Retirement investing...

[PandaBear]

Personally I think whether you invest in retirement or before retirement, you need to look at what is your goal: are you planning to gradually use up your principal, and if so, when?

If you are someone who would like to use up your fund and would be forced to sell something regularly to support your expenses, then dividends make sense. If you are someone who has enough to live on and will only draw little (as a precentage), and want to maximize your growth over an infinite investment horizon (it is passing to your kids or a charity when you die), then dividend makes less sense and growth makes more sense.

To me dividend vs growth is dictated by 1) tax rate (capital gain vs personal income, tax bracket, state income tax or not), and 2) are you forced to withdraw regardless of market conditions.

 

[Dave Hess]

Some people retire and work 20 hours a week to keep busy.

It’s a gradual drawdown of retirement funds to make it to the finish line.

 

[Pablo]

Been retired 5 years and haven’t taken anything out of my IRA. I probably should and pay the taxman when I pay for the van and next the conversion. Although wife has a huge cash account. Maybe if I play nice .

 

[Ws6]

Personally I think whether you invest in retirement or before retirement, you need to look at what is your goal: are you planning to gradually use up your principal, and if so, when?

If you are someone who would like to use up your fund and would be forced to sell something regularly to support your expenses, then dividends make sense. If you are someone who has enough to live on and will only draw little (as a precentage), and want to maximize your growth over an infinite investment horizon (it is passing to your kids or a charity when you die), then dividend makes less sense and growth makes more sense.

To me dividend vs growth is dictated by 1) tax rate (capital gain vs personal income, tax bracket, state income tax or not), and 2) are you forced to withdraw regardless of market conditions.

By the time I plan to retire, everything will be paid off. I'll only need money for food and clothing and health insurance. Car insurance, home insurance, and a small electric bill.

 

[Ws6]

Some people retire and work 20 hours a week to keep busy.

It’s a gradual drawdown of retirement funds to make it to the finish line.

I'd enjoy a low pressure easy job like auto sales, etc for a few days per week. Wouldn't even want a draw. Just let me sell a few.

 

[Pablo]

Been retired 5 years and haven’t taken anything out of my IRA. I probably should and pay the taxman when I pay for the van and next the conversion. Although wife has a huge cash account. Maybe if I play nice .

A couple folks contacted me about this. First let me say we don't have large pensions. I have a small pension, wife has two small pensions. We both collect SS. Plus Amsoil income. - this all is deposited in our CU. We also have income on our cash accounts (muni bonds, cap gains, etc). And some other small income sources. This is enough to live on just fine, plus some is moved over to savings/investment monthly (or so, depending prop tax, insurance, etc.)

I suspect a number of retired folks live like this. It's kind of a lazy man's way. I did a huge work up on expenses before retirement, and every six months after retirement. I stopped doing this, waste of time.

 

[Ws6]

A couple folks contacted me about this. First let me say we don't have large pensions. I have a small pension, wife has two small pensions. We both collect SS. Plus Amsoil income. - this all is deposited in our CU. We also have income on our cash accounts (muni bonds, cap gains, etc). And some other small income sources. This is enough to live on just fine, plus some is moved over to savings/investment monthly (or so, depending prop tax, insurance, etc.)

I suspect a number of retired folks live like this. It's kind of a lazy man's way. I did a huge work up on expenses before retirement, and every six months after retirement. I stopped doing this, waste of time.

I think it would be cool to have worked in a factory or something back in the day and get given a pension. That's like welfare for when you retire, right? In exchange for staying with one company for 20 years or something?

 

[Pablo]

I think it would be cool to have worked in a factory or something back in the day and get given a pension. That's like welfare for when you retire, right? In exchange for staying with one company for 20 years or something?

Most all .gov jobs have pensions. They really started to phase them out in the private sector in the 1990's.

Not at all like welfare. You earned it in simple terms, money is real coming from a real funded source. Typically well invested. Welfare is funded via forced taking.

The reason I get a small one is because early in my career I worked at a company with a pension, but they were bought out, so I still qualified. Not bad. My wife gets both hers from the state, teacher, the UW Medical Center. None are large, but it adds up.

That all said and I repeat myself: The smartest thing I ever did financially is save money like a crazed raccoon. All just "invisibly" deducted, maxed. Wife did the same.

My wife got around $500K when her mom died. I got some inheritance when my aunt died (split with my brother). This money was originally meant to support my ailing sister, but she passed away. My dad passed less than a year ago if you remember me posting about that. My mom is still doing fine, but in a care home and we still haven't sold their multimeg SoCal house plus she has three substantial trusts and lots of investments to untangle (easily over $20Meg). The reason I'm typing this personal is some people just morbidly wait for relatives to die. Others mock people who inherit money. We've all read the inheritance battles, etc. My goal is not to suddenly become a rich guy and be an ass, but rather be proud of my daughters and SO's with skills (ALL of them) to continue with generational wealth, the life we never had.

 

[opus1]

I'd enjoy a low pressure easy job like auto sales, etc for a few days per week. Wouldn't even want a draw. Just let me sell a few.

The guy who sold me my Malibu was doing that. He said that he was retired for a couple of years and needed to find something to get him out of the house before his wife killed him.

 

[Ws6]

Most all .gov jobs have pensions. They really started to phase them out in the private sector in the 1990's.

Not at all like welfare. You earned it in simple terms, money is real coming from a real funded source. Typically well invested. Welfare is funded via forced taking.

The reason I get a small one is because early in my career I worked at a company with a pension, but they were bought out, so I still qualified. Not bad. My wife gets both hers from the state, teacher, the UW Medical Center. None are large, but it adds up.

That all said and I repeat myself: The smartest thing I ever did financially is save money like a crazed raccoon. All just "invisibly" deducted, maxed. Wife did the same.

My wife got around $500K when her mom died. I got some inheritance when my aunt died (split with my brother). This money was originally meant to support my ailing sister, but she passed away. My dad passed less than a year ago if you remember me posting about that. My mom is still doing fine, but in a care home and we still haven't sold their multimeg SoCal house plus she has three substantial trusts and lots of investments to untangle (easily over $20Meg). The reason I'm typing this personal is some people just morbidly wait for relatives to die. Others mock people who inherit money. We've all read the inheritance battles, etc. My goal is not to suddenly become a rich guy and be an ass, but rather be proud of my daughters and SO's with skills (ALL of them) to continue with generational wealth, the life we never had.

That's super cool companies did that. Yah, I just want to retire and live a few years and die. I could care less about all that other stuff and if there's anything left I'll leave it to some random organization.

 

[SC Maintenance]

I went to work for a Fortune 500 company in 1997 out of college. I was not eligible for the pension - 401K only. The older folks there had one - but they sun-setted it somehow.

For Pensions you usually get somewhere less than 2% x number of years. So if you worked 30 years you would get a bit less than 60% of your final income. Not too shabby. Problem was in the 90's they started laying people off so you have people that have 10 + years, so they get some, but not a lot.

Many pensions went bust and were turned over to the Federal Pension fund - and pay out only a part of what they were supposed to. Additionally, most government pensions (state and local) are woefully underfunded. That will be interesting in coming years.

 

[SC Maintenance]

Something someone here might know the answer to. I am just curios.

If someone were to retire very early - say 55. They have 10 years before eligible for medicare. If you buy Health Insurance on the exchanges, would you be eligible for a subsidy assuming your income level was below the threshold for that?

How much of a subsidy do people usually get. Lets say a single person, who had income investments paying like $30K per year, or 200% of the poverty line, for example?

 

[Mechanician]

A couple folks contacted me about this. First let me say we don't have large pensions. I have a small pension, wife has two small pensions. We both collect SS. Plus Amsoil income. - this all is deposited in our CU. We also have income on our cash accounts (muni bonds, cap gains, etc). And some other small income sources. This is enough to live on just fine, plus some is moved over to savings/investment monthly (or so, depending prop tax, insurance, etc.)

I suspect a number of retired folks live like this. It's kind of a lazy man's way. I did a huge work up on expenses before retirement, and every six months after retirement. I stopped doing this, waste of time.

Just curious if you've considered the RMD when you get into your 70s?
All that wealth - all those taxes - a nice problem to have.

 

[ArrestMeRedZ]

Something someone here might know the answer to. I am just curios.

If someone were to retire very early - say 55. They have 10 years before eligible for medicare. If you buy Health Insurance on the exchanges, would you be eligible for a subsidy assuming your income level was below the threshold for that?

How much of a subsidy do people usually get. Lets say a single person, who had income investments paying like $30K per year, or 200% of the poverty line, for example?

There is a whole cottage industry on this subject on the FIRE (Financial Independence Retire Early) forums. Basically it involves millionaires (or close to millionaires) that retire early and game the system to get other taxpayers to subsidize their health care using The Affordable Health Care Act. Premiums apparently are based upon income only, and are not need based considering total wealth.
Check the Vanguard or Mr. Money Mustache FIRE forums. Lot of info there. And yes, a 35 year old crypto multimillionaire can get a 60 year old factory worker that lives paycheck to paycheck to pay his medical premiums.

 

[Pablo]

Something someone here might know the answer to. I am just curios.

If someone were to retire very early - say 55. They have 10 years before eligible for medicare. If you buy Health Insurance on the exchanges, would you be eligible for a subsidy assuming your income level was below the threshold for that?

How much of a subsidy do people usually get. Lets say a single person, who had income investments paying like $30K per year, or 200% of the poverty line, for example?

It is substantial. I don't feel like digging out the records but 30-40-50%. But no idea for SC. And .gov will yank back via your tax bill if your income blows over the lines. We did this for several years and oops one year thought IRS was gonna refund $3000 or so overpaid, then that comes in at the end I have to pay $2000 or something. Point being keep that income low!! (and AMRZ just said basically the same more politely)

Just curious if you've considered the RMD when you get into your 70s?
All that wealth - all those taxes - a nice problem to have.

Yeah, I hope they move the age out more! It won't be purdy. Currently it's set at 73, so I have 7 years

 

[zzyzzx]

Something someone here might know the answer to. I am just curios.

If someone were to retire very early - say 55. They have 10 years before eligible for medicare. If you buy Health Insurance on the exchanges, would you be eligible for a subsidy assuming your income level was below the threshold for that?

How much of a subsidy do people usually get. Lets say a single person, who had income investments paying like $30K per year, or 200% of the poverty line, for example?

They have webpages where you can put in information and get quotes. You don't have to give them your real information. Price varies by age (going up exponentially) and I think varies by state (cost of living type of thing).

 

[Dave Hess]

I went to work for a Fortune 500 company in 1997 out of college. I was not eligible for the pension - 401K only. The older folks there had one - but they sun-setted it somehow.

For Pensions you usually get somewhere less than 2% x number of years. So if you worked 30 years you would get a bit less than 60% of your final income. Not too shabby. Problem was in the 90's they started laying people off so you have people that have 10 + years, so they get some, but not a lot.

Many pensions went bust and were turned over to the Federal Pension fund - and pay out only a part of what they were supposed to. Additionally, most government pensions (state and local) are woefully underfunded. That will be interesting in coming years.

I was very lucky to get a company pension and voluntary pension….. plus a 401K.

Very old has been company from the past froze both pensions Dec 31, 2024.

I will do a lump sum payout when I retire.

 

[99Saturn]

Just curious if you've considered the RMD when you get into your 70s?
All that wealth - all those taxes - a nice problem to have.

Makes it worth considering if a Roth account is right, no RMD.

 

[Pablo]

Makes it worth considering if a Roth account is right, no RMD.

Some but there were those pesky taxes again

 

[99Saturn]

Some but there were those pesky taxes again

Hard to get away from them.