty cool, so long as the rates they are using are decent. Recently they haven’t been (historically speaking) because interest rates had been low, though that’s obviously changing with the times. They are also flexible in their nature - you can have a spia that’s “my lifetime with a minimum of 10 years” (in case you pass away in year 2 for instance).

Just to be clear on the bolded. You couldn't touch the initial 100k and wouldn't get payouts but after 10 years, you'd have 179k and would be obligated to put that into another annuity?

No, You could touch it at any time (but too much and it would impact that rider). You could annuitize your floor anytime after at least 7 years on most I sold (I just used 10 in the example above). In my example the $179k would be your floor (and would continue to grow at 6% a year), so you’re under no obligation to do anything. This type of rider is no longer available with most carriers, or been altered quite a bit. I even had the carrier reach out to contract owners offering to pay them money in return for them dropping the rider (as it can be an extremely powerful tool if used correctly).

I can see why!

Yes, 2022. That’s when for a lot of these contracts the floor was higher, sometimes substantially higher, than the contract value. Looked at one yesterday in fact where the contract value is currently 854k but the “floor” value is 925k. (For this particular person a big reason for this was they were very aggressive with their investment options because they knew they have the floor).

So that person (if they wanted) could take 854k in cash (taxable, as it’s in an IRA), OR could annuitize 925k (where you give up your basis but have a guaranteed income stream).

 

[SFBayDuck]

Of course, I just replaced my roof yesterday, so we'll see how this year's expenses pile up...

I feel ya as we did the same last year. That $18K check wasn't particularly fun to write.

Do you (or anyone else) build housing repairs into your expense projections for retirement? I've seen a 1-4% range of your home's value to set aside for repairs and replacements, and would like to include that in the annual budget that is being set aside until needed. And if so, do you use the purchase price or adjust to current estimates (which would seem to make sense as it builds in inflation)? I'm thinking with the roof now checked off I might go on the low end of that, but curious what others are doing.

 

[Sand]

Of course, I just replaced my roof yesterday, so we'll see how this year's expenses pile up...

I feel ya as we did the same last year. That $18K check wasn't particularly fun to write.

Do you (or anyone else) build housing repairs into your expense projections for retirement? I've seen a 1-4% range of your home's value to set aside for repairs and replacements, and would like to include that in the annual budget that is being set aside until needed. And if so, do you use the purchase price or adjust to current estimates (which would seem to make sense as it builds in inflation)? I'm thinking with the roof now checked off I might go on the low end of that, but curious what others are doing.

My house always seems to have a decent maintenance need, so it's baked in at this point.

 

[-OZ-]

Of course, I just replaced my roof yesterday, so we'll see how this year's expenses pile up...

I feel ya as we did the same last year. That $18K check wasn't particularly fun to write.

Do you (or anyone else) build housing repairs into your expense projections for retirement? I've seen a 1-4% range of your home's value to set aside for repairs and replacements, and would like to include that in the annual budget that is being set aside until needed. And if so, do you use the purchase price or adjust to current estimates (which would seem to make sense as it builds in inflation)? I'm thinking with the roof now checked off I might go on the low end of that, but curious what others are doing.

My house always seems to have a decent maintenance need, so it's baked in at this point.

In the past five years we’ve replaced both HVACs, remodeled the bathroom and replaced the fence. Considering our planning budget is the average of the past five years adjusted for inflation plus anything bigger we plan to do, like buying a new vehicle, the costs are built in. Those equal slightly more than 10% of our home value, so we’re basically using 2%.

 

[KGB]

I'm stupid...

We need news ac's but not retired yet... There's a tax advantage to getting new AC?

 

[Peggy]

Of course, I just replaced my roof yesterday, so we'll see how this year's expenses pile up...

I feel ya as we did the same last year. That $18K check wasn't particularly fun to write.

Do you (or anyone else) build housing repairs into your expense projections for retirement? I've seen a 1-4% range of your home's value to set aside for repairs and replacements, and would like to include that in the annual budget that is being set aside until needed. And if so, do you use the purchase price or adjust to current estimates (which would seem to make sense as it builds in inflation)? I'm thinking with the roof now checked off I might go on the low end of that, but curious what others are doing.

One line on our cost tracking spreadsheet is for "home" just like there is one for "auto" expenses. We even have one for "emergencies" that is a catch all for everything else. But those are variable expenses that are unknown. If you add our home and emergency budget together it's at $3,600 per year which is only 0.5% of home value. The big expenditures we track separately because they are usually known expenses. Examples of those we've had are "hot tub", " AC - furnace", "kitchen remodel" and "living room furniture" and often financed at 0% for at least 12 months. But if you add those together it's closer to 2% of home value which seems plenty to me. So 0.5% unknown expense and 1.5% planned. Keeping as many as you can planned means you're doing good preventative maintenance and keeping things under your control.

 

[Peggy]

Speaking of home expenses I guess this is a good as time as any for an update. As mentioned previously I'm retiring after this year. So we've been looking for retirement homes when a series of fortunate events happened. One property that checked all the boxes in the area we were looking for came on the market and sold in 4 days last April. I had it in my favorites in Zillow and noticed it was pending for months and months. Suddenly in June it came on the market again and I told the wife we were flying out to look at it on Friday. The night before flying out our relator called and said the home had another offer already, but, the owners knew we are coming so they are going to wait and let us look at it. Long story short we ended up getting the property at asking price.

After an agonizing long month of dealing with the bank and title company, I'm pretty disappointed in the bank that supposed to do this for a living that made so many mistakes, we finally closed on the property last week. We know own a small 6 acre farm in rural Virginia nestled in the blue ridge mountains.

The fortunate: A blessing in disguise. It turns out the property didn't sell the first time because of a crawl space water issue noted on the home inspection report. I noticed the same thing and made our offer contingent on getting an actual contractor in to review and quote the repairs. Solving these types of problems is basically what I do (did) for a living, only on a bigger scale. There was no structural damage and the contractor quoted 15K to put in a sump, conditioner and completely encapsulate the crawl-space. Done deal.

Full circle back to home maintenance. The next thing we plan to do is replace the roof. The biggest problem we have now is we have a cash flow problem. We're carrying a mortgage on the new place until we sell our existing home which goes on the market next month. And the down payment took a good portion of our liquid cash. Trying to figure out how to pay for everything (crawl-space, roof, moving, traveling between the two, double the insurance and utilities) without tapping into our brokerage accounts triggering more capitol gains which I really don't need more of right now. The good news is we're looking to come out 250K ahead between the two properties when we do finally sell when the plan was always to break even.

 

[New Binky the Doormat]

Speaking of home expenses I guess this is a good as time as any for an update. As mentioned previously I'm retiring after this year. So we've been looking for retirement homes when a series of fortunate events happened. One property that checked all the boxes in the area we were looking for came on the market and sold in 4 days last April. I had it in my favorites in Zillow and noticed it was pending for months and months. Suddenly in June it came on the market again and I told the wife we were flying out to look at it on Friday. The night before flying out our relator called and said the home had another offer already, but, the owners knew we are coming so they are going to wait and let us look at it. Long story short we ended up getting the property at asking price.

After an agonizing long month of dealing with the bank and title company, I'm pretty disappointed in the bank that supposed to do this for a living that made so many mistakes, we finally closed on the property last week. We know own a small 6 acre farm in rural Virginia nestled in the blue ridge mountains.

The fortunate: A blessing in disguise. It turns out the property didn't sell the first time because of a crawl space water issue noted on the home inspection report. I noticed the same thing and made our offer contingent on getting an actual contractor in to review and quote the repairs. Solving these types of problems is basically what I do (did) for a living, only on a bigger scale. There was no structural damage and the contractor quoted 15K to put in a sump, conditioner and completely encapsulate the crawl-space. Done deal.

Full circle back to home maintenance. The next thing we plan to do is replace the roof. The biggest problem we have now is we have a cash flow problem. We're carrying a mortgage on the new place until we sell our existing home which goes on the market next month. And the down payment took a good portion of our liquid cash. Trying to figure out how to pay for everything (crawl-space, roof, moving, traveling between the two, double the insurance and utilities) without tapping into our brokerage accounts triggering more capitol gains which I really don't need more of right now. The good news is we're looking to come out 250K ahead between the two properties when we do finally sell when the plan was always to break even.

can the roof wait a few months?

 

[Peggy]

Speaking of home expenses I guess this is a good as time as any for an update. As mentioned previously I'm retiring after this year. So we've been looking for retirement homes when a series of fortunate events happened. One property that checked all the boxes in the area we were looking for came on the market and sold in 4 days last April. I had it in my favorites in Zillow and noticed it was pending for months and months. Suddenly in June it came on the market again and I told the wife we were flying out to look at it on Friday. The night before flying out our relator called and said the home had another offer already, but, the owners knew we are coming so they are going to wait and let us look at it. Long story short we ended up getting the property at asking price.

After an agonizing long month of dealing with the bank and title company, I'm pretty disappointed in the bank that supposed to do this for a living that made so many mistakes, we finally closed on the property last week. We know own a small 6 acre farm in rural Virginia nestled in the blue ridge mountains.

The fortunate: A blessing in disguise. It turns out the property didn't sell the first time because of a crawl space water issue noted on the home inspection report. I noticed the same thing and made our offer contingent on getting an actual contractor in to review and quote the repairs. Solving these types of problems is basically what I do (did) for a living, only on a bigger scale. There was no structural damage and the contractor quoted 15K to put in a sump, conditioner and completely encapsulate the crawl-space. Done deal.

Full circle back to home maintenance. The next thing we plan to do is replace the roof. The biggest problem we have now is we have a cash flow problem. We're carrying a mortgage on the new place until we sell our existing home which goes on the market next month. And the down payment took a good portion of our liquid cash. Trying to figure out how to pay for everything (crawl-space, roof, moving, traveling between the two, double the insurance and utilities) without tapping into our brokerage accounts triggering more capitol gains which I really don't need more of right now. The good news is we're looking to come out 250K ahead between the two properties when we do finally sell when the plan was always to break even.

can the roof wait a few months?

Yeah, there are a few shingles missing and one small leak. Was hoping to get it done before winter. Hopefully they have some 0% financing. In addition to selling current home, when I finally do retire I'm due a large sum of cash. Just threading a needle until then so we don't cause ourselves unnecessary tax exposure. Then comes the real fun, kitchen and bathroom remodels. Power to the out building wood shop. Landscape, pool.

 

[matttyl]

I'm stupid...

We need news ac's but not retired yet... There's a tax advantage to getting new AC?

If it’s a heat pump (and meet certain requirements), there is.

 

[SFBayDuck]

Anyone else here invested in Gold? I first started adding with some PHYS back in Mar of '23, and then in March of this year moved further into it with a good chunk of IAUM. My initial goal was about 5% of my portfolio, and that allocation has climbed up to over 6% as of today.

I'm not a gold bug at all, not stashing gold bars from Costco in my basement next to my ammo and iodine pills or any of that stuff. Just started adding it, via ETFs, as an uncorrelated asset as I begin to transition the retirement accounts toward where I want them to be when I get to the decumulation phase, with a goal of a 10% allocation. But my timing so far has been pretty good (ie lucky) as GLD has outperformed SPY over 6 months (25% v 10%), YTD (21% v 17%), 1 year (31% v 25%), and 2 years (40% v 29%). In fact going back to the start of GLD in late 2004, it's outperformed SPY 403% to 352%! Although if you go back to 1995, equities blow gold away due to a negative/flat return while stocks exploded going into 2000.

I didn't get into it to outperform equities, just to deliver a positive return over time and perform differently than equities in various economic environments. And it should provide the opportunity to rebalance into equities during recessions when Gold tends to significantly outperform.