Retirement investing...

[Mechanician]

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

We've been thinking about it a little - but only in the distributions we take currently.
Taking out some, without tripping over the line out of the lower current tax bracket.
Treasury bills avoid any state tax on earnings, so that is a small shelter anyway.

 

[Nessism1]

I retired on Monday! Yeah!

Got two 401K's, with about $1M in each. All money in S&P index funds. Thinking of moving half to bonds? Or maybe all? I'm 63.5 years old, and have enough cash to bridge to 65, and Medicare. Thinking of taking SS then. Oh, and house is paid for.

What say ye?

 

[SC Maintenance]

I retired on Monday! Yeah!

Got two 401K's, with about $1M in each. All money in S&P index funds. Thinking of moving half to bonds? Or maybe all? I'm 63.5 years old, and have enough cash to bridge to 65, and Medicare. Thinking of taking SS then. Oh, and house is paid for.

What say ye?

Be careful with what kind of "bonds", there not all equal. Thats a great big world of all kinds of different things. If preservation is your goal, duration risk usually is not your friend.

Good job, and good luck with retirement!

 

[Pablo]

I retired on Monday! Yeah!

Got two 401K's, with about $1M in each. All money in S&P index funds. Thinking of moving half to bonds? Or maybe all? I'm 63.5 years old, and have enough cash to bridge to 65, and Medicare. Thinking of taking SS then. Oh, and house is paid for.

What say ye?

Some depends on tax situation

Will you need to WD from IRAs to live? SS looks better if that is the case. But monthly amount will be reduced of course

Does your state offer good coop marketplace health rates?

 

[Pablo]

I would put a hunk of each in stable short gov $ funds certainly not longer bond funds. You could buy individual govt bonds as well

 

[Nessism1]

Some depends on tax situation

Will you need to WD from IRAs to live? SS looks better if that is the case. But monthly amount will be reduced of course

Does your state offer good coop marketplace health rates?

My money is in 401K's, not IRA. Other than my cash. Shouldn't need to touch 401 until 65. To be honest, I'm not sure how much I'll need. Between SS and a small $1500/mo pension I have, I don't figure to have to dip hard into the 401's right away.

I have Kaiser, and Cobra is quoted at $590/month. I called Kaiser for a second quote, and they told me they can't match the Cobra quote.

 

[Pablo]

My money is in 401K's, not IRA. Other than my cash. Shouldn't need to touch 401 until 65. To be honest, I'm not sure how much I'll need. Between SS and a small $1500/mo pension I have, I don't figure to have to dip hard into the 401's right away.

I have Kaiser, and Cobra is quoted at $590/month. I called Kaiser for a second quote, and they told me they can't match the Cobra quote.

401k and IRA are essentially same- no difference in most states - aside from in most cases 401k limiting investment choices

And that is my first real recommendation. Roll both to ROLLOVER IRAs.

What state?

Lucky to have low cost COBRA. Nice

 

[Nessism1]

401k and IRA are essentially same- no difference in most states - aside from in most cases 401k limiting investment choices

And that is my first real recommendation. Roll both to ROLLOVER IRAs.

What state?

Lucky to have low cost COBRA. Nice

Thanks for the suggestion. I'll investigate a rollover.

In California. I was expecting $1000/month, and was surprised to see $590. Hope it's not a mistake...

 

[Dave Hess]

Great job.

That’s a lots of money.

 

[ArrestMeRedZ]

I'll tell you what I did in similar situation. Your mileage may vary, and it may or may not be applicable to you.
Retired about the same time (64.5). Medical not an issue (Tricare). Rolled my entire 401k over to IRA. Lived off of investments and very small retirement check until SS at 70. During those low income years rolled as much as I was comfortable from tIRA into a Roth. Stayed almost fully invested in the market except for maybe 25% money market (brokerage account) for contingencies.
Now I'm having to do RMDs I keep 4 years worth of them in cash/money market/bond funds in my IRA. This cash bucket is to avoid sequence of return risk. Remainder is stock equivalents. Cash in brokerage account is for emergencies (I currently have a significant risk factor) and Roth is almost all invested in stocks.
Using hindsight, the only thing I would have done differently is to have bitten the bullet and rolled enough over to zero out my tIRA by the time I hit 70. With all the gains, it's more than I had when I retired.

 

[Dave Hess]

I retired on Monday! Yeah!

Got two 401K's, with about $1M in each. All money in S&P index funds. Thinking of moving half to bonds? Or maybe all? I'm 63.5 years old, and have enough cash to bridge to 65, and Medicare. Thinking of taking SS then. Oh, and house is paid for.

What say ye?

Today’s youngins need to read what some BITOG members are posting about how they saved / invested for retirement.

I also have multiple retirement accounts, IRA, pension and SS.

Younger folks need to stop complaining about older folks with money and get serious about their retirement…… not buying the new stupid iPhone that comes out every year and then say they can’t contribute towards retirement.

 

[zzyzzx]

I have Kaiser, and Cobra is quoted at $590/month.

That's really cheap. How did you manage to get health insurance (I assume that's just for you) so cheap?

 

[zzyzzx]

Rolled my entire 401k over to IRA.

I've thought about doing that. In retirement the fees would be less. The reason why I don't already do it is because the state of MD taxes 401K money differently from IRA money. I'm not sure if any other state even does that.

 

[zzyzzx]

401k and IRA are essentially same- no difference in most states -

In Maryland it's treated differently for income tax purposes. Already on my long list of reasons to leave Maryland.

 

[Pablo]

In Maryland it's treated differently for income tax purposes. Already on my long list of reasons to leave Maryland.

You mean WD's are are taxed differently?

 

[zzyzzx]

You mean WD's are are taxed differently?

Yes.

https://www.google.com/search?q=Maryland+401K+exclusion

In Maryland, 401(k) withdrawals are generally taxable, but they may be eligible for a pension exclusion that can reduce your taxable income.

• Eligibility: To qualify, you must generally be 65 or older or totally disabled (or your spouse is totally disabled) on the last day of the tax year.
• Limitations: Traditional IRAs, Roth IRAs, SEPs, Keogh plans, ineligible deferred compensation plans, some non-qualified annuities, and foreign retirement income do not qualify for this exclusion.
• Maximum Exclusion: For the 2024 tax year, the maximum allowable pension exclusion is $39,500 per taxpayer.
• Social Security Benefit Impact: The amount of your Social Security benefits is taken into account when calculating the pension exclusion, and it can reduce or eliminate the exclusion amount.
• Example Calculation: If you are 65 and receive $20,000 in Social Security benefits and $30,000 from a pension in 2024, you could exclude $19,500 ($39,500 - $20,000) of your pension, and the remaining $10,500 would be subject to Maryland income tax.

So yes. 401K money is eligible for the pension exclusion, but IRA money is not.

 

[SC Maintenance]

States that don't tax 401K / IRA. Some are the states without any income tax to begin with, but there are special rules in others as well.

https://www.aarp.org/money/taxes/states-that-do-not-tax-your-retirement-distributions/

 

[zzyzzx]

States that don't tax 401K / IRA. Some are the states without any income tax to begin with, but there are special rules in others as well.

https://www.aarp.org/money/taxes/states-that-do-not-tax-your-retirement-distributions/

Good information, but for state income tax purposes retirement income usually has to come from a pension / 401K / IRA.
If you have income coming from a taxable account, like dividend income, it's still taxable at the state level.

 

[alarmguy]

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 are ACA calculators online. I have a sibling who got insurance for his wife at almost no cost (literally less than $100. a month for sure) until she qualified for Medicare 5 years later. I am willing to bet income wasnt showing much more than 40k a year the way they worked it. It's been a while and I cant remember the details.

Im not at this point yet for my wife
https://www.irs.gov/affordable-care-act/affordable-care-act-estimator-tools

Also available now are short term (I think 3 year) catastrophic plans that do not have to comply with the ACA. Meaning cheaper "gap" insurance from age 62 to 65

 

[Nessism1]

That's really cheap. How did you manage to get health insurance (I assume that's just for you) so cheap?

You're making me nervous!

That price is on a paper they gave me with my retirement paperwork package. I thought it was cheap, also. It clearly shows "per month" on the paper. Fingers crossed.