The Retirement Planning/ Investment/ Savings Thread (2 Viewers)

[DrStrange]

Good luck!

 

[pltrgyst]

I don't know if they exist in California, but in Florida and some other states there is an arrangement called a "Life Estate" which might fit well into your plans as an alternative to simply inheriting the house. You might want to check that out. Good luck!

 

[inca911]

Update for those who may be interested in my exploits and ramblings:
Arrangements have been made in 2H2025 to decrease to ~30 hours/wk, which is my company's minimum for benefits. I am doing a lot of traveling in 1H2025 to consume my PTO and empty that tank before comp is prorated down. Making less money in exchange for less work frees up cap space for many years of lower-tax-rate Roth conversions, so starting now makes sense as I think the math looks good. I'm selling several assets to shore up the reserve and show little income in CY2026 and beyond.

Roth conversions are planned in upcoming years to convert 401(k) by filling lowest tax brackets each year (i.e.., 10% + 12%). Ballpark estimate is convert ~$55k/year and pay taxes from non-Roth/non-401(k) buckets. That's based on the top of the current 12% bracket ($47k) + $14.6k single deduction. As a single guy, I will get healthcare via the Affordable Care Act (ACA) marketplace, so having a low on-paper income qualifies for ACA subsidies until Medicare kicks in at 65. That's one reason for the smaller annual conversion total. I need to bridge a decade of healthcare costs from now to 65YO. My post-subsidy healthcare premium cost estimate is ~$3k/yr, so $36k for the -10Y bridge. If something actually happens, I have a decent HSA balance to offset non-premium costs. Reminder that HSA dollars can't be used for healthcare premiums outside of COBRA (i.e., you can't use an HSA to pay ACA premiums). I'll run the math on ACA vs. COBRA insurance in CY2026 but suspect ACA will win. Doing less work to focus on health is a priority.

The plan is to convert the majority of 401(k) to Roth before SS kicks in (i.e., keeping taxation of SS benefits at 0% and avoiding the SS tax torpedo). The current thinking is to wait until 70Y to claim SS. The 401(k) buckets will be near empty prior to Required Minimum Distributions starting at 73. I'm not trying to convert it all, as keeping the 0% bracket open for incidentals seems smart, as is keeping the 0% bracket open for Capital Gains. Maintaining an income <$25k/year when taking SS means nothing will be taxed. The Roth will have grown nicely by then and both dividends and capital gains in the Roth are invisible and have zero tax implications. I have no house payment, so it seems feasible with some planning (provided I keep my wits). For highly appreciated investments, I'll hold on to those and use the step-up in cost basis for heirs to pass them on such that nobody pays tax.

I'm very interested in other's perspectives, especially those either already on the path, those who see a pitfall I'm missing, or are planning something similar. If you really like an investment, drop me a line. Several PCFers recommendations have done quite well! I'm discussing an arrangement with my current employer to consult a little each week in exchange for benefits (or comp that covers benefit costs). HSA contributions + 401(k) contributions are invisible as income, so some comp isn't bad. HSA + 401(k) comes to ~$35k/Y, so I think I can offer something useful. We shall see. Else, hopefully you'll find me at a poker table near you....

 

[DrStrange]

Lots of good work on tax planning. This is a useful thing as tax matters can become critical.

I didn't see much effort on the investment side. One's appetite for risk often changes upon retirement - sometimes with justification, other times not as well justified. The investment strategy is likely as important if not more important than the tax strategies.

No doubt you have thought about the investment angle. Even so, it is still worthwhile to have the discussion out loud. We are entering a period of high variance. How one approaches this sort of environment isn't obvious - eg. risk mitigation vs profit maximization. Or how to decide which asset classed to pursue vs avoid.

 

[SSTB2213]

Definitely speak to a fee-only financial planner - I think you would get good advice.

This White Coat Investor article from 2019 is a good start (probably). The article describes different payment models for financial planners, but at the end of this article is a link to an updated (2023) list of vetted financial planners for the site. They are paid advertisers on his site, but I doubt he is trying to point folks in the wrong direction given the mission of the website. This dude markets his advice towards physicians, butI think it is applicable to any high-networth individual.

Additionally, if you must rely on the internet for important, specific financial advice IMO you would be better off using Bogleheads. People ask portfolio questions all the time...

Dude. Music to my ears. Always fun to run into another Boglehead, and I echo everything Burke said. Low-cost, broad-based index funds FTW.

If you need help finding a fee-only advisor, checking out Nectarine (no affiliation) is worth a click. I haven't used them personally yet, but the founder is involved in the FIRE community and seems to be a stand-up guy. Everything on Nectarine is fee-only (careful to avoid fee-based, as there will be an AUM fee in addition)

 

[SSTB2213]

Sell the house. Pocket the $1.47M. Rent an apartment. Invest $1M of it conservatively. It will throw off a good $50-60K per year, which easily covers their added income needs with $30-40K on top for rent and more. Have fun in old age with the other $470,000. Will a million to you, their heir.

Something along these lines. How long does someone in their late 70s want to maintain a $1.5MM property for? Find a 55+ community, preferably with tiered assisted living capabilities.

 

[SSTB2213]

Lol I'm trying, I'm in the top 00.11% supposedly of members regarding total posts, yet have averaged under 1.5 non classified posts for the past couple of months.

So I'm definitely no longer here like I used to be, and generally pop in for a reprieve when I get a second in between calls and decompress by brainlessly surfing somewhere online.

Prob should've made better use of my time than doing that maff. Good to know though, thanks for the help Mod!

If you're not well versed on the topic, poking around financial forums can be a bit like searching for a needle in a haystack.

If listening is your jam, try some podcasts. ChooseFI is a big one, but Catching up to FI might be more in your wheelhouse (I'm still getting caught up on the thread, so not sure of your needs exactly). Money Guy Show and Earn & Invest are other popular ones.

If you want targeted reading about index funds (the Boglehead approach) check out (literally, from the library) JL Collins A Simple Path to Wealth

 

[Darson]

@inca911 I’m hopefully 6 years behind you but the thing that shocks me the most is the healthcare cost. $36k/yr just for insurance is ridiculous. At a 4% drawdown from a 401k that’s $900k you need in your retirement savings just to pay for health insurance. I’ve seen others quote around $3k-5k annually for international health insurance with a maximum stay of 2 months/yr in the USA aggregate. Given that my kids would probably not want to see me for anything like that long I’m planning on retiring abroad.

 

[moose]

Nice to see you heading for semi-retirement. I hit the eject button just before Christmas. Just waiting for the employer to sign off on the final date.

Edit: approval came through this morning! Aug.31 is my final day.

 

[inca911]

@inca911 …the healthcare cost. $36k…

Typo in my post. 36k is the after-$170/M-subsidy, premium-only, low-level Bronze plan estimate (i.e., $0 primary visit copay, 0% generic drugs copay, $8k yearly deductible, $8k OOP annual max), for the entire 55-65YO range (i.e., $300/M for a decade), not per year. I've been funding HSA and investing HSA funds for a long time, so that account can essentially cover the annual deductible maximum for a decade.

For investments I also do mostly low expense index funds, with some exceptions for individual stocks that I think have a great product/history. As I sell down individual stocks in the brokerage account to fund healthcare premium costs + Roth conversion tax payments, it will end up looking very Bogle-esque. I will have an amount to buy/sell with no capital gains in the Roth. If I can “day trade” smaller fluctuations for extra, I don’t see a big downside. For example, I grabbed some MDT sub $80 for the Roth recently and might exit that position if it pops. Medtronic is a company I believe in, so it’s likely I’ll keep it and hope for a ride back to $135+. Investment is definitely a big piece of the retirement puzzle. Maybe I’ll start a separate investment thread as it deserves a dedicated discussion outside the broader retirement logistics topic.

 

[mike32]

Update for those who may be interested in my exploits and ramblings:
Arrangements have been made in 2H2025 to decrease to ~30 hours/wk, which is my company's minimum for benefits. I am doing a lot of traveling in 1H2025 to consume my PTO and empty that tank before comp is prorated down. Making less money in exchange for less work frees up cap space for many years of lower-tax-rate Roth conversions, so starting now makes sense as I think the math looks good. I'm selling several assets to shore up the reserve and show little income in CY2026 and beyond.

Roth conversions are planned in upcoming years to convert 401(k) by filling lowest tax brackets each year (i.e.., 10% + 12%). Ballpark estimate is convert ~$55k/year and pay taxes from non-Roth/non-401(k) buckets. That's based on the top of the current 12% bracket ($47k) + $14.6k single deduction. As a single guy, I will get healthcare via the Affordable Care Act (ACA) marketplace, so having a low on-paper income qualifies for ACA subsidies until Medicare kicks in at 65. That's one reason for the smaller annual conversion total. I need to bridge a decade of healthcare costs from now to 65YO. My post-subsidy healthcare premium cost estimate is ~$3k/yr, so $36k for the -10Y bridge. If something actually happens, I have a decent HSA balance to offset non-premium costs. Reminder that HSA dollars can't be used for healthcare premiums outside of COBRA (i.e., you can't use an HSA to pay ACA premiums). I'll run the math on ACA vs. COBRA insurance in CY2026 but suspect ACA will win. Doing less work to focus on health is a priority.

The plan is to convert the majority of 401(k) to Roth before SS kicks in (i.e., keeping taxation of SS benefits at 0% and avoiding the SS tax torpedo). The current thinking is to wait until 70Y to claim SS. The 401(k) buckets will be near empty prior to Required Minimum Distributions starting at 73. I'm not trying to convert it all, as keeping the 0% bracket open for incidentals seems smart, as is keeping the 0% bracket open for Capital Gains. Maintaining an income <$25k/year when taking SS means nothing will be taxed. The Roth will have grown nicely by then and both dividends and capital gains in the Roth are invisible and have zero tax implications. I have no house payment, so it seems feasible with some planning (provided I keep my wits). For highly appreciated investments, I'll hold on to those and use the step-up in cost basis for heirs to pass them on such that nobody pays tax.

I'm very interested in other's perspectives, especially those either already on the path, those who see a pitfall I'm missing, or are planning something similar. If you really like an investment, drop me a line. Several PCFers recommendations have done quite well! I'm discussing an arrangement with my current employer to consult a little each week in exchange for benefits (or comp that covers benefit costs). HSA contributions + 401(k) contributions are invisible as income, so some comp isn't bad. HSA + 401(k) comes to ~$35k/Y, so I think I can offer something useful. We shall see. Else, hopefully you'll find me at a poker table near you....

Following and I really appreciate these posts. I was poking around on the ACA marketplace and $300 per month seems cheap to me but I'm no expert. I will also have to provide health insurance for my wife so I guess that is an additional hurdle for me.

 

[BPTDirector]

First advice. If you think you’re close - quit buying chips.

 

[MrCatPants]

I'm further away than a lot of you who are active in this thread (mid 40s), but also close enough where the level of assets and moves with those assets are starting to matter a lot more. Find it very interesting to read how those of you who are close on either side of the retirement border look at these issues.

Still at a loss for how to look at Roth 401k options vs. Trad (no one can predict the future of taxation 20-50 years out and so for now I'm just doing "some" to Roth). I get up a few tax brackets, but not all the way, so feel a little stuck in no man's land on this. Right now I have about 10% of my current retirement assets in a Roth, but splitting contributions 50/50 so that is slowly creeping up over time. Thoughts?