The “I want to retire soon” thread (2 Viewers)

[NutterButter]

I just did my 2023 credit card. Spent 74k

Add in mortgage about 29 all in. Another 12k for cars. Another 10-15ish towards college.

Say another 5 for misc utilities and cash I'm not realizing.

So 2023 130-140 all expenses

I think I can bring that down to 100 easily in 3 years and by retirement in ~10 should be fine

I think I feel a little better? Not sure. Wife and I have about 1.2 saved currently.

That seems like a lot of credit purchases. You go to Greece with the judge?

Lol.... 3 vacations and everything goes on the card. Car insurance is on it, cable, medical visits, tolls. I only have one card. That's pretty much ALL my expenses including entertainment

Ah,nj tolls. Makes sense now. I live in north jersey. Interstates are free.

 

[gianmarco]

It's almost like there is a whole industry whose mission is "this is too complicated for your wittle head. Just give us the money and trust us. "

My retired parents have an advisor, I looked over their statements the last time I was at their house. Fee is "reasonable" AUM for the space, at 0.8%, but the guy has them in like 40 different funds, I'm sure many of which have a ton of overlap. But it looks complicated, which I think to them "justifies" the fee. Overall asset allocation was appropriate, fees ok, so I just told them probably not optimal but no glaring red flags. But I don't think they're getting much for their money other than a sense of peace of mind (which is obviously important).

I'm a fan of the fee-only or project models (and I'm exploring how I may be able to get into it someday). Get a second set of (trained) eyes taking a look at everything, put together a plan, and then many people are fully capable of managing the basics from there. Tax planning/optimization is the one area that actually can be complicated and might warrant more consistent paid expertise.

I'm like your parents, except I only have about 1/2 my money with the advisor. AUM and # of funds are similar, and rates of return are just average. He's doing backdoor Roth's, entree into some pre-IPO's (SpaceX), etc. Also will do tax harvesting but don't have much in my taxable accounts with him. I need to get educated enough to do all and then just shift to a bucket Vanguard approach. I know I'd get higher returns. Doing OK but I know I could be doing better

This was us until a few weeks ago. We left our financial advisor and will shift to doing it ourselves. At this point, everything is set up and I will get a set of eyes to review every once in a while. The peace of mind and set up was worth it in the beginning but no longer with the fees we are paying.

 

[belljr]

I just did my 2023 credit card. Spent 74k

Add in mortgage about 29 all in. Another 12k for cars. Another 10-15ish towards college.

Say another 5 for misc utilities and cash I'm not realizing.

So 2023 130-140 all expenses

I think I can bring that down to 100 easily in 3 years and by retirement in ~10 should be fine

I think I feel a little better? Not sure. Wife and I have about 1.2 saved currently.

That seems like a lot of credit purchases. You go to Greece with the judge?

Lol.... 3 vacations and everything goes on the card. Car insurance is on it, cable, medical visits, tolls. I only have one card. That's pretty much ALL my expenses including entertainment

Ah,nj tolls. Makes sense now. I live in north jersey. Interstates are free.

Lol plus a teen driver!!!!

 

[jamny]

numbers are going to be influenced by location but I think it is quite hard to imagine spending much more than that on the high end.

During our go go years, I fully plan on spending $15k monthly or more (adjusted for inflation). We’ve put off international or even long distance travel until then. But I don’t plan on being home more than half the year during our first decade. Things can change of course.

I hear you, but I suggest doing strenuous travel earlier if you can. You stack up trips to take for your go-go years and you can run out of time and health. Just got back from Greece and saw many people who I bet wished they were scaling steps at the Acropolis or Lycabettus Hill a decade earlier. Many were struggling.

And those old European cities are not ADA compliant. It's really not easy to get around if you are not mobile. All of those cities are meant to be walked.

Yup...we just got back from Europe at 4 different cities. Hurt my knee a week before leaving and was hobbled throughout but still didn't compare to some of the seniors struggling to get around. Outside of Edinburgh, there are no more big cities left we want to see, having travelled extensively over our 30+ years together. Moving forward will be smaller towns and countryside trips. Hoping to knock off a few more long road trips in the US too before I get too old to drive 8 hours a day. Plus, not sure if we'll continue on our high end trips. We kinda spoil ourselves and this last one was a doozy $$$

 

[Sand]

Outside of Edinburgh, there are no more big cities left we want to see, having travelled extensively over our 30+ years together.

Edinburgh is awesome. If you can catch the beginning of Tattoo season definitely catch one of those. I advise against going during that entire season as hotel prices go ape, much like DC when Congress is in session. Bonkers. So catch one day and get out of dodge.

 

[tri-man 47]

For me, instead of focusing on the asset allocation %s, I look at how much liquidity I have ($). The amount I have in money market funds represents roughly 4 - 5 years of cash flow if the markets tank. So there's peace of mind having that cash available, and those funds also happen to be earning a few percent annually.

Optimizing for "able to sleep at night". Ain't nothing wrong with that. Coming from academia, will you have pensions as well?

If you're looking to spend as much as possible over the next 30 years (I've seen how fit you are, your "go go years" are going to last until you're like 90!), 4-5 years of cash will likely be a drag on that. Unless of course you have 50 years of spending saved up, then you can do whatever the hell you want!!!!

To follow up on this: The "peace of mind" aspect is as much, or more, for my wife as it is for me. She would have been happy if we just stuck it all in a mattress and never had a down month or down year. Fortunately, she just griped and didn't try to act on those irrational impulses.

Academia doesn't have pensions. Schools just do a retirement match. At my prior school (for 27 years), it was dollar-for-dollar up to 10% (and in the last several years, up to 8%).

As to the cash cushion, the MM fund has averaged 3% through the years. The primary Vanguard index fund has averaged a little below 11%. So blended, that's about an 8% annual return. I'm fine with that as I get very close to retirement (around mid-2026, I expect).

 

[shuke]

I just did my 2023 credit card. Spent 74k

That seems like a lot of credit purchases. You go to Greece with the judge?

 

[jamny]

My wife is slowly coming around to the idea that we have enough to retire now. I'm planning on setting up a meeting early next year with our financial advisor but I'm worried that they might not be on the same page, hoping to keep us contributing and making more. This could reinforce some of her concerns. Has anyone had that experience where a FA is more about making money than guiding you through a retirement phase? I might be totally wrong and they'll see that we're ready but they've done right by us and my wife trusts them and what they say will go a long way.

 

[SFBayDuck]

My wife is slowly coming around to the idea that we have enough to retire now. I'm planning on setting up a meeting early next year with our financial advisor but I'm worried that they might not be on the same page, hoping to keep us contributing and making more. This could reinforce some of her concerns. Has anyone had that experience where a FA is more about making money than guiding you through a retirement phase? I might be totally wrong and they'll see that we're ready but they've done right by us and my wife trusts them and what they say will go a long way.

One option would be a fee-only FA instead of one who charges based on AUM. Some of them do investment management, tax planning, retirement planning, etc, but with a set annual fee. That removes that potential conflict of interest. I've heard stories of FAs encouraging downsizing instead of drawing down on investments, or discouraging anything that would fall outside of what they can get paid on like taking out funds to purchase real estate or a SPIA.

It also lets you select one who is focused on retirement planning, instead of one who is more specialized in accumulation and investment management.

Not saying any of these are issues with your current FA, there are lots of great FAs who charge on AUM. But it's fair to evaluate as you look to make the transition.

 

[Gally]

How much did y'all move growing up? We're coming up on 5 years in our house and I'm super antsy to move again, but I moved every ~4 years growing up and then college, then grad school, then wife's grad school...this is about to be the longest I've ever been in one spot.

I hate moving. I lived in one house until I was between 7th and 8th grade. Then stayed in that house (my mom still lives in it) until I moved out. In college I was in the dorms one year, a duplex for one year and then a house for three years. Then i moved back home until I got a real job. Once I got that I was in an apartment with the fiance (living in sin) until we got married (about 4 months in the apartment). We bought our first house about a month after we got married. Planned to stay there forever but ended up there for 11 years until we bought the house I am in now. Been in this house for 17 years and counting.

Moving sucks. I couldn't imagine moving every 4 years.

 

[Gally]

The other thing I need to think about somewhat is when/how/if to factor in inheritance from my parents (eventually).

I am not factoring that in at all. The way I see it depending on what happens with them health wise etc I can't "plan" on getting anything. So if something does come it's a bonus. I just don't want to factor in something that may never come.

 

[-OZ-]

. Has anyone had that experience where a FA is more about making money than guiding you through a retirement phase?

Yes, when we were first getting started. The nice thing was it convinced my wife to invest. Now she’s happy to let me do my thing.
The only reasons I’d go back to a FA now are for a second, educated opinion to increase our confidence; to be there when I die; for any potential tax pitfalls I might miss.

 

[Gatorade]

How much did y'all move growing up? We're coming up on 5 years in our house and I'm super antsy to move again, but I moved every ~4 years growing up and then college, then grad school, then wife's grad school...this is about to be the longest I've ever been in one spot.

I hate moving. I lived in one house until I was between 7th and 8th grade. Then stayed in that house (my mom still lives in it) until I moved out. In college I was in the dorms one year, a duplex for one year and then a house for three years. Then i moved back home until I got a real job. Once I got that I was in an apartment with the fiance (living in sin) until we got married (about 4 months in the apartment). We bought our first house about a month after we got married. Planned to stay there forever but ended up there for 11 years until we bought the house I am in now. Been in this house for 17 years and counting.

Moving sucks. I couldn't imagine moving every 4 years.

We are in our 6th house in 40 years. Moving is never fun, especially since my wife likes to aquire things. We downsized almost 10 years ago getting ready for retirement. Thought we would stay there forever. Then, almost three years ago when our house was filling with stuff again and getting some inheritance, we bought the biggest house yet. It was either that or getting an RV, which I do not like. No need for a storage unit here, referencing earlier posts. It's a good thing I am retired now because if I still worked, I would never new able to keep up with the maintenance.
This does not even include the eleven times I moved after HS until buying first house.
We always made good money selling and our FA even advised in buying latest house as good investment. He was right. It has gone up in price 50% in less than three years.

 

[-OZ-]

The other thing I need to think about somewhat is when/how/if to factor in inheritance from my parents (eventually).

I am not factoring that in at all. The way I see it depending on what happens with them health wise etc I can't "plan" on getting anything. So if something does come it's a bonus. I just don't want to factor in something that may never come.

Totally agreed. It would be a shock if they left us anything substantial. I guess that’s the benefit of having teachers for parents, he gets a nice pension (back then they did) and we know we’re getting nothing.

 

[Gatorade]

. Has anyone had that experience where a FA is more about making money than guiding you through a retirement phase?

Yes, when we were first getting started. The nice thing was it convinced my wife to invest. Now she’s happy to let me do my thing.
The only reasons I’d go back to a FA now are for a second, educated opinion to increase our confidence; to be there when I die; for any potential tax pitfalls I might miss.

Just the opposite. Our FA advised us to start spending money as we approached retirement. He encouraged us to travel and enjoy life. Then when we thought about buying a bigger house closer to the beach, he said it was a good investment even though it meant taking some money out of his investments. In less than three years, that investment has grown over 50%. Never thought he was all about the money.

 

[SFBayDuck]

. Has anyone had that experience where a FA is more about making money than guiding you through a retirement phase?

Yes, when we were first getting started. The nice thing was it convinced my wife to invest. Now she’s happy to let me do my thing.
The only reasons I’d go back to a FA now are for a second, educated opinion to increase our confidence; to be there when I die; for any potential tax pitfalls I might miss.

Just the opposite. Our FA advised us to start spending money as we approached retirement. He encouraged us to travel and enjoy life. Then when we thought about buying a bigger house closer to the beach, he said it was a good investment even though it meant taking some money out of his investments. In less than three years, that investment has grown over 50%. Never thought he was all about the money.

You've got a good one!

 

[Judge Smails]

. Has anyone had that experience where a FA is more about making money than guiding you through a retirement phase?

Yes, when we were first getting started. The nice thing was it convinced my wife to invest. Now she’s happy to let me do my thing.
The only reasons I’d go back to a FA now are for a second, educated opinion to increase our confidence; to be there when I die; for any potential tax pitfalls I might miss.

Just the opposite. Our FA advised us to start spending money as we approached retirement. He encouraged us to travel and enjoy life. Then when we thought about buying a bigger house closer to the beach, he said it was a good investment even though it meant taking some money out of his investments. In less than three years, that investment has grown over 50%. Never thought he was all about the money.

That’s a good advisor. Hardest part is getting people to realize if they are in a good state or not with Monte Carlo simulations. Once they are, get them to see that they can retire and spend money

 

[Sand]

Huh - so end of week roundup says I just hit my number.

I would implore everyone out there to go to 100% bonds as the market freefall signal has just been hit.

 

[-OZ-]

Huh - so end of week roundup says I just hit my number.

I would implore everyone out there to go to 100% bonds as the market freefall signal has just been hit.

Congrats!
Time to get some inverse/short ETFs.

 

[IvanKaramazov]

. Has anyone had that experience where a FA is more about making money than guiding you through a retirement phase?

Yes, when we were first getting started. The nice thing was it convinced my wife to invest. Now she’s happy to let me do my thing.
The only reasons I’d go back to a FA now are for a second, educated opinion to increase our confidence; to be there when I die; for any potential tax pitfalls I might miss.

Just the opposite. Our FA advised us to start spending money as we approached retirement. He encouraged us to travel and enjoy life. Then when we thought about buying a bigger house closer to the beach, he said it was a good investment even though it meant taking some money out of his investments. In less than three years, that investment has grown over 50%. Never thought he was all about the money.

Add me to the chorus who likes your FA.

 

[NutterButter]

Huh - so end of week roundup says I just hit my number.

I would implore everyone out there to go to 100% bonds as the market freefall signal has just been hit.

Congrats!
Time to get some inverse/short ETFs.

Yeah whatever those are, I'm going all on.

 

[SFBayDuck]

Huh - so end of week roundup says I just hit my number.

I would implore everyone out there to go to 100% bonds as the market freefall signal has just been hit.

Congrats!
Time to get some inverse/short ETFs.

Yeah whatever those are, I'm going all on.

SQQQ should do the trick.

 

[Sand]

Huh - so end of week roundup says I just hit my number.

I would implore everyone out there to go to 100% bonds as the market freefall signal has just been hit.

Congrats!
Time to get some inverse/short ETFs.

:laughing emoji:

Yeah, even better than bonds/gold. I'll setup a GoFundMe for the defense lawyers when the SEC comes around.

 

[-OZ-]

defense lawyers when the SEC comes around.

I always have to think twice when I see SEC.

Huh - so end of week roundup says I just hit my number.

I would implore everyone out there to go to 100% bonds as the market freefall signal has just been hit.

Congrats!
Time to get some inverse/short ETFs.

Yeah whatever those are, I'm going all on.

sadly that’s exactly how these things work. “I have no idea how this works but put it all on black!”

 

[jamny]

. Has anyone had that experience where a FA is more about making money than guiding you through a retirement phase?

Yes, when we were first getting started. The nice thing was it convinced my wife to invest. Now she’s happy to let me do my thing.
The only reasons I’d go back to a FA now are for a second, educated opinion to increase our confidence; to be there when I die; for any potential tax pitfalls I might miss.

Just the opposite. Our FA advised us to start spending money as we approached retirement. He encouraged us to travel and enjoy life. Then when we thought about buying a bigger house closer to the beach, he said it was a good investment even though it meant taking some money out of his investments. In less than three years, that investment has grown over 50%. Never thought he was all about the money.

That's encouraging and for all I know, our guy might be the same way.
They took us on years ago as a favor to her boss, even though we didn't meet the minimum amount required for a new client. My wife has a personal relationship with them since she handles her company and her boss' finances too. They've been great, worth every penny and we really don't want to use anyone else.

 

[Peggy]

My wife is slowly coming around to the idea that we have enough to retire now. I'm planning on setting up a meeting early next year with our financial advisor but I'm worried that they might not be on the same page, hoping to keep us contributing and making more. This could reinforce some of her concerns. Has anyone had that experience where a FA is more about making money than guiding you through a retirement phase? I might be totally wrong and they'll see that we're ready but they've done right by us and my wife trusts them and what they say will go a long way.

My financial advisor is provided by my company. Pretty good, helped with with tax screwups etc. But now that I'm planning retirement they start pushing their version and song and dance that they can squeeze out an extra 1.6% compared to the S&P index. Trying to get my business after I leave the company. Of course that will cost me 1% and the 0.6% isn't guaranteed. Kind of annoying because he wasn't very prepared in our last meeting with the tasks I asked him to help me on. F them.

 

[-OZ-]

Not sure if this is a win or just interesting to me, but today my TSP finally crossed over my Roth IRA. I’ve been contributing to the TSP for just over 7 years now and hadn’t contributed every year to my Roth IRA but has opened that account back in 1999 and transferred the military Roth portion into it. The civilian TSP isn’t quite twice the amount contributed after maxing for the last 7 but it’s close. Half the TSP is Roth. FWIW, these are both less than my traditional IRA and wife’s Roth IRA (we maxed hers every year since 2000). Spitball estimate, I’ll probably retire right before the TSP reaches the traditional IRA level.

 

[BrutalPenguin]

I have a FA managing my rollover ira from my first job. I manage my rollover ira from my second job, mostly by shadowing the moves the FA makes with my first ira. Percentage wise, im doing a little better, I assume because I don't charge 1%.

 

[Desert_Power]

I have a FA managing my rollover ira from my first job. I manage my rollover ira from my second job, mostly by shadowing the moves the FA makes with my first ira. Percentage wise, im doing a little better, I assume because I don't charge 1%.

As much as I generally dislike FAs, this is a pretty brilliant idea.

 

[Sand]

defense lawyers when the SEC comes around.

I always have to think twice when I see SEC.

Ahem

 

[Alex P Keaton]

Huh - so end of week roundup says I just hit my number.

I would implore everyone out there to go to 100% bonds as the market freefall signal has just been hit.

Sorry, can you say more about the market freefall signal?

 

[Sand]

Huh - so end of week roundup says I just hit my number.

I would implore everyone out there to go to 100% bonds as the market freefall signal has just been hit.

Sorry, can you say more about the market freefall signal?

Last time I hit a benchmark number I held it for like 2 days and didn't see it again for about 2 years.

It's officially called the Sand-Murphy Hindenburg indicator.

 

[Peggy]

I have a FA managing my rollover ira from my first job. I manage my rollover ira from my second job, mostly by shadowing the moves the FA makes with my first ira. Percentage wise, im doing a little better, I assume because I don't charge 1%.

We had a BoA guy running my wife's IRA (old 401s) in a bunch of Blackrock for a while. Worthless. So proud of my wife when she called them up and yanked it all out.Didnt take no for an answer.

Hello, oh you want to liquidating everything out and put it into your own IRA?

Yes, everything, close that account.

Well, I can't do it, we have to get your FA to do it so call back on Monday.

Monday

Um doesn't look we have an FA assigned, let me look into it.

I don't care get it transfered over.

Tuesday

BS Blackrock account zeroed out and all funds under our control again.


She did it all on her own!

 

[steelerfan1]

Has anyone had that experience where a FA is more about making money than guiding you through a retirement phase?

Yup…we starting saving late in life as it was, but went to a friend of a friend. She worked for Ameriprise. We were there 7 years. Met yearly, for an expensive consultation and we were always on track and doing great. We really started looking at things and discovered, no we were no on track. I called her out on it once I started trying to figure stuff out and she really was deflecting and making excuses. We let her go and I discovered the funds we were in were ungood and she was getting a good kickback from Ameriprise for the stuff we were in. She made far more on our money than we did. And it costs us to get out of those funds. I’ve made plenty of errors since taking over finances right during Covid, but we are still far more ahead than we would have been if we had still been with her. It sux, but can only do the best we can now, but those 7 years really hurt.

 

[Orange&Blue]

. Has anyone had that experience where a FA is more about making money than guiding you through a retirement phase?

Yes, when we were first getting started. The nice thing was it convinced my wife to invest. Now she’s happy to let me do my thing.
The only reasons I’d go back to a FA now are for a second, educated opinion to increase our confidence; to be there when I die; for any potential tax pitfalls I might miss.

Just the opposite. Our FA advised us to start spending money as we approached retirement. He encouraged us to travel and enjoy life. Then when we thought about buying a bigger house closer to the beach, he said it was a good investment even though it meant taking some money out of his investments. In less than three years, that investment has grown over 50%. Never thought he was all about the money.

FA contact information please

 

[Gatorade]

. Has anyone had that experience where a FA is more about making money than guiding you through a retirement phase?

Yes, when we were first getting started. The nice thing was it convinced my wife to invest. Now she’s happy to let me do my thing.
The only reasons I’d go back to a FA now are for a second, educated opinion to increase our confidence; to be there when I die; for any potential tax pitfalls I might miss.

Just the opposite. Our FA advised us to start spending money as we approached retirement. He encouraged us to travel and enjoy life. Then when we thought about buying a bigger house closer to the beach, he said it was a good investment even though it meant taking some money out of his investments. In less than three years, that investment has grown over 50%. Never thought he was all about the money.

FA contact information please

Message sent with his info

 

[Peggy]

Little bit of change of subject. And a new book. I'm starting How to Lower Your Taxes Big Time by Sandy Botkin.

Skimming it, the premise is that everyone should start a small business, even those working a full time job, in order to get all the tax write offs available to small businesses. If your full time job is 50K and your small business is in the red 10K then you only pay taxes on 40K. Wife has had a small business for quite a few years and she's never not been profitable. We're able to write of internet bills, phone bills, the portion of the house she has dedicated to her business, expenses and even trips and meals. But it never seemed to add up to too much (probably because married filing jointly we make way too much). I wonder if I'm missing other write offs that we're unaware of.

But, my big question for this thread is as I'm now retired do the write offs count against income from 401k rollovers? If it does then theoretically I can use expenses to get more rolled over as I set up my consulting business doing very little actual consulting. I say more because I will be trying to stay under income limits for tax brackets and ACA insurance. Simply if 80K is the max I can roll over before loosing ACA tax credits and/or jumping up into the 20% tax bracket - having 10K in small business expenses could bump that up to 90K?

 

[SFBayDuck]

Little bit of change of subject. And a new book. I'm starting How to Lower Your Taxes Big Time by Sandy Botkin.

Skimming it, the premise is that everyone should start a small business, even those working a full time job, in order to get all the tax write offs available to small businesses. If your full time job is 50K and your small business is in the red 10K then you only pay taxes on 40K. Wife has had a small business for quite a few years and she's never not been profitable. We're able to write of internet bills, phone bills, the portion of the house she has dedicated to her business, expenses and even trips and meals. But it never seemed to add up to too much (probably because married filing jointly we make way too much). I wonder if I'm missing other write offs that we're unaware of.

But, my big question for this thread is as I'm now retired do the write offs count against income from 401k rollovers? If it does then theoretically I can use expenses to get more rolled over as I set up my consulting business doing very little actual consulting. I say more because I will be trying to stay under income limits for tax brackets and ACA insurance. Simply if 80K is the max I can roll over before loosing ACA tax credits and/or jumping up into the 20% tax bracket - having 10K in small business expenses could bump that up to 90K?

I don't know the answer to your specific question, but the tax benefits of a small business have come onto my radar recently as well. My wife is a partner in a small rental management company, and several expenses get run through the business so they don't ever get to her as income. It's one of the things that got me thinking about starting something myself when I "retire", a gig that includes client/prospect entertaining so that my Duck tickets can be at least partially expensed.

My dad was way ahead of this when I was a kid. He was a psychologist but we commercial salmon fished every summer. So a lot of the expenses related to our cabin at the Oregon coast were written off as business expenses, as was the percentage of the gross he paid me.

 

[matttyl]

Little bit of change of subject. And a new book. I'm starting How to Lower Your Taxes Big Time by Sandy Botkin.

Skimming it, the premise is that everyone should start a small business, even those working a full time job, in order to get all the tax write offs available to small businesses. If your full time job is 50K and your small business is in the red 10K then you only pay taxes on 40K. Wife has had a small business for quite a few years and she's never not been profitable. We're able to write of internet bills, phone bills, the portion of the house she has dedicated to her business, expenses and even trips and meals. But it never seemed to add up to too much (probably because married filing jointly we make way too much). I wonder if I'm missing other write offs that we're unaware of.

But, my big question for this thread is as I'm now retired do the write offs count against income from 401k rollovers? If it does then theoretically I can use expenses to get more rolled over as I set up my consulting business doing very little actual consulting. I say more because I will be trying to stay under income limits for tax brackets and ACA insurance. Simply if 80K is the max I can roll over before loosing ACA tax credits and/or jumping up into the 20% tax bracket - having 10K in small business expenses could bump that up to 90K?

I’d think you could only write off against earned income. 401k withdrawals wouldn’t be that.

 

[Steve Tasker]

Little bit of change of subject. And a new book. I'm starting How to Lower Your Taxes Big Time by Sandy Botkin.

Skimming it, the premise is that everyone should start a small business, even those working a full time job, in order to get all the tax write offs available to small businesses. If your full time job is 50K and your small business is in the red 10K then you only pay taxes on 40K. Wife has had a small business for quite a few years and she's never not been profitable. We're able to write of internet bills, phone bills, the portion of the house she has dedicated to her business, expenses and even trips and meals. But it never seemed to add up to too much (probably because married filing jointly we make way too much). I wonder if I'm missing other write offs that we're unaware of.

But, my big question for this thread is as I'm now retired do the write offs count against income from 401k rollovers? If it does then theoretically I can use expenses to get more rolled over as I set up my consulting business doing very little actual consulting. I say more because I will be trying to stay under income limits for tax brackets and ACA insurance. Simply if 80K is the max I can roll over before loosing ACA tax credits and/or jumping up into the 20% tax bracket - having 10K in small business expenses could bump that up to 90K?

In theory, if you have a legitimate business that loses money, you can deduct losses. It is possible to run a loss on a Schedule C self-employed business, and deduct the loss on your tax return. This would reduce your taxable income that you have received from 401k withdrawals, in theory. That said, it needs to be a legitimate business (i.e. it's shady and borderline tax fraud to "run a business" in air-quotes just to deduct illegitimate business expenses), and there's limitations as to deductions for home office expenses for unprofitable businesses.

Unprofitable businesses also run the risk of failing the "hobby loss" rules. Under a hobby loss scenario, the business income is still taxable, but the expenses are mostly entirely disallowed. Unprofitable Schedule C businesses have been a major IRS audit red flag for decades, as well as home office expenses.

Please don't take tax advice from unqualified providers.

 

[Peggy]

Little bit of change of subject. And a new book. I'm starting How to Lower Your Taxes Big Time by Sandy Botkin.

Skimming it, the premise is that everyone should start a small business, even those working a full time job, in order to get all the tax write offs available to small businesses. If your full time job is 50K and your small business is in the red 10K then you only pay taxes on 40K. Wife has had a small business for quite a few years and she's never not been profitable. We're able to write of internet bills, phone bills, the portion of the house she has dedicated to her business, expenses and even trips and meals. But it never seemed to add up to too much (probably because married filing jointly we make way too much). I wonder if I'm missing other write offs that we're unaware of.

But, my big question for this thread is as I'm now retired do the write offs count against income from 401k rollovers? If it does then theoretically I can use expenses to get more rolled over as I set up my consulting business doing very little actual consulting. I say more because I will be trying to stay under income limits for tax brackets and ACA insurance. Simply if 80K is the max I can roll over before loosing ACA tax credits and/or jumping up into the 20% tax bracket - having 10K in small business expenses could bump that up to 90K?

I’d think you could only write off against earned income. 401k withdrawals wouldn’t be that.

Yeah, dagnabbit. I'll have a little bit of earned income next year and my wife's small business. Now that we'll have to pay for insurance that's writeoffable. Still worth reading the book probably.

 

[Peggy]

Little bit of change of subject. And a new book. I'm starting How to Lower Your Taxes Big Time by Sandy Botkin.

Skimming it, the premise is that everyone should start a small business, even those working a full time job, in order to get all the tax write offs available to small businesses. If your full time job is 50K and your small business is in the red 10K then you only pay taxes on 40K. Wife has had a small business for quite a few years and she's never not been profitable. We're able to write of internet bills, phone bills, the portion of the house she has dedicated to her business, expenses and even trips and meals. But it never seemed to add up to too much (probably because married filing jointly we make way too much). I wonder if I'm missing other write offs that we're unaware of.

But, my big question for this thread is as I'm now retired do the write offs count against income from 401k rollovers? If it does then theoretically I can use expenses to get more rolled over as I set up my consulting business doing very little actual consulting. I say more because I will be trying to stay under income limits for tax brackets and ACA insurance. Simply if 80K is the max I can roll over before loosing ACA tax credits and/or jumping up into the 20% tax bracket - having 10K in small business expenses could bump that up to 90K?

In theory, if you have a legitimate business that loses money, you can deduct losses. It is possible to run a loss on a Schedule C self-employed business, and deduct the loss on your tax return. This would reduce your taxable income that you have received from 401k withdrawals, in theory. That said, it needs to be a legitimate business (i.e. it's shady and borderline tax fraud to "run a business" in air-quotes just to deduct illegitimate business expenses), and there's limitations as to deductions for home office expenses for unprofitable businesses.

Unprofitable businesses also run the risk of failing the "hobby loss" rules. Under a hobby loss scenario, the business income is still taxable, but the expenses are mostly entirely disallowed. Unprofitable Schedule C businesses have been a major IRS audit red flag for decades, as well as home office expenses.

Please don't take tax advice from unqualified providers.

Thanks. To date my wife's small business has generated a profit every year. 3 out of 5 years in profit protects you against hobby loss, I think. Relocating and having to find new clients would be a reason why she might not be profitable next year. Now that we have a bunch of land, building a new studio would be too.

If I started a consulting business I'm fairly certain I would have a couple professional service agreements in place with large companies. I don't really want to work a lot though, that's why I'm retiring. What I'm asking sounds shady*, I get that, but an ex IRS attorney wrote a whole book about it that peaked my interest.

*shady, or loophole aren't real words. It's either allowed by tax law or it isn't. And I never feel bad for using the tax law to pay as little as possible.

 

[Steve Tasker]

Thanks. To date my wife's small business has generated a profit every year. 3 out of 5 years in profit protects you against hobby loss, I think. Relocating and having to find new clients would be a reason why she might not be profitable next year.

If I started a consulting business I'm fairly certain I would have a couple professional service agreements in place with large companies. I don't really want to work a lot though, that's why I'm retiring. What I'm asking is shady, I get that, but an ex IRS agent wrote a whole book about it that peaked my interest.

"3 out of 5" is a rule of thumb surrounding hobby loss rules, but it's not enshrined in the code as far as I'm aware. Hobby loss provisions are facts and circumstances based. "3 out of 5" is a back-of-the-envelope "the IRS will probably not notice you if you do this" type of practical accounting advice, but doesn't actually truly protect you from anything. The IRS could assert a hobby loss at any time, even for a profitable business, though I've never seen them do it.

Absolutely nothing wrong with small businesses taking legitimate business expenses; that said, there's a lot of people out there who push the envelope a little too far, in my opinion.

 

[Zegras11]

Retired six weeks ago today. On 3 leg, 22 day trip right now. All the planning has paid off.

 

[BeTheMatch]

Retired six weeks ago today. On 3 leg, 22 day trip right now. All the planning has paid off.

Didn't realize that. Congratulations!

 

[Peggy]

Little bit of change of subject. And a new book. I'm starting How to Lower Your Taxes Big Time by Sandy Botkin.

Skimming it, the premise is that everyone should start a small business, even those working a full time job, in order to get all the tax write offs available to small businesses. If your full time job is 50K and your small business is in the red 10K then you only pay taxes on 40K. Wife has had a small business for quite a few years and she's never not been profitable. We're able to write of internet bills, phone bills, the portion of the house she has dedicated to her business, expenses and even trips and meals. But it never seemed to add up to too much (probably because married filing jointly we make way too much). I wonder if I'm missing other write offs that we're unaware of.

But, my big question for this thread is as I'm now retired do the write offs count against income from 401k rollovers? If it does then theoretically I can use expenses to get more rolled over as I set up my consulting business doing very little actual consulting. I say more because I will be trying to stay under income limits for tax brackets and ACA insurance. Simply if 80K is the max I can roll over before loosing ACA tax credits and/or jumping up into the 20% tax bracket - having 10K in small business expenses could bump that up to 90K?

I don't know the answer to your specific question, but the tax benefits of a small business have come onto my radar recently as well. My wife is a partner in a small rental management company, and several expenses get run through the business so they don't ever get to her as income. It's one of the things that got me thinking about starting something myself when I "retire", a gig that includes client/prospect entertaining so that my Duck tickets can be at least partially expensed.

My dad was way ahead of this when I was a kid. He was a psychologist but we commercial salmon fished every summer. So a lot of the expenses related to our cabin at the Oregon coast were written off as business expenses, as was the percentage of the gross he paid me.

Welp, I just read in Chapter 2 that starting in 2023 entertainment is no longer deductible. Make sure the bill for your box seats is itemized so you can at least deduct the food!

 

[SFBayDuck]

Little bit of change of subject. And a new book. I'm starting How to Lower Your Taxes Big Time by Sandy Botkin.

Skimming it, the premise is that everyone should start a small business, even those working a full time job, in order to get all the tax write offs available to small businesses. If your full time job is 50K and your small business is in the red 10K then you only pay taxes on 40K. Wife has had a small business for quite a few years and she's never not been profitable. We're able to write of internet bills, phone bills, the portion of the house she has dedicated to her business, expenses and even trips and meals. But it never seemed to add up to too much (probably because married filing jointly we make way too much). I wonder if I'm missing other write offs that we're unaware of.

But, my big question for this thread is as I'm now retired do the write offs count against income from 401k rollovers? If it does then theoretically I can use expenses to get more rolled over as I set up my consulting business doing very little actual consulting. I say more because I will be trying to stay under income limits for tax brackets and ACA insurance. Simply if 80K is the max I can roll over before loosing ACA tax credits and/or jumping up into the 20% tax bracket - having 10K in small business expenses could bump that up to 90K?

I don't know the answer to your specific question, but the tax benefits of a small business have come onto my radar recently as well. My wife is a partner in a small rental management company, and several expenses get run through the business so they don't ever get to her as income. It's one of the things that got me thinking about starting something myself when I "retire", a gig that includes client/prospect entertaining so that my Duck tickets can be at least partially expensed.

My dad was way ahead of this when I was a kid. He was a psychologist but we commercial salmon fished every summer. So a lot of the expenses related to our cabin at the Oregon coast were written off as business expenses, as was the percentage of the gross he paid me.

Welp, I just read in Chapter 2 that starting in 2023 entertainment is no longer deductible. Make sure the bill for your box seats is itemized so you can at least deduct the food!

Well that's dumb! Didn't realize the TCJA got rid of that.

 

[New Binky the Doormat]

Retired six weeks ago today. On 3 leg, 22 day trip right now. All the planning has paid off.

big congrats man - you're gonna love it!

 

[Gally]

Retired six weeks ago today. On 3 leg, 22 day trip right now. All the planning has paid off.

Take it to the "I am retired" thread. You don't belong here anymore.

(I am so jealous)

 

[SFBayDuck]

It's only one day so I know it's really just noise, but still interesting to see how my portfolio is acting today. NASDAQ is currently down 0.9%, S&P down 0.5%. And I'm up slightly on the day. And I'm 90% in ETFs so it's not some individual stock doing well, in fact NVDA is a top 3 holding of the individual stocks I do have and it's getting hammered. It's the diversification I've added over the past 6-12 months.

Long term treasuries - up
Gold - up
Small Cap Value - up
REITS - up
Casualty and Property insurance - up

And then there's a day like today where Growth, SCV, Gold, Emerging, Developed, Managed Futures, LT treasuries, insurance, even crypto are all down! Only REITs seem to be doing ok today.

Again, one day, it's noise!