How much $ to retire and how to fund your lifestyle in retirement

[adiggs]

Thanks! Sounds good, I ask because this feels way over my head. Do ask my financial advisor as well as my tax person too (now needed), but the aspect of having multiple opinions is helpful IMO.

I did something like this. When I started thinking maybe it was time last summer, then I figured out an answer on my own that got pretty detailed. The detail was primarily around cash flow by account as I've got most of a decade until I have access to retirement accounts.

Then I talked to my Fidelity financial advisor as that was a free service through my employer. I like free. They got me into detailed expenses planning (that tool is available on the Fidelity site, and I'm pretty sure it's free and accessible to anybody, with or without an account, though don't hold me to that last bit ). That advisor was too polite to say so, but was clearly thinking that I was hair-on-fire risky by being roughly 100% TSLA. Then again the results were good. Their recommendation was diversification of course - take my outstandingly lucky winnings off the table.

And then I talked to a second financial advisor in the context of them taking over investing decisions with a portion of our portfolio. Less detailed planning here, but more discussion and advice around the larger plan, and a repeat of the first advice - take the winnings off the table.


I listened to all of it. And I really did learn many useful things from the advisors and I'm glad that I talked to them. And then I made my own decision about how we would proceed (I'm the financial manager in my family - I enjoy doing this stuff else we'd have turned this over to a financial manager by now). That by the way is key to any decision making - the less and less fun that you find this stuff, the more and more that you'll want to turn this over to somebody else to do. Even if it costs you $ - in effect part of what you're buying is your time away from this thing that doesn't interest you or that you find interesting / fun.

 

[CHGolferJim]

I did something like this. When I started thinking maybe it was time last summer, then I figured out an answer on my own that got pretty detailed. The detail was primarily around cash flow by account as I've got most of a decade until I have access to retirement accounts.

Then I talked to my Fidelity financial advisor as that was a free service through my employer. I like free. They got me into detailed expenses planning (that tool is available on the Fidelity site, and I'm pretty sure it's free and accessible to anybody, with or without an account, though don't hold me to that last bit ). That advisor was too polite to say so, but was clearly thinking that I was hair-on-fire risky by being roughly 100% TSLA. Then again the results were good. Their recommendation was diversification of course - take my outstandingly lucky winnings off the table.

And then I talked to a second financial advisor in the context of them taking over investing decisions with a portion of our portfolio. Less detailed planning here, but more discussion and advice around the larger plan, and a repeat of the first advice - take the winnings off the table.


I listened to all of it. And I really did learn many useful things from the advisors and I'm glad that I talked to them. And then I made my own decision about how we would proceed (I'm the financial manager in my family - I enjoy doing this stuff else we'd have turned this over to a financial manager by now). That by the way is key to any decision making - the less and less fun that you find this stuff, the more and more that you'll want to turn this over to somebody else to do. Even if it costs you $ - in effect part of what you're buying is your time away from this thing that doesn't interest you or that you find interesting / fun.

Interesting (as usual!). I’m working on an overall investment strategy to somehow combine 3 complementary and/or conflicting approaches: 1) TMC >100% in TSLA, 2) typical advisor diversification and 3) ARKK focus on disruptive companies and constant rebalancing around a target percentage.

I‘m 64 and retired, and looking to TSLA to improve an already sound portfolio/spending position, enable occasional extravagant travel and spending, and to fund philanthropy and estate.

Current hypothesis is:
* ~40% TSLA declining over time as I harvest and accumulate gains above a target total $ exposure assuming an SP uptrend as forecast by Wood/Baron/Maurer et al.
* 80% minus above other equities
* 20% cash for spending reserve, portfolio segregation, and to fund TSLA rebalancing purchases when SP drops
* 0% fixed income (all shunted to TSLA covered call strategy in 2019)

Gradually spending down taxable accounts to the point where everything will be in Roth IRA, and eventually pay off mortgages and go on Medicare = simplified tax situation (reduced need for taxable income to offset deductible expenses).

 

[adiggs]

Both my wife and I worked at good jobs in healthcare, earning about as much as nurses make, and as I enjoyed what I was doing I kept working until I was 70. My brother, on the other hand, was the only worker in his marriage and retired at age 59 (!), and now they have virtually nothing, live poor, while Milli and I buy new Teslas and take road trips and live in a beautiful older home overlooking Napa Valley. You HAVE to think about when to retire and how you're going to live when you do so. Wildly spending money on vacations will suck your savings down in a few years, while living simply leaves you happy for years. Especially if "simply" means only owning ONE Model S at a time....

What - no his and hers Model S's?

Interesting (as usual!). I’m working on an overall investment strategy to somehow combine 3 complementary and/or conflicting approaches: 1) TMC >100% in TSLA, 2) typical advisor diversification and 3) ARKK focus on disruptive companies and constant rebalancing around a target percentage. (I‘m 64 and retired, and looking to TSLA to improve an already sound portfolio/spending position, enable occasional extravagant travel and spending, and to fund philanthropy and estate.

Current hypothesis is:
* ~40% TSLA declining over time as I harvest and accumulate gains above a target total $ exposure assuming an SP uptrend as forecast by Wood/Baron/Maurer et al.
* 80% minus above other equities
* 20% cash for spending reserve, portfolio segregation, and to fund TSLA rebalancing purchases when SP drops
* 0% fixed income (all shunted to TSLA covered call strategy in 2019)

Gradually spending down taxable accounts to the point where everything will be in Roth IRA, and eventually pay off mortgages and go on Medicare = simplified tax situation (reduced need for taxable income to offset deductible expenses).

This sure does sound like where I've landed as well

I've landed on roughly 50% TSLA and 50% cash, with 1/2 of the cash used as my fixed income replacement. I use the cash for puts and/or put spreads (most definitely not advice - it's something I like and works for me!), with about 25% of the total unencumbered so its available for big purchases, spending reserve, or whatever.

If I were to diversify it would be something in the ARK universe though my bias is towards biotech. I know there is amazing stuff going on in that area but I also know that I won't be doing the research to figure out the big next thing, nor will I do the follow up research to decide on the company(s) to invest in.

 

[tivoboy]

I lIke this guys financial calculators and models. Gives the option for a lot of variable tweaking and alternatie projections. READ the instructions for each financial calculator, like the FIRE model or Will my money last calcs.. one can easily put in something like SS and pension or alternate income streams to add to the modeling.

Disclaimer: no interest or relationship whatsoever

Home - Engaging Data

Engaging Data is a virtual workshop/gallery of javascript tools, data visualizations and maps of stuff that I find interesting and fun. Enjoy and Learn.

engaging-data.com

 

[Oil4AsphaultOnly]

Hello fellow TMCers! I seek the wisdom of the masses, or at least those who are familiar with the US tax rules.

Now for the next step. If you've decided that you have enough to retire, then how to go about it?

The IRS has some pretty strict rules about taking early distributions of one's IRA, part and parcel to it is the S.E.P.P (Substantially Equal Periodic Payments), and that there can be no changes to the IRA (no rollovers, no contributions, and no 'significant' changes to the distribution amounts) once the payments have started.

So obviously, don't take any distributions until after any rollovers are done (from a 401k into the IRA, or IRA out into a Roth, or even splitting the IRA into smaller ones - not sure why one would want to do this), but what about the timing of the first distribution? If I were to use the RMD method of calculating the distribution amount, would it be based off of the Dec 31, 2020 total (which can be significantly different from today after all the rollovers are done), or the current total? Also, would it be wiser to hold off on the distribution (to try to grow the IRA larger), and thus live off of the savings for longer, or take the distribution right away and use that money to shore up the after-tax finances?

 

[MikeC]

Hello fellow TMCers! I seek the wisdom of the masses, or at least those who are familiar with the US tax rules.

Now for the next step. If you've decided that you have enough to retire, then how to go about it?

The IRS has some pretty strict rules about taking early distributions of one's IRA, part and parcel to it is the S.E.P.P (Substantially Equal Periodic Payments), and that there can be no changes to the IRA (no rollovers, no contributions, and no 'significant' changes to the distribution amounts) once the payments have started.

So obviously, don't take any distributions until after any rollovers are done (from a 401k into the IRA, or IRA out into a Roth, or even splitting the IRA into smaller ones - not sure why one would want to do this), but what about the timing of the first distribution? If I were to use the RMD method of calculating the distribution amount, would it be based off of the Dec 31, 2020 total (which can be significantly different from today after all the rollovers are done), or the current total? Also, would it be wiser to hold off on the distribution (to try to grow the IRA larger), and thus live off of the savings for longer, or take the distribution right away and use that money to shore up the after-tax finances?

There are a few members here who already started SEPP. I plan to take my first distribution this year but am hoping for a fed mid-term rate bump this month that will allow me to take out a little more.

The total can be any date you choose that is reasonably recent, there's no firm requirement, you just have to be sure you're able to clearly document it (screenshot your balance on that date) which is why the default tends to be 12/31 of the prior year. I had a high balance on April 13th, 2021, so unless we get a nice run up to the earnings report, I'll probably be using that date.

It depends on your personal situation, but if you expect your IRA balance to grow, you'll be able to take out a bigger annual payment if you wait for that to happen.

The reason you might want to split your IRA into smaller ones is if you don't need the full balance to get the annual distribution you need. That leaves you with non-SEPP IRAs to use later, possibly in another SEPP if you choose to do so, because you won't be able to withdraw any other amount from your SEPP IRA(s) until the SEPP plan concludes.

This site and forum have been useful for me: 72tNET – Retire with Confidence

 

[dmvevguy]

Good day all. I've been fortunate this year from my little consulting company and made a lot more than planned. Was hoping CT would be delivered before Dec 31, but I doubt I'll be in any queue to get it this year for the 179 deduction.

Does anyone have any thoughts on any big ticket purchases for 179? I need to spend 50-100k this year to take advantage of 179 deduction and maximize on my taxes. I wish the Model Y would qualify b/c then I would have just got bought it and then do a trade-in next year for the CT. Thoughts and opinions greatly appreciated!

 

[tivoboy]

Good day all. I've been fortunate this year from my little consulting company and made a lot more than planned. Was hoping CT would be delivered before Dec 31, but I doubt I'll be in any queue to get it this year for the 179 deduction.

Does anyone have any thoughts on any big ticket purchases for 179? I need to spend 50-100k this year to take advantage of 179 deduction and maximize on my taxes. I wish the Model Y would qualify b/c then I would have just got bought it and then do a trade-in next year for the CT. Thoughts and opinions greatly appreciated!

Frankly, you could probably buy a large over 2T SUV and take the full write off this year, and sell it into early next year for a very small loss. I’d look at used, which will still be higher price than expected, but the overall loss going into the 2022 tax year would be probably less than buying an actual brand new one.

You could also think about setting up a large funded DAF (donor advised fund) this year, and then make all your charitable contributions over the next 5-10 years out of the DAF.

I’ve heard of people buying pre-paid private flight cards, and then selling them in the secondary market for a small discount. Make sure the company you do this with allows it. Or, if that is even something you are interested in, make sure it can be used for family or carried far into the future.

I’m assuming you’re making the maximum contributions to your either SEP or Keogh plan for retirement contributions? Max this year is ~$56K, depending on how your company is setup you could actually fund it with higher amounts, for an “Employee” sponsored plan

 

[mongo]

Frankly, you could probably buy a large over 2T SUV and take the full write off this year, and sell it into early next year for a very small loss. I’d look at used, which will still be higher price than expected, but the overall loss going into the 2022 tax year would be probably less than buying an actual brand new one.

Interesting, so using depreciation recapture to shift the income into next year and use it on the CT?
Still take a hit on sales tax depending on the state's treatment of trade ins.

 

[adiggs]

Good day all. I've been fortunate this year from my little consulting company and made a lot more than planned. Was hoping CT would be delivered before Dec 31, but I doubt I'll be in any queue to get it this year for the 179 deduction.

Does anyone have any thoughts on any big ticket purchases for 179? I need to spend 50-100k this year to take advantage of 179 deduction and maximize on my taxes. I wish the Model Y would qualify b/c then I would have just got bought it and then do a trade-in next year for the CT. Thoughts and opinions greatly appreciated!

I don't know the tax side particularly, but does Model X qualify? You would get some of the functionality that CT will provide - towing capacity at 5k lbs (I use mine to tow a pickup truck trailer) and the sort of interior space you'd expect from a large crossover / SUV.

I sort of think that we'll trade our Model X in, someday, for a CT.


And congratulations on the first world problem

 

[tivoboy]

Interesting, so using depreciation recapture to shift the income into next year and use it on the CT?
Still take a hit on sales tax depending on the state's treatment of trade ins.

If you get over 2T, you can write off the full amount THIS year, so no depreciation required. Depending on how you sell it next year, you’d have some reversals - YMMV

 

[mongo]

If you get over 2T, you can write off the full amount THIS year, so no depreciation required. Depending on how you sell it next year, you’d have some reversals - YMMV

Yeah, full deduction with 179 recapture.

@adiggs X qualifies (there's a thread on that), but can they get one before the end of the year?

 

[dmvevguy]

Frankly, you could probably buy a large over 2T SUV and take the full write off this year, and sell it into early next year for a very small loss. I’d look at used, which will still be higher price than expected, but the overall loss going into the 2022 tax year would be probably less than buying an actual brand new one.

You could also think about setting up a large funded DAF (donor advised fund) this year, and then make all your charitable contributions over the next 5-10 years out of the DAF.

I’ve heard of people buying pre-paid private flight cards, and then selling them in the secondary market for a small discount. Make sure the company you do this with allows it. Or, if that is even something you are interested in, make sure it can be used for family or carried far into the future.

I’m assuming you’re making the maximum contributions to your either SEP or Keogh plan for retirement contributions? Max this year is ~$56K, depending on how your company is setup you could actually fund it with higher amounts, for an “Employee” sponsored plan

Excellent advice, and really appreciate it and the follow-on comments! I thought about Model X, but don't want to risk delivery delays. Great idea on used SUV. I am planning a big move to FL early next year, so that would make sense. I actually started test driving qualified SUVs and even F150 trucks (don't shoot me, pls). I may end up opting for a used F150, getting 179, and then selling next year once I get CT and am ok to take a little bit of loss!

Didn't realize about pre-paid private flight cards...need to research that. My CPA set me up a few years ago with the whole retirement plan/cash benefit plan, pre-cola, etc. so I am able to max out everything in terms of retirement, life insurance policies, cash benefit, and an overall retirement plan of about 200k. Pay an arm and a leg to an attorney and an actuary to make sure it's all legal and above board.

I just wish I could get the tri-motor CT this year vs. doing all this buy/sell SUV/truck headache. I also have until ~December to do something, so hoping the chip shortage is resolved by then and the used SUV/truck market goes back down.

I was researching another idea to buy a used boat/yacht, put it into charter, and that way I could take 179 on it. But, I wanted to buy the yacht from my existing business and not have to create a new LLC. I'm not totally familiar with the tax / accounting rules if my current LLC creates another subsidiary LLC (would that capital investment to buy the yacht be a write-off for current LLC tax year?) and then the new LLC will buy the boat and put it into charter. Talking to a few companies in FL about this now, but it seems a bit more complicated than what I want to do.

What's crazy is that I actually was planning to only work 10-20 hours a week, but tried that in Jan/Feb and got super bored and anxious, so more work came my way and I was having "fun" again .

 

[tivoboy]

I just wish I could get the tri-motor CT this year vs. doing all this buy/sell SUV/truck headache. I also have until ~December to do something, so hoping the chip shortage is resolved by then and the used SUV/truck market goes back down.

I do NOT see the chip shortage resolving enough by the end of the year to get OEM or Tesla back up to full speed, or even more predictable manufacturing more than what we have now. It’s really a multiple collateral damage situation. It’s not just ONE chip, or a couple chips, it’s SEVERAL chips and it might come down to something like the 4G/5G chipset that was engineered for the in car hotspot In the end. Sometimes it’s just the Bluetooth module and they aren’t prepared to change/shift the supplier, and do all the engineering REWORK to get it approved internally and externally. so, while I think things will get BETTER by EOY, I’m not counting on a full resumption to predictable manufacturing till squishy EQ2/Q3 2022. Some people say it may be even further back than that.

 

[dmvevguy]

I do NOT see the chip shortage resolving enough by the end of the year to get OEM or Tesla back up to full speed, or even more predictable manufacturing more than what we have now. It’s really a multiple collateral damage situation. It’s not just ONE chip, or a couple chips, it’s SEVERAL chips and it might come down to something like the 4G/5G chipset that was engineered for the in car hotspot In the end. Sometimes it’s just the Bluetooth module and they aren’t prepared to change/shift the supplier, and do all the engineering REWORK to get it approved internally and externally. so, while I think things will get BETTER by EOY, I’m not counting on a full resumption to predictable manufacturing till squishy EQ2/Q3 2022. Some people say it may be even further back than that.

Bummer. Great points. I’ve been reading “rumors” on Twitter that they will be able to deliver some CT before 12/31. Guess it’s hype to either cause stock price to go up/down (if they fail).

DAF, getting a used SUV/truck (most likely a truck) will be my marching orders btw now and Dec. I’m still looking into this boat thing, but it’s way over my head on it being a truly 179 bonus depreciation write off from my existing llc.

 

[dmvevguy]

I do NOT see the chip shortage resolving enough by the end of the year to get OEM or Tesla back up to full speed, or even more predictable manufacturing more than what we have now. It’s really a multiple collateral damage situation. It’s not just ONE chip, or a couple chips, it’s SEVERAL chips and it might come down to something like the 4G/5G chipset that was engineered for the in car hotspot In the end. Sometimes it’s just the Bluetooth module and they aren’t prepared to change/shift the supplier, and do all the engineering REWORK to get it approved internally and externally. so, while I think things will get BETTER by EOY, I’m not counting on a full resumption to predictable manufacturing till squishy EQ2/Q3 2022. Some people say it may be even further back than that.

Well, you're officially right At this point, I'm not even holding my breath for my delivery of CT in 2022. I lowered my expectations to 2023.

 

[adiggs]

Bringing these over from the main / Perpetual thread:

I asked him how he manages his entrenched mindset and behavior patterns. His answer was he does not. He's making more money than he can spend, and yet he still enjoys living life ...economically.

Being rich is a mentality. I grew up poor so I treat money as an essential and finite resource in life. My wife grew up well off so money is just a number to her. If she needs more she will get/ask/make more. I don’t know if that’s the better way to live life, but definitely the happier lol

Like KMCC my wife and I still are obsessed with getting "a deal " on everything we buy, even though the cost difference is usually irrelevant at this point in our lives.

I'm trying to get over that mindset. I guess I inherited it from my depression era parents. I can identify with KMCC's $.25 yogurt. I'm working to learn that most decisions need not be just about the money. Namaste

As a newly retired person, this mindset is something that I think about. I've seen this in others that have retired - they never get to a place where they are willing to spend money. If it is a "problem" then it can at best be described as a first world problem. The primary thing that I think about is whether in our continuation of our saving-for-retirement mindset, are we now avoiding spending on something that we want and is important to us, because our previous mentality was that is was unobtainable?

We want a new Roadster, and when it was first shown, that was a wish-that-won't-be. Now it's a choice between getting it immediately, or wait a few years for the beta testers and Tesla to work out the kinks. When we get there, will we actually spend that money? Old / pre-retirement us probably woudn't (it's such a ridiculous thing to spend money on).

I love all of this space tourism stuff going on - will I buy a ticket for myself though for the experience? It's not like I can take it with me, either the money or the experience, but the experience will enrich my life afterwards more than different / bigger numbers in the portfolio will. And isn't that in the running for 'bad' ways to spend money


And yet at some point it needs to be spent. I suppose this is easy for those with children - the pile gets passed down to them and they get to deal with the problem (to spend, or to save, or like something).

Our personal plan, as we have no children, is to be giving away the pile as we go along. We could wait, grow the pile as large as possible, and then give it all away in our will. But I think it's going to be a lot more fun and interesting to be donating it to causes and organizations that we think worthwhile along the way. And it is STILL hard, today, to be donating as aggressively as I think we need to.

We are early enough in retirement that waiting for a decade or so to begin the aggressive annual donations isn't unreasonable and yet there is still a mentality there that won't change overnight (nor should it), but that I'm trying to nudge to something closer to enjoying it while I can.

Step 1 by the way - I discovered sushi earlier this year. Somehow I've gone through my adult life without eating sushi. Now I get takeout weekly. Thank goodness there is a sushi restaurant near home with good prices! Those other sushi places we've looked at are like 3x as expensive!

 

[ZeApelido]

Bringing these over from the main / Perpetual thread:







As a newly retired person, this mindset is something that I think about. I've seen this in others that have retired - they never get to a place where they are willing to spend money. If it is a "problem" then it can at best be described as a first world problem. The primary thing that I think about is whether in our continuation of our saving-for-retirement mindset, are we now avoiding spending on something that we want and is important to us, because our previous mentality was that is was unobtainable?

We want a new Roadster, and when it was first shown, that was a wish-that-won't-be. Now it's a choice between getting it immediately, or wait a few years for the beta testers and Tesla to work out the kinks. When we get there, will we actually spend that money? Old / pre-retirement us probably woudn't (it's such a ridiculous thing to spend money on).

I love all of this space tourism stuff going on - will I buy a ticket for myself though for the experience? It's not like I can take it with me, either the money or the experience, but the experience will enrich my life afterwards more than different / bigger numbers in the portfolio will. And isn't that in the running for 'bad' ways to spend money


And yet at some point it needs to be spent. I suppose this is easy for those with children - the pile gets passed down to them and they get to deal with the problem (to spend, or to save, or like something).

Our personal plan, as we have no children, is to be giving away the pile as we go along. We could wait, grow the pile as large as possible, and then give it all away in our will. But I think it's going to be a lot more fun and interesting to be donating it to causes and organizations that we think worthwhile along the way. And it is STILL hard, today, to be donating as aggressively as I think we need to.

We are early enough in retirement that waiting for a decade or so to begin the aggressive annual donations isn't unreasonable and yet there is still a mentality there that won't change overnight (nor should it), but that I'm trying to nudge to something closer to enjoying it while I can.

Step 1 by the way - I discovered sushi earlier this year. Somehow I've gone through my adult life without eating sushi. Now I get takeout weekly. Thank goodness there is a sushi restaurant near home with good prices! Those other sushi places we've looked at are like 3x as expensive!

Sushi is the best. And I can rationalize a weekly $100 sushi bill with "meh just sell one weekly way OTM covered call".

 

[adiggs]

Sushi is the best. And I can rationalize a weekly $100 sushi bill with "meh just sell one weekly way OTM covered call".

I find myself askign questinos like - can I eat only sushi for a whole day? It doesn't onerous in the slightest! Maybe sushi every night for dinner for a week. Probablyl with enough left over for breakast. @Lycanthrope has his beer money; I have my sushi money

 

[Mokuzai]

I find myself askign questinos like - can I eat only sushi for a whole day? It doesn't onerous in the slightest! Maybe sushi every night for dinner for a week. Probablyl with enough left over for breakast. @Lycanthrope has his beer money; I have my sushi money

Sushi is great and quite healthy if you don't get it loaded with mayo and crap. But all things in moderation. There's a not insignificant amount of mercury in most fish and that can build up if eaten too frequently.

Sushi twice a day for years and/or the herbs he was taking took down Jeremy Piven for a while.

Exclusive: Jeremy Piven Defends Play Departure Due to Mercury Poisoning

Jeremy Piven talks to Good Morning America in an exclusive interview about why he pulled out of his starring role in David Mamet's Broadway play 'Speed-the-Plow.' Piven and his doctor said the actor had mercury poisoning possibly from eating too much sushi. He said at the Golden Globes it has...

abcnews.go.com