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Post by Freeborn on Feb 16, 2019 13:32:39 GMT -6
Actually.....I'd say most financial planners would tell you to have from 3 to 5 million in a nest egg to be able to live the way you want.....and still do something for your family, gifting, philanthropy. etc. At 3 million your not gonna be living the life of Riley (I bet most of you. guys don't remember that comic strip?). 5 Miillion is a good target in todays world.....IMO. Not that it matters what i think, but i disagree agree with those numbers. Especially under tax shelters like a Roth. At an average ROR of 9% inside a Roth, 5 million would be $450,000 annual income! Damn man thats a lot of golf Roths are not the best deal and are restricted by your income. I have very little in Roth's as they always phased out before i could contribute. The assumption is that future tax rates will be higher than today's tax rate. If you look at tax brackets keep in mind these are applied to everyone so I doubt you are going to see a significant change in tax brackets unless you go over 250k. I see the Roth as somewhat of a non-event and if you give up your companies match a net loser. Run a compound table, 350k, 30% tax rate, 7% for 20 years and the net results are the same. If you add a company match you lose money.
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Post by mnfish on Feb 16, 2019 13:37:17 GMT -6
Once again i stand corrected. I will shut up now and go back to hobby farming.
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Post by MoBuckChaser on Feb 16, 2019 13:43:30 GMT -6
Diversified to me is more risk probably than diversified to others. I lumped mine into 4 categories for the most part. a healthcare index fund, a tech index fund, a stock index fund, and a Utility ETF. Wrong or right, I am liking it for now.
Edit: I forgot, I just put my last 20% of investing cash into a small cap fund at vanguard (VSMAX) 2 months ago. And man is it tearing it up right now.
John your truly not that diversified but probably more diversified than most. I would bet Foggy has 60+ investments similar to my mother In-law. Before my father in-law passed he worked with professional money managers who developed his diversification strategy which I now oversee. Once my wife and I retire we will move our money to a similar manager applying a similar strategy. Here is the kicker, unless you have 5+ million they don't want to talk to you. Wealth managers want to manage big money, Foggy's level and much higher. That doesn't mean they won't work with you but it can be eye opening that your nest egg is not that big of deal. My mother in-laws strategy is to protect assets while generating a livable income. This is pretty easy for my mother In-law as her income requirements are minimal. If you want more income and you don't have the assets you need to move into riskier investments. By the way, we have bonds in my mother in-laws portfolio and they provide risk free income with some of them tax free. Bonds are not all bad depending on what your age and goals are. Maybe not that diversified when it comes to investment money. But maybe I should explain further We have some farm rental income that is fairly steady, some CRP income that is steady. Some land sold on a CFD, and I have 2 personal loans and a business loan out that pay us from 5.5 to 7%. So along with the investment money, Its my way of being diversified.
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Post by Sandbur on Feb 16, 2019 13:50:09 GMT -6
Thats fine for only a few grand a year, what else can be done? If you're ready to retire and it's all balled up in tax deferred stuff, you need to leave MN and set up residency in a low tax/no tax state and then rent a place wherever the Cuda wants to be, to be by the grandkids. The state tax savings will provide you a shitload of plane tickets and extra cash to have a place in MN. Art and I own a cabin on Gull Lake we rent out in the winter for $800/mo + utilities that you can use. Even got a brand new Kubota cab tractor you can play with to push snow. I thought the ice was thicker than that when we tried to push the snow out for that trail to the fishing contest. I hope we have a new tractor by next year.
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Post by MoBuckChaser on Feb 16, 2019 13:53:45 GMT -6
Thats fine for only a few grand a year, what else can be done? If you're ready to retire and it's all balled up in tax deferred stuff, you need to leave MN and set up residency in a low tax/no tax state and then rent a place wherever the Cuda wants to be, to be by the grandkids. The state tax savings will provide you a shitload of plane tickets and extra cash to have a place in MN. Art and I own a cabin on Gull Lake we rent out in the winter for $800/mo + utilities that you can use. Even got a brand new Kubota cab tractor you can play with to push snow. Yep, Arizona here we come!
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Post by Freeborn on Feb 16, 2019 14:03:08 GMT -6
IF YOU HAVE A YEAR WHERE YOU DONT HAVE TO PAY ANY TAXES......that would be a good year to convert IRA funds to a Roth IRA. I had a year like that but my planner and tax person blew it. I'm still miffed at them for not advising me on this. INstaed I had to pay taxes when I converted IRA money. REMEMBER THIS....as you may get one of those times when it could be a big advantage......OR YOU MAY BE ABLE TO CREATE SUCH A YEAR?? Big Jerry??? I am not a Roth expert but from what I have read the best time to convert is when your income is the lowest and when a market downturn occurs. If a market downturn occurs and you have a paper loss you can move an asset at its lower value and pay taxes on a lower asset value. If the asset is lower due to the timing of the market you should be able to see the asset quickly appreciate once it is in the Roth. You will have to ask your CPA but it would seem if you have a year where you manage your income to zero (a business owner should be able to time this) you would have a larger amount you could transfer before you move into a higher tax bracket. I don't know if you can have a loss for the year and offset a Roth conversion.
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Post by sd51555 on Feb 16, 2019 14:13:20 GMT -6
There are hidden taxes involved with a deferred-heavy retirement. These are the hidden gems of extremely progressive taxation that you cannot see. Your on-paper income can impact what you pay for medicare B & D premiums, as well as increase the tax on your social security.
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Post by MoBuckChaser on Feb 16, 2019 14:16:16 GMT -6
They make this shit so fucking complicated you need a 8 year CPA degree just to buy a fucking condom now! GEEZ!
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Post by Freeborn on Feb 16, 2019 14:32:34 GMT -6
There are hidden taxes involved with a deferred-heavy retirement. These are the hidden gems of extremely progressive taxation that you cannot see. Your on-paper income can impact what you pay for medicare B & D premiums, as well as increase the tax on your social security. That is true but many of us will have multiple income sources that I doubt can all be rolled under a Roth. Not sure what kind of penalty I will see based on my annual retirement income but I should probably understand it. I do like the idea of being able to manage my taxable income but I want to be able to access my wealth when necessary.
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Post by nhmountains on Feb 16, 2019 15:32:43 GMT -6
I have very little money in bonds or bond funds. Was reading for my age I should be at around 40% bonds. Are any of you guys thinking bonds for retirement when we have a stock market in good shape? Do you believe in the prevent defense in football during the last quarter of the game?
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Post by MoBuckChaser on Feb 16, 2019 16:43:23 GMT -6
I have very little money in bonds or bond funds. Was reading for my age I should be at around 40% bonds. Are any of you guys thinking bonds for retirement when we have a stock market in good shape? Do you believe in the prevent defense in football during the last quarter of the game? Of course not. I have seen how it has worked for the Vikings here the last 50 years.
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Post by Foggy on Feb 16, 2019 17:34:27 GMT -6
Keep one thing in mind fellas.......until I was about 35 years old.....there was no IRA's, 401K plans or a way to shelter any money for retirement.....unless you were in education or in medicine or congress. My wife and I had little or no retirement plan until we were about 40 years old. Luckily we were able to pour the coals to those plans in the next 20 years and the markets took off......and I had a biz to sell. I think our retirement plans would have been "enough" but my biz sale gave us a better retirement than we were prepared for. My best stocks and funds over my lifetime were in medical technology and energy. My family rode the Biomedicus stock from its infancy which turned into Medtronic. Another story. Another great way to prepare for retirement is to inherit some cash / real estate. I was not THAT lucky. .
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Post by Freeborn on Feb 16, 2019 17:36:35 GMT -6
I took a look at both SS and Medicare and there is no way I can avoid SS taxes and the premium increase in Medicare is immaterial. SD I understand your strategy It makes sense and it should benefit you. For Mo, Foggy and I, much of these taxes can't be avoided. Pretty sad they tax social security, Thank you Democrats. www.ssa.gov/pubs/EN-05-10536.pdfwww.ssa.gov/planners/taxes.html
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Post by smallchunk on Feb 16, 2019 21:03:41 GMT -6
They make this shit so fucking complicated you need a 8 year CPA degree just to buy a fucking condom now! GEEZ! I have read every post in this thread and it's all over my head. I teach fourth graders, I'm too dumb for all of this money talk! Is there something a 30 year old teacher should be looking out for? Lol
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Post by Freeborn on Feb 16, 2019 22:52:12 GMT -6
They make this shit so fucking complicated you need a 8 year CPA degree just to buy a fucking condom now! GEEZ! I have read every post in this thread and it's all over my head. I teach fourth graders, I'm too dumb for all of this money talk! Is there something a 30 year old teacher should be looking out for? Lol You should have a pension which is good. Contribute to a retirement account (401k or similar) as much as you can and if it's not the max amount allowed add 1% per year until you are at the max. Avoid debt particularly if the asset depreciates. Hire a financial planner that talks to you about your goals and reset your goals at least 1 per year. Compounding is your friend and the sooner you invest the better. Dollar cost averaging is a good thing so don't sweat the reasonable market swings. Learn enough to know what to avoid. Vote for pro market, capitalist politicians.
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