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For a wife significantly younger, I would think the following would be important:
You know I was going to add the word work. "Partner at work " but thought oh they will know what I mean. I guess not everyone.
I'm 44, she's 31. She has her own small business. We do all of the finances together; basically educated by watching Suze Orman. I have a large life insurance policy from work, but definitely need to start thinking now about having insurance in place for when I am done working. Our goal is for me to retire at 60. She wants to work until she's 55, so for 8 years after I retire. When I retire, we will use her work earnings, start taking my pension and use the Roth to bridge gap until when we start taking from the 401K. Sound plan?wilked said:
Just joking, bro...Wooderson said:
I have no way of telling if it is a good plan from this. If you want a review you will have to post a whole lot more, including assets, debt, pension size, salaries, expenses. I mean it sounds like a fine plan in general but it's the details that will make or break you
So I applied for the card, got rejected.
apparently when filling out the form I thought they were asking monthly salary when they were asking annual. They seemingly didn't bother to check our score.
No worries.
I will send a PM. Thanks GB
You are correct in that you will file your normal 1040 return annually but the partnership will need to file their return first and then distribute the schedule k1s to the partners. There will just be one annual k1 for the partnership (under most circumstances).
529 plan?eoMMan said:
I feel like the 401k is a no brainer to get at least the match. Depending on the match it is most likely going to destroy any other conservative return you could get.
Yes. Seed all 3 plans with the inheritance money.
I suppose the goal was to replace the W2 income. I still have a little under a year before the last of the rentals are paid off. We do have 2 kids (3 and 8) that we have been saving to pay for their college. I have somewhat earmarked our IRAs for the college funds if everything works out with the rentals. They each also have 529s we have contributed to off and on.
Oh heck yes. Having a pot of tax deferred income allows you to play tax games and keep lots more of your retirement monies. Since the rentals are all taxable income I'd continue contributing to the 401k at least. Once you retire you can convert the 401k to an IRA and start playing the tax shell game.
I've been looking for an article on exactly this. Still have to digest it all, but this will be a huge help
There are also some articles on madfientist.com that might be helpful. Nice guides to the tax shell game (all legal - best part!).I've been looking for an article on exactly this. Still have to digest it all, but this will be a huge help
That payout will be a brutal tax hit. Could they do it over 2 years...say December 31 and January 1 of the following year? (I doubt you know the answer..just throwing that out there)
Assuming no, is there any way to minimize the tax hit if they take the payout? Is a IRA rollover available on pensions?
How "decent" is her savings? 401k? IRA? other? How does the $1784 compare with her monthly costs of living?
I will get the answer to this next time I discuss this with them, but for now I can safely assume they have 10+ years of expenses in savings + 401K. They did cash out part of the 401K years ago to payoff the house and buy some adjacent land.
The starting point to figure this out is the risk tolerance of your parents and what other retirement funds they have or don't have. The pension for life is nice because it is backed by the government (PBGC- kind of like the FDIC but for pensions) so it is pretty much as safe as you can get. If this is pretty much their only income other than social security then they may want to consider staying put. By taking the lump sum, they could potentially end up getting better returns but that opens up various levels of risk to potentially achieve that depending on the products that are invested.
Or just have the funds sent to an investment house and put into an IRA. Then you pay the taxes on withdrawal, and/or whatever amount of the $285k they want up front.
You can always roll the amount to an IRA. But that's starting to be looked at very closely as the person is giving up the guaranteed payout. What other pension options are there if her spouse is the beneficiary? What happens to the payout if he dies first? What will they get from social security? Does he get a pension?
I go with this. The key is whether that monthly amount is critical to her quality of life. The percent return calcs are all straight line which doesn't happen - if the market drops big and your mom has to start pulling out more than 4% - it could lead to draining the nest egg much more quickly.
For a 65 yr old female, an annuity payment of $285K will generate $1550 or so on the free market. The annuity option generates about 15% more cash flow, seems like an obvious choice to me given that she is in good health.
I think I agree with this. If she were younger, say in her 40s, I'd take the annuity. Why no COLA?
great question. If less than a year, it's a no brainer. If for whatever reason you couldn't sell it while you worked for the company, it's not worth it.
It would be a virtual certainty that she would not be able to start her pension in her 40s, and if she did the monthly payment would be significantly reduced. And that's not taking into account her desire to manage (or let someone else manage) her money, her risk tolerance, etc.
