Jump to content
Fantasy Football - Footballguys Forums

Personal Finance Advice and Education!


No. 16

Recommended Posts

Here is my question today:

* My wife and I both own 25 year term life insurance policies

* Both were purchased when my daughter was born 16 years ago

* Policies were purchased to replace either income or care for daughter if one of both of us were to die

* We both retired more than 5 years ago and as such, there is no meaningful income to replace any more

Should we cancel the policy or just let it ride out?

Keep it. Just b/c you don't have income to replace, it will make life easier for the survivors in the case of the extreme unfortunate situation.

Edited by Tiger Fan
  • Like 1
Link to comment
Share on other sites

Wife is a Physical Therapist who works PRN. PRN is essentially when she picks up shifts at different facilities when help is needed. Better pay, but the trade off is no benefits. Are there any special retirement accounts other than the traditional for people like this?

Edited by ragincajun
Link to comment
Share on other sites

Wife is a Physical Therapist who works PRN. PRN is essentially when she picks up shifts at different facilities when help is needed. Better pay, but the trade off is no benefits. Are there any special retirement accounts other than the traditional for people like this?

Is she an LLC?

Link to comment
Share on other sites

She is not an LLC currently. I am not sure if she should be or not. I have done some research but cannot find anything definitive. They essentially set her up as a real employee at each company.

Being an LLC doesn't have any bearing on her retirement choices. If she receives a W-2 from each facility she is stuck with a Roth or traditional IRA. If she receives a 1099-MISC as an independent contractor she may be eligible for a SEP, SIMPLE or solo 401(k) which have higher contribution limits based on net profit.

  • Like 1
Link to comment
Share on other sites

She is not an LLC currently. I am not sure if she should be or not. I have done some research but cannot find anything definitive. They essentially set her up as a real employee at each company.

Being an LLC doesn't have any bearing on her retirement choices. If she receives a W-2 from each facility she is stuck with a Roth or traditional IRA. If she receives a 1099-MISC as an independent contractor she may be eligible for a SEP, SIMPLE or solo 401(k) which have higher contribution limits based on net profit.

Yeah, I never really understand why people ask "are you an LLC" re: taxes. Sure it has a legal context and could be a good move, but from a tax standpoint it doesn't matter.

Link to comment
Share on other sites

Pension is currently sitting in a balanced fund (60% equities, 40% bonds). Now a good time to switch over to a pure equities fund or give it a bit few more weeks/months? 25-30 years from retirement.

just buy when we hit the absolute bottom. That's always the best time. Buy low, sell high... don't forget to sell at the absolute top.

Link to comment
Share on other sites

Pension is currently sitting in a balanced fund (60% equities, 40% bonds). Now a good time to switch over to a pure equities fund or give it a bit few more weeks/months? 25-30 years from retirement.

just buy when we hit the absolute bottom. That's always the best time. Buy low, sell high... don't forget to sell at the absolute top.

:lol:
Link to comment
Share on other sites

Pension is currently sitting in a balanced fund (60% equities, 40% bonds). Now a good time to switch over to a pure equities fund or give it a bit few more weeks/months? 25-30 years from retirement.

just buy when we hit the absolute bottom. That's always the best time. Buy low, sell high... don't forget to sell at the absolute top.

Thanks for nothing :thumbup:

Link to comment
Share on other sites

Pension is currently sitting in a balanced fund (60% equities, 40% bonds). Now a good time to switch over to a pure equities fund or give it a bit few more weeks/months? 25-30 years from retirement.

just buy when we hit the absolute bottom. That's always the best time. Buy low, sell high... don't forget to sell at the absolute top.

Thanks for nothing

Just keep watching CNBC, they'll let you know with their expert analysis when the bottom is, and then boom... profit. Follow Cramer on twitter. he's got the crystal ball

Link to comment
Share on other sites

Pension is currently sitting in a balanced fund (60% equities, 40% bonds). Now a good time to switch over to a pure equities fund or give it a bit few more weeks/months? 25-30 years from retirement.

that seems like a lot of bonds for someone so far away from retirement

Yep which why I need to change it. Just wondering if today is a blip or if the people who follow the markets expect this to be a prolonged drop in the markets. Instead, Dentist.

Link to comment
Share on other sites

Looks fine to me... Maybe argue to be 30/70 but not a huge difference

Not an option. Cash / Bond / Balanced / Equity are the only choices.

I would leave it alone then

Don't make any decisions based on 1 day swings, and asking anyone what they think will happen in the market is akin to people talking about what sex your baby will be when born based on the amount of indigestion the mother has - ie it's pointless

Link to comment
Share on other sites

Pension is currently sitting in a balanced fund (60% equities, 40% bonds). Now a good time to switch over to a pure equities fund or give it a bit few more weeks/months? 25-30 years from retirement.

just buy when we hit the absolute bottom. That's always the best time. Buy low, sell high... don't forget to sell at the absolute top.

Thanks for nothing :thumbup:

The bottom was at about 10 am this morning.. did you get your order in in time?

Link to comment
Share on other sites

What about 100% ETFs if I'm also about 25-30 years away from retirement? Any reason at all to panic if I don't plan to touch that money until retirement?

That's not terribly descriptive. They make ETFs for every possible investment there is.

You could be in 100% bond ETFs. You could be in 100% gold ETFs

you could be in 100% 2X Oil or China ETFs.

What's your investment mix... 100% stocks? Could be fine depending on your risk tolerance.

Link to comment
Share on other sites

Pension is currently sitting in a balanced fund (60% equities, 40% bonds). Now a good time to switch over to a pure equities fund or give it a bit few more weeks/months? 25-30 years from retirement.

just buy when we hit the absolute bottom. That's always the best time. Buy low, sell high... don't forget to sell at the absolute top.

Thanks for nothing :thumbup:

The bottom was at about 10 am this morning.. did you get your order in in time?

:thumbup:

Link to comment
Share on other sites

What about 100% ETFs if I'm also about 25-30 years away from retirement? Any reason at all to panic if I don't plan to touch that money until retirement?

That's not terribly descriptive. They make ETFs for every possible investment there is.

You could be in 100% bond ETFs. You could be in 100% gold ETFs

you could be in 100% 2X Oil or China ETFs.

What's your investment mix... 100% stocks? Could be fine depending on your risk tolerance.

Yeah 100% stocks. I sold everything earlier today :bag:

Ok just kidding. My risk tolerance is fairly high.

Edited by fred_1_15301
Link to comment
Share on other sites

I'm normally a fan of dollar cost averaging, but I'm sitting on a little excess cash at the moment. With these China fears, the markets have been plummeting this week. If the markets go to #### in the next week, I'm thinking about making my full 2016 Roth contribution. If I didn't have this cash I wouldn't even consider it, but I do. I always preach to people "don't try to time the market"....but here I am. Someone talk me out of this.

I just sent in a check for almost all of my annual Roth contribution for 2016. Normally I'd deduct $400 or so per month, but I wanted to buy a chunk of something ASAP. I'm not talking you out of it--I'm endorsing the move.

I've also increased my bi-weekly 403(b) contributions. I plan on maxing it out by April/May.

Link to comment
Share on other sites

  • 1 month later...

Just came across this when looking around at my retirement stuff for work.  When I first started we had some sort of pension plan, but it changed after a short while.  On my retirement page that money is just referred to as my "frozen pension plan" that appears to be fixed.   This is far down the road, but just for fun, say you were closing in on age 55 and had these choices in front of you.  Which do you go with and why?

- Age 55, take one lump sum payment of $31,258............. or a Monthly Lifetime Annuity of $159

- Age 62 take one lump sum payment of $43,984.............. or a monthly lifetime annuity of $269

- Age 65 take one lump sum payment of $50,916.............. or a monthly lifetime annuity of $317

It is just me or does it seem obvious to take the lump sum payment of $31,258 at age 55.   If you take the annuity at age 55 it would take over 16 years to collect the same as the lump sum (yes I know taxes would be a factor on the lump sum, but investing the money should pretty easily win out over time when comparing the two).

Not sure waiting 7 extra years until age 62 is worth an extra $12,500 or so.  At 62 it would take about 14 years of the annuity to collect the lump sum amount. 

Three more years after that to get another 7 grand?  Also almost 14 years again for the annuity to add up to the lump sum. 

If I have these 6 options it seems the way to rank them is:

1-3 take lump sum at 55, then 62, then 65

4-6 take annuity at 55, 62, then 65.  It doesnt seem like waiting on the annuities would really benefit you unless you live a very long time considering you can use/invest the money you get starting at age 55.

 

 

 

Edited by ghostguy123
Link to comment
Share on other sites

3 hours ago, ghostguy123 said:

Just came across this when looking around at my retirement stuff for work.  When I first started we had some sort of pension plan, but it changed after a short while.  On my retirement page that money is just referred to as my "frozen pension plan" that appears to be fixed.   This is far down the road, but just for fun, say you were closing in on age 55 and had these choices in front of you.  Which do you go with and why?

- Age 55, take one lump sum payment of $31,258............. or a Monthly Lifetime Annuity of $159

- Age 62 take one lump sum payment of $43,984.............. or a monthly lifetime annuity of $269

- Age 65 take one lump sum payment of $50,916.............. or a monthly lifetime annuity of $317

It is just me or does it seem obvious to take the lump sum payment of $31,258 at age 55.   If you take the annuity at age 55 it would take over 16 years to collect the same as the lump sum (yes I know taxes would be a factor on the lump sum, but investing the money should pretty easily win out over time when comparing the two).

Not sure waiting 7 extra years until age 62 is worth an extra $12,500 or so.  At 62 it would take about 14 years of the annuity to collect the lump sum amount. 

Three more years after that to get another 7 grand?  Also almost 14 years again for the annuity to add up to the lump sum. 

If I have these 6 options it seems the way to rank them is:

1-3 take lump sum at 55, then 62, then 65

4-6 take annuity at 55, 62, then 65.  It doesnt seem like waiting on the annuities would really benefit you unless you live a very long time considering you can use/invest the money you get starting at age 55.

 

 

 

If you put those #s in a future value calculator, the breakeven b/w each of the options is 5%.  If you think you can earn more than 5% on your own (which you should over the long term just investing in the market), just take the lump sum at 55.

  • Like 1
Link to comment
Share on other sites

I guess it also depends on your financial situation at the time.  If you need the money between ages 55-62 before social security would kick in, take it.  If not it wouldn't be a bad idea to just wait it out until you actually need it and take the guaranteed 5% return over those 7 years (I assume you can cash it out at any age once you hit 55, but not 100% sure on that). 

Edited by ghostguy123
Link to comment
Share on other sites

14 hours ago, Tiger Fan said:

If you put those #s in a future value calculator, the breakeven b/w each of the options is 5%.  If you think you can earn more than 5% on your own (which you should over the long term just investing in the market), just take the lump sum at 55.

Take the safe play at 65 if you can manage it.  Believe me.  Its different when you are there - and I am.

Link to comment
Share on other sites

3 minutes ago, Binky The Doormat said:

Take the safe play at 65 if you can manage it.  Believe me.  Its different when you are there - and I am.

Yeah, the more I think about it, I would have to agree.  It's the same as simply investing the money, except you get a guaranteed return right around 5% which is a pretty good guarantee.  If you don't need the money at all at 55, let it ride. 

I can certainly see some instances where it would also make sense to take the cash at 55 if you either NEED the money, or if you are taking a shot on another investment, maybe a rental property or something. 

Link to comment
Share on other sites

not to be a downer, but assuming you're under 40 right now, how much will $159/month be worth in 2031 and beyond?  $31k is a decent down payment on a rental home or maybe a retirement car.  I'd wait until 65 I think.

According to http://money.cnn.com/tools/annuities/, the lump sum is equivalent to a $284 monthly payment.  So I guess the monthly payment is the better option but annuities are very conservative, I think I'd take the lump sum at 65. 

Link to comment
Share on other sites

On February 27, 2016 at 8:03 AM, Tiger Fan said:

If you put those #s in a future value calculator, the breakeven b/w each of the options is 5%.  If you think you can earn more than 5% on your own (which you should over the long term just investing in the market), just take the lump sum at 55.

If you take the lump sum can you roll it over to a Ira and avoid taxes until you start to withdraw the money?

Link to comment
Share on other sites

11 minutes ago, Vincesanity said:

If it's my money I'm taking the lump sum. 

99/100 when reviewing client pension plans the lump sum makes more sense in my experience. 

Yes, I like it for the simple fact of having control over it. Who knows how the company or plan's finances will look decades down the road. Granted, you still need to weigh the risk/return but I'd much rather control it even if I'm giving up some great return. 

Link to comment
Share on other sites

11 minutes ago, eoMMan said:

Yes, I like it for the simple fact of having control over it. Who knows how the company or plan's finances will look decades down the road. Granted, you still need to weigh the risk/return but I'd much rather control it even if I'm giving up some great return. 

The pension requirements put on companies these days provide a pretty nice level of comfort.  When you start drawing money and have no decent plan b to go back to work you will likely want some level of income that is stable.  

I am not a fan of purchasing annuities but if I could get a guaranteed yield of 5% over the next few years - I would put some money in that bad boy.   

Link to comment
Share on other sites

On 3/3/2015 at 8:41 AM, General Malaise said:

And when you move to another city, rent your place out and buy another. Hell man, build a small Bender empire. Even if you use a management company (and you should) you'll ton it in this environment (which won't last forever, so take advantage whilst you can).

Homes up over 5% nationally year over year and probably better where Bender lives.  Rates still historically low.  Hope you bought, buddy.

Link to comment
Share on other sites

7 hours ago, stubby said:
9 hours ago, FUBAR said:

not to be a downer, but assuming you're under 40 right now, how much will $159/month be worth in 2031 and beyond?  $31k is a decent down payment on a rental home or maybe a retirement car.  I'd wait until 65 I think.

According to http://money.cnn.com/tools/annuities/, the lump sum is equivalent to a $284 monthly payment.  So I guess the monthly payment is the better option but annuities are very conservative, I think I'd take the lump sum at 65. 

Yes

I am actually not sure if there will be any adjustment for inflation or growth or anything.  It does say "estimated payouts", but really I have no idea.  I just looked this up a couple days ago and haven't made a call to anyone about it yet.  I probably will at some point soon. 

Lump sum also seems like a better idea because who the hell knows if I am going to make it to 75 to make the annuity worth it anyway.

Link to comment
Share on other sites

  • 4 weeks later...
48 minutes ago, ghostguy123 said:

Question about Roth IRA limits.

If I am married and am maxing out my 403b, how much are my wife and I able to put into a roth IRA each year?  Am I still able to contribute or just my wife?  What would be our limit?  Thanks.

5500 for you and wife, 401/3 have no bearings on that

Link to comment
Share on other sites

I will just ask this here cause I dont wanna start a thread.

Ok, let's say someone (let's say my stupid mother in law) has a lot of debt.  Owes a lot of her house (probably around what it is worth), credit cards.....................She is divorced and all her debt/assets are all hers.  Say all her debt is 100 grand.

Now, let's say she has life insurance with her kids as beneficiaries.  Let's say her life insurance policy is 200 grand.  If she dies, how does that work?  Are all her debts required to be paid by the life insurance, or does it all go to the beneficiaries?  All the kids are adults and out of the house if that matters.

Edited by ghostguy123
Link to comment
Share on other sites

24 minutes ago, ghostguy123 said:

I will just ask this here cause I dont wanna start a thread.

Ok, let's say someone (let's say my stupid mother in law) has a lot of debt.  Owes a lot of her house (probably around what it is worth), credit cards.....................She is divorced and all her debt/assets are all hers.  Say all her debt is 100 grand.

Now, let's say she has life insurance with her kids as beneficiaries.  Let's say her life insurance policy is 200 grand.  If she dies, how does that work?  Are all her debts required to be paid by the life insurance, or does it all go to the beneficiaries?  All the kids are adults and out of the house if that matters.

No, the life insurance would not pay her debts. It would go to who it was intended. If there is any money/assets left over in her estate, that would go against her debts.

  • Like 1
Link to comment
Share on other sites

1 hour ago, ghostguy123 said:

I will just ask this here cause I dont wanna start a thread.

Ok, let's say someone (let's say my stupid mother in law) has a lot of debt.  Owes a lot of her house (probably around what it is worth), credit cards.....................She is divorced and all her debt/assets are all hers.  Say all her debt is 100 grand.

Now, let's say she has life insurance with her kids as beneficiaries.  Let's say her life insurance policy is 200 grand.  If she dies, how does that work?  Are all her debts required to be paid by the life insurance, or does it all go to the beneficiaries?  All the kids are adults and out of the house if that matters.

The lien on the house would need to be satisfied on selling the house (or paid if not sold or it would go into foreclosure). Same for vehicles really.

For unsecured debt like credit cards- the credit card companies have the option to go after the estate of the deceased but unless the debt owed to the credit card company is significant they most likely will not as it costs too much to do so and just write off the debt. I have been involved with situations where the estate lawyer was trying to pay off credit card debt but the process was such a hassle he basically said "screw it, let them come after us if they want to" (I doubt they did). I could not tell you where the magic number is for them to be motivated to try to recoup through legal action in probate court- likely different for each company.

For something like an insurance policy- the money goes straight to the beneficiaries and has nothing to do with the estate and thus not something that would be subject to the estate and any claims against the estate.

Link to comment
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Restore formatting

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

  • Recently Browsing   1 member

×
  • Create New...