Retirement investing...

[supton]

I should point out, if you can start a Roth, do so. You contribute, up to $7k/yr currently, post tax. It can grow of course. BUT when you pull money out, it's not taxable income. How cool is that? that's why they limit you to $7k/yr.

There's more of course--you can do Roth conversions of a 401k, back door Roths, stuff that you shouldn't focus on right now.

There is also HSA's. This can be an avenue to build wealth too. I consider it something for people of higher net worth, 'cuz I've never been able to really utilize it--but if you have access to an HSA at work, do pay attention. You might want to not only contribute to it but to max it out, and then to not use it. Not today. There's more to it than that, and I'm not knowledgeable about it, but do pay attention when you come across it.

 

[Ws6]

My workplace matches my 5% contribution with 200% (Extra 10%), so meeting 15% saving right off the bat!!! I tell my young cohorts to consider everything when comparing wages and benefits.

That's pretty insane. You probably work for a good company.

 

[Astro14]

Can I pull however I want from a 401k after 60? 100% on day one, or 1% a year, or anything in between?

After age 59 1/2, you can withdraw as much as you like from your 401(k) without paying a penalty.

However, anything you withdraw is in fact, taxed as ordinary income.

You did not pay taxes on it going in, so you got quite a bit of a return with the initial deposit, and then it grew tax-free, but uncle Sam gets his hands on it when you take it out.

If you were to withdraw from your 401(k) prior to age 59 1/2, aside from certain exceptions like a hardship, loss of job or illness, then you pay a 10% penalty in addition to your income tax.

 

[Vil_Riker]

There are a few factors in choosing a dividend stock, ETF or a fund. What is the underlying business. Quite a lot of these high dividend funds return capital in a form of a high yield. A crude3 way would be to describe them as a Ponzi scheme. Watch out for those.

Dividend stocks can do the same thing. You will need to look at the underlying business and the payout ratio. Pfizer, for example, has maintained their dividends and is paying out of their cash pile despite negative margins. May work for the short term, will likely not work in the long term.

Another thing to look for is the taxes. Are the dividends qualified or not? If not, they will be taxed like ordinary income. So watch out for those.

In my dividend investing, I stick with infrastructure stocks. I have some ETF-s and also have a portfolio of solid stocks. I avoid activist or media darling companies and prefer companies that do solid work in the background. My goal is 6% return overall.

I will likely retire overseas by the end of this year. There are a lot of ducks to be put in a row.

To answer the original question - I haven't seen much value in dealing with even top end financial advisors when managing large portfolios at work. They have a lot of data about asset classes, benchmarking and fund analysis. It's good information but what they do is not rocket science if you are a little sophisticated in finance.

 

[MrGraybeard]

As I was preparing to retire at age 59, I stumbled across a forum called early-retirement.org. Many of the people on the forum have won the game and are happy to tell you how they did it.

 

[99Saturn]

There is also HSA's. This can be an avenue to build wealth too. I consider it something for people of higher net worth, 'cuz I've never been able to really utilize it--but if you have access to an HSA at work, do pay attention. You might want to not only contribute to it but to max it out, and then to not use it. Not today. There's more to it than that, and I'm not knowledgeable about it, but do pay attention when you come across it.

Triple tax advantaged:
- pre-tax contribution
- growth is tax free
- withdrawals are tax free if used for a qualified expense, and not subject to a penalty if not used for medical expenses after 65 I think.

 

[SC Maintenance]

One gotcha is that the years of earnings is inflation adjusted but only until age 60. So working after 60 can bump lower pay quarters off—but there might be a point where it isn’t.

I did not know that. Very interesting. That is sort of a slap in the face to those who's full retirement age is 67 especially.

 

[supton]

Triple tax advantaged:
- pre-tax contribution
- growth is tax free
- withdrawals are tax free if used for a qualified expense, and not subject to a penalty if not used for medical expenses after 65 I think.

Yep. IIRC one trick is to pay medical out of pocket today--and keep all the receipts. Reimburse yourself 10, 20, 30 years from now. So the HSA can grow all on its own without any hindrance. Edit: so that you build all the more money for future medical expenses (which are sure to come).

My problem is, for a few years the money going in was coming right back out--wife & daughter were hitting physical therapy hard. And I wasn't in a position to pay cash to cover that. That might change as the years go forward, dunno, but to me while it's a great idea it might be more aspirational than feasible. At least for some people. YMMV.

I did not know that. Very interesting. That is sort of a slap in the face to those who's full retirement age is 67 especially.

Yeah, I have not read too deeply into it but a coworker has griped about it as he's past 60 now. It's something else to consider in one's planning, even if one doesn't have control over it. Ramp up in pay early if you can, and aim to get to where one can coast all the sooner.

 

[MrGraybeard]

Triple tax advantaged:
- pre-tax contribution
- growth is tax free
- withdrawals are tax free if used for a qualified expense, and not subject to a penalty if not used for medical expenses after 65 I think.

Non-medical withdrawals after 65 are taxable, though, just like an IRA or 401k.
BTW, one of the advantages of a 401k over an IRA is that you can take penalty-free withdrawals at age 55, vs. 59 1/2 for the IRA.

 

[JeffKeryk]

Retiring at 39 with $500K is a pretty good trick, IMO. I don't know how you do that, if you are going to live awhile. Prices continue to go up. $50K will likely be needed for house and car repairs alone...
If your job is the problem, perhaps look into doing something else?

 

[Ws6]

Retiring at 39 with $500K is a pretty good trick, IMO. I don't know how you do that, if you are going to live awhile. Prices continue to go up. $50K will likely be needed for house and car repairs alone...
If your job is the problem, perhaps look into doing something else?

I am 39. I want to retire by 50, and hope to have more than $500K. I would feel very comfortable with $1M. Of course I hate working. That said, I wasn't born rich, so I have to until I save up enough to dump that life.

 

[tbm5690]

I am 39. I want to retire by 50, and hope to have more than $500K. I would feel very comfortable with $1M. Of course I hate working. That said, I wasn't born rich, so I have to until I save up enough to dump that life.

It varies for everyone, but I would not feel comfortable hanging up the hat with $1M at 50...not even close. My target last time I ran some rough calcs based on assumed inflation and other factors was retire at 65 with $2.5M. I'm currently 34. Don't under-estimate what COL might/will do during the DECADES after you retire.

 

[supton]

11 years, hard goal IMO. Not using time as a wealth multiplier, so that is a bit of a hindrance. I mean, the money you put in today can double, maybe triple in 11 years time... but it has lost some growth because you didn't put it in 20 years ago (the standard line is, the best time to start investing was in the past).

I think you might be able to make a course where you save inside of 401k/Roth and plan to tap that after age 60. I think you'll want money outside of that that you can access before then, but honestly, what might work best is to redirect your career around age 50. Stack it high and deep until then, then find something else that you don't hate but can pay the bills. I mean, if you can somehow save enough over the next 11 years to pull this off--great, go for it. I just think it's incredibly hard, unless if you make huge money today but can scrimp and save a huge amount so as to pull this off.

It varies for everyone, but I would not feel comfortable hanging up the hat with $1M at 50...not even close. My target last time I ran some rough calcs based on assumed inflation and other factors was retire at 65 with $2.5M.

Ditto. It's a bit strange but it makes sense: the longer the timeframe you plan to pull money, the more money you have to have. To punch out early requires many times your income saved. Ideally it'd be like 25x one's income so as to live around the 4% withdrawal recommendation. Not a small amount for most. But... if you wait until a few years before taking Social Security, the amount one needs to save comes way down, and Social Security (for most) is a sizeable chunk of income. For some, they can retire at 60-ish, pulling at a rate above 4%, knowing that they'll take SS at some time in the near future, and that all the numbers work. For them.

 

[MrGraybeard]

11 years, hard goal IMO. Not using time as a wealth multiplier, so that is a bit of a hindrance. I mean, the money you put in today can double, maybe triple in 11 years time... but it has lost some growth because you didn't put it in 20 years ago (the standard line is, the best time to start investing was in the past).

I think you might be able to make a course where you save inside of 401k/Roth and plan to tap that after age 60. I think you'll want money outside of that that you can access before then, but honestly, what might work best is to redirect your career around age 50. Stack it high and deep until then, then find something else that you don't hate but can pay the bills. I mean, if you can somehow save enough over the next 11 years to pull this off--great, go for it. I just think it's incredibly hard, unless if you make huge money today but can scrimp and save a huge amount so as to pull this off.

Ditto. It's a bit strange but it makes sense: the longer the timeframe you plan to pull money, the more money you have to have. To punch out early requires many times your income saved. Ideally it'd be like 25x one's income so as to live around the 4% withdrawal recommendation. Not a small amount for most. But... if you wait until a few years before taking Social Security, the amount one needs to save comes way down, and Social Security (for most) is a sizeable chunk of income. For some, they can retire at 60-ish, pulling at a rate above 4%, knowing that they'll take SS at some time in the near future, and that all the numbers work. For them.

Yep, I would wait until 67 at least to claim Social. I would have waited till 70, but there was a glitch in the system where my wife could claim spousal if I filed at 67 and then she could wait to file on her own account at 70. We made about equal income during our working years, so it paid to bank her account. Every year you don't file increases your monthly payout by 8%, IIRC. Actuary tables suggest she'll likely live longer than me

 

[JeffKeryk]

I am 39. I want to retire by 50, and hope to have more than $500K. I would feel very comfortable with $1M. Of course I hate working. That said, I wasn't born rich, so I have to until I save up enough to dump that life.

If I were in your shoes, I would focus on myself. Invest in yourself. Get into a career you like or at the very least can live with.
I think you are saying the right things; your are considering retirement and don't like where you are now.
That's good; sounds like you are ready for a change. I wish you luck.

I got sober at 33 and my 1st degree at 40. I am the biggest late bloomer on the sthnkin' planet. Let's just say CA education and Silicon Valley have been good to me. You just gotta get after it and never quit.

Use your energy towards a postive result. In vesting in the markets is on the critical path; but to win plan on the long game.
Again, invest in yourself.

Always make your money work for you. $500K is squat in today's world and will likely get worse. One more thing... the 1st million is the hardest. Good luck.

 

[MrGraybeard]

If I were in your shoes, I would focus on myself. Invest in yourself. Get into a career you like or at the very least can live with.
I think you are saying the right things; your are considering retirement and don't like where you are now.
That's good; sounds like you are ready for a change. I wish you luck.

I got sober at 33 and my 1st degree at 40. I am the biggest late bloomer on the sthnkin' planet. Let's just say CA education and Silicon Valley have been good to me. You just gotta get after it and never quit.

Use your energy towards a postive result. In vesting in the markets is on the critical path; but to win plan on the long game.
Again, invest in yourself.

Always make your money work for you. $500K is squat in today's world and will likely get worse. One more thing... the 1st million is the hardest. Good luck.

Lots of good insight here. If you hate your job, find one that you don't hate. It makes life a lot less miserable. Go back to school if you have to. And yes, once you amass that first million, it builds on itself -- at least, it did in the last 20 years. And as we all know, past performance is not an indication of future results.

 

[Nick1994]

Reading through this thread, it’s pretty painful.

I think the roughest part of it isn’t that you aren’t super knowledgeable about these topics, that’s ok. We all learn continuously and you’re here to learn. The roughest part is you’re making assumptions without facts and research ahead of time. You’re assuming your company is crooked and will play with your money. You’re assuming they even have access to touch it. You’re assuming they keep their match to your 401k if you died.

You need to start fresh with a clear, unbiased mind. Research. Create a plan. Don’t research from conspiracy theorist sites or creators.

Not contributing to your company 401k at least up to the match is like throwing money away. Not investing your money wisely and diversified is risky.

You aren’t going to save your way into retirement. You have to make your money work for you and snowball into a nice nest-egg that continues to grow while you withdraw from it in retirement.

Investing into a standard 401k reduces your taxable income. Let’s say someone makes $80k a year and contributes $15k a year into a 401k. The $15k goes in untaxed, and you’re paying income taxes for the year on $65k a year.

Income is not taxed in a linear fashion, it’s tiered in brackets. Currently the first $11,925 you make, you pay 10% tax. ($1,192.50) From $11,926-$48,475 you pay 12% tax ($4,385.88). From $48,476-$103,350 you pay 22% tax. But remember, in this scenario the person has $65k in taxable income, so. $48,476-$65,000. So $3,635.28. Add up all those numbers and you pay $9,213.66. If this person hadn’t contributed into their 401k, they’d be taxed on $80k of income and would have paid $12,513.66 of taxes for the year. So putting in $15k into a 401k saved $3,300 in taxes for the year.

 

[mitsuman47]

If I were in your shoes, I would focus on myself. Invest in yourself. Get into a career you like or at the very least can live with.
I think you are saying the right things; your are considering retirement and don't like where you are now.
That's good; sounds like you are ready for a change. I wish you luck.

I got sober at 33 and my 1st degree at 40. I am the biggest late bloomer on the sthnkin' planet. Let's just say CA education and Silicon Valley have been good to me. You just gotta get after it and never quit.

Use your energy towards a postive result. In vesting in the markets is on the critical path; but to win plan on the long game.
Again, invest in yourself.

Always make your money work for you. $500K is squat in today's world and will likely get worse. One more thing... the 1st million is the hardest. Good luck.

Solid guidance here. I think that being in an industry/company/role that you enjoy can change your view of what “work” is, and your relationship with it. We (myself included) give ourselves plenty of excuses as to why we need to stay where we are, instead of exploring a new path that we might enjoy more.

@Ws6 It sounds like you’re unhappy with your current employer. Is it the company? Or, the field you’re in?

Also, if you do retire early at 50, what are you actually planning on doing with your time? You’ve mentioned goals of both $500k and $1M. But, those are still small sums of money that may not allow for much, if any, discretionary spending during what could be a very lengthy retirement.

 

[Dave Hess]

So, I have been plotting a retirement. If everything is paid off, and you have say, $500k in mutual funds etc, is there any reason not to put it in a fund like PRT or EFC or something and just live off the dividends?

That would be very, very, very difficult to do in 2025.
$500K is NOT a lot of money to live off the dividends.
USA gets an economic slowdown and companies immediately cut their dividend. It takes lots of financial planning, discipline, strict budget and staying focused. My personal opinion is for you to get to $1M and then consider early retirement.


We hit our retirement number at the age of 50 (not bragging) and both of us currently still working.

Two company pensions
Two company voluntary pensions
Two 401Ks
Two Roth IRAs
Two brokerage accounts
Two Social Security
One military pension
And I’m a small business owner.

 

[Slick3914]

Retire is the plan. As soon as possible.

You just don’t get it.