Page 2 of 34 FirstFirst 123412 ... LastLast
Results 11 to 20 of 338

Thread: Financial Independence

  1. #11
    Darth Small Macheath's Avatar
    Join Date
    Sep 2010
    Posts
    14,704
    Edit: pasting the retirement worksheet link back in

    Okay, should be all fixed up at this point. The columns are now meaningful after retirement age, and show:

    A) age,
    B) balance for that year,
    C) your total contributions for that year,
    D) the market's contributions on top of that, AKA appreciation,
    E) the amount you will withdraw in a retirement year,
    F) the total increase in your accounts for the year.

    The "red numbers" have also shifted around some; the amount you intend to invest each year is now at the top of the "contributions" column, and there's a spot to put in a number by which to increase those annual contributions, over on the right (by the assumed interest rate and so forth).
    Last edited by Macheath; 02-28-2014 at 01:15 PM.

  2. #12
    Darth Small Macheath's Avatar
    Join Date
    Sep 2010
    Posts
    14,704
    Quote Originally Posted by Threnn View Post
    Shit. didn't realize I was editing your form.
    You're not, you're editing the copy of it that I made public and gave everyone edit access to.

    But it's all good now, fire away.

  3. #13
    Darth Small Macheath's Avatar
    Join Date
    Sep 2010
    Posts
    14,704
    I added another column showing your withdrawals post retirement, and a chart.

  4. #14
    Darth Small Macheath's Avatar
    Join Date
    Sep 2010
    Posts
    14,704
    Quote Originally Posted by Gnorlin View Post
    Can I have all the dollars left when you die since they're not important?
    Sure, but I don't plan to die, so sucks to be youuu-uuuu

  5. #15
    Senior Member
    Join Date
    Sep 2010
    Posts
    1,191
    The balance didn't seem to change when modifying the annual contrib increase.

    Balance (B16 and below) had $C$15 representing the annual contrib, so it always just used the first number. I changed it to $C15 and pasted in the change.

    Nice graph by the way.

  6. #16
    Senior Member
    Join Date
    Sep 2010
    Posts
    1,191
    Speaking of investing... Is there a magic number that should be hit through tax-deferred contribs before looking into Roth (after tax) contributions?

    I know a Roth requires at least 5 years before you can withdraw on it "tax free" and that it requires several years to make up for paying taxes beforehand. I just wonder if there is a breakpoint where a Roth becomes a better deal.

  7. #17
    Darth Small Macheath's Avatar
    Join Date
    Sep 2010
    Posts
    14,704
    Quote Originally Posted by Threnn View Post
    Balance (B16 and below) had $C$15 representing the annual contrib, so it always just used the first number. I changed it to $C15 and pasted in the change.
    Ahh, whoops. Typo.

    Quote Originally Posted by Threnn View Post
    Speaking of investing... Is there a magic number that should be hit through tax-deferred contribs before looking into Roth (after tax) contributions?
    You can only do so much with tax-deferred investments before hitting the 401(k) limit of $17,500 (unless there's some other tax-deferred investment I'm not aware of that has no limit). But what I've always heard is that step #1 should be to maximize your employer's contribution, if any.

    For some people, their employer matches up to a certain level... mine matches 25% of whatever I put in, so I'm both lucky and unlucky in that regard -- I can keep going all the way to the maximum and still reap some extra benefit, but there's no point (until the max) at which I can claim to have "maximized my employer's contribution."

    After step #1, you need to consider your tax bracket situation: If you expect to be in a lower tax bracket after retirement, you'll want to pay taxes then -- so put more money into your 401(k). If you're in a low enough bracket currently (and might actually be higher after retirement), then you want to pay taxes now -- put money into a Roth IRA if you can.

    <high salary advice>

    If your MAGI (modified adjusted gross income) is too high for you to contribute to a Roth IRA, then it's probably too high to benefit from the tax-deductible nature of a Traditional IRA too, but you can still use a Roth; you can put money into a Trad IRA and transfer it from there to a Roth IRA (this is known as a "backdoor Roth" and is a loophole that has yet to be closed). This gets more complicated if you have other IRAs, so it may be best to avoid a Traditional IRA (aside from the temporary one) entirely if you plan to take advantage of the backdoor Roth.

    Of course, if your MAGI is that high, then chances are you're currently in a higher tax bracket than you will be in retirement, so you should be focusing on the 401(k) anyway. If you're making that much, max out the 401(k) first, then backdoor Roth, then taxable investments (stocks; keep your bonds in tax-advantaged accounts).

    </high salary advice>

    Okay, I'm overcomplicating this. The short answer is, it depends on your income, your tax bracket, and your expected tax bracket in retirement. The medium answer is, #1. max out your employer's contribution to your 401(k), #2. attempt to place the rest of your funds in a tax-efficient manner.

    Quote Originally Posted by Threnn View Post
    I know a Roth requires at least 5 years before you can withdraw on it "tax free" and that it requires several years to make up for paying taxes beforehand. I just wonder if there is a breakpoint where a Roth becomes a better deal.
    Yeah, there's some monkey business you've got to go through to slowly transfer money out of your retirement accounts, if you plan to retire before 59. I haven't looked into it in too much detail, but within ~5 years of my intended retirement date, I certainly plan to.
    Last edited by Macheath; 02-28-2014 at 03:12 PM.

  8. #18
    Senior Member
    Join Date
    Sep 2010
    Posts
    1,191
    Hmmm... It just so happens my wife has access to a 457(b), which allows you to contribute a separate 17,500. She could conceivably max out a 403(b) and a 457(b) and put away 35k/yr deferred, according to her benefits site.

    As of now, her employer is already capped (it is 2:1, max 10%) and the employer part doesn't count against the IRC limit. So after her 5% "base" contribution, the rest has to go into a supplemental to hit the 17.5k cap on the 403/401 side of things(those both count together).

    Also, her employer site seems to offer the Roth without the income restrictions (they mention that banks/etc have the restriction, but employers that offer it don't). The Roths available are a Supplemental or a 457. And thus they behave like those as well.

    The thing of note about the 457b is that it can be pulled from before turning 59.5 without the 10% early withdrawal penalty. The supplemental has the 10% penalty. This is really only significant if retiring before 59, but it is worth thinking about.

    Her base 5% also has no penalty starting at 55. I feel like I need to make sure there are enough early access funds available to bridge the 4.5 years just in case that is a possibility.

  9. #19
    Darth Small Macheath's Avatar
    Join Date
    Sep 2010
    Posts
    14,704
    Wow, what does your wife do? Those sound like pretty fabulous retirement benefits. (I am not an expert.)

  10. #20
    Senior Member
    Join Date
    Sep 2010
    Posts
    1,191
    She is an RN for the U of Michigan hospital OR (plastics team... boobs, penises, and hands- oh my!). The benefits at the U are very generous compared to the private sector, albeit the pay is less in comparable fields. That has been their thing since I can remember.

Bookmarks

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •