The accountant says we can retire early. Woohoo!!!

[CloverKnollFarms]

I had a pension at my first career too... Rolled that into an IRA years ago. Then invested the max in my ROTH 401k and ROTH IRAs until retirement.

 

[Gale Hawkins]

We had one of our anesthesiologists retire and come back...

He said the dynamics of being retired just didn't suit him.

At work he is a respected Doctor and at home he became the family gopher for everyone...

Not all have financial and emotional fulfilling careers. Escaping high stress work places can make retiring very desirable if one is just working to make more money.

 

[Torvy]

Not all have financial and emotional fulfilling careers. Escaping high stress work places can make retiring very desirable if one is just working to make more money.

True.

For some people, though, it is just how they value themselves. The job defines them.

Of course, imo, there are two ends of that spectrum. Many young 'uns value work too little in the work-life balance.

In our case, retiring early improved our chances of having some healthy years to enjoy in retirement. For many, by the time they retire, they spend half of their time at the Dr.

 

[Gale Hawkins]

I have one 'pension'. First full-time job at a major bank. After I'd been there 5 or 6 years, that ended. Had to start investing for myself, but at a time disadvantage.

I never count public employee pensions as such because they are effectively immune to the mergers or financial failures.

I think your experience is more the exception than the rule. I worked for 4 or 5 companies with 401k style plans and only one had a 'vesting' period. The pension plan did. The money in the 401k is yours. Even when you don't have any employer match, it far outperforms SocSec.

In the doctor's example above SS can be as much as $4500 monthly plus their high income professional income. Another plus they are continuing to help fund SS for the rest of us.

 

[Torvy]

In the doctor's example above SS can be as much as $4500 monthly plus their high income professional income. Another plus they are continuing to help fund SS for the rest of us.

I've done the math. Everyone would have been better off investing their SocSec rather than having it to through the government. Even in 100% safe investments. 50+ years of just S&P500 indexed funds would return about 7% after inflation. Even low-income people would have much more than they get today. No one else should be funding your retirement unless you have a severe disability.

 

[Gale Hawkins]

I've done the math. Everyone would have been better off investing their SocSec rather than having it to through the government. Even in 100% safe investments. 50+ years of just S&P500 indexed funds would return about 7% after inflation. Even low-income people would have much more than they get today. No one else should be funding your retirement unless you have a severe disability.

I think the reality of that is not factual if you will look at people in general and they're investing capacity and abilities.

Keep in mind SS is not a retirement plan but a social safety net for the poor. Realizing that you may have more appreciation for the social program . While the many drawing $50,000+ of SS annually may not need they do support the rest of us that do need it .

 

[DarkBlack]

We got around the 59-1/2 by placing $500k in a brokerage outside of retirement. That brokerage averages 12%.

How did you “place” $500k in a taxable account without paying a huge tax bill the following year?
It would have to come from an already taxed area, like cash, or savings account.

 

[Torvy]

I think the reality of that is not factual if you will look at people in general and they're investing capacity and abilities.

No abilities needed. If, for example, rather than requiring SocSec, the government required everyone to invest that same % into the S&P (or similar fund) and leave it there to retirement age. Even through our depressions and recessions, it has beaten inflation by 7% annually. When you run the numbers, the beauty of compounding interest shines through. Literally everyone would have more money than they will get from SocSec. If you think we are obligated to provide for others through the government, they could take 10% of your retirement at age 65 and you would still have more money than SocSec would provide.

 

[LittleBill21]

No abilities needed. If, for example, rather than requiring SocSec, the government required everyone to invest that same % into the S&P (or similar fund) and leave it there to retirement age. Even through our depressions and recessions, it has beaten inflation by 7% annually. When you run the numbers, the beauty of compounding interest shines through. Literally everyone would have more money than they will get from SocSec. If you think we are obligated to provide for others through the government, they could take 10% of your retirement at age 65 and you would still have more money than SocSec would provide.

actually yea, people can't save money, thus why there is a law trying to get through to force people to opt out of I think a 3% investment into 401k, because people are so horrible with money.

 

[CloverKnollFarms]

How did you “place” $500k in a taxable account without paying a huge tax bill the following year?
It would have to come from an already taxed area, like cash, or savings account.

Yes, it was already taxed money... Like my ROTH 401k and ROTH IRA monies are.
It came from our income being invested in a brokerage over the past several years.
The capital gains on the brokerage will be 0% however due to our new, and glorious tax bracket.

 

[Torvy]

actually yea, people can't save money, thus why there is a law trying to get through to force people to opt out of I think a 3% investment into 401k, because people are so horrible with money.

I don't understand what you are saying.

The US currently confiscates a little more than 15% of your wages for SocSec. The returns are abysmal.

Literally taking the same money and putting it into a 401K style instrument and locking it there until retirement would be infinitely better.

Many people save just fine, others don't. The fact is that the government takes that money and wastes much of it and gives you back a pittance. They are already doing it. I'm just saying do it better.

 

[Gale Hawkins]

No abilities needed. If, for example, rather than requiring SocSec, the government required everyone to invest that same % into the S&P (or similar fund) and leave it there to retirement age. Even through our depressions and recessions, it has beaten inflation by 7% annually. When you run the numbers, the beauty of compounding interest shines through. Literally everyone would have more money than they will get from SocSec. If you think we are obligated to provide for others through the government, they could take 10% of your retirement at age 65 and you would still have more money than SocSec would provide.

You don't seem to understand many benefiting from social security have never paid in any to social security or any other plan. Think about the woman with four young kids and a dead spouse.

 

[DarkBlack]

Yes, it was already taxed money... Like my ROTH 401k and ROTH IRA monies are.
It came from our income being invested in a brokerage over the past several years.
The capital gains on the brokerage will be 0% however due to our new, and glorious tax bracket.

So you moved $500k from one taxable brokerage account to another?
I’m still a bit confused

 

[Torvy]

You don't seem to understand many benefiting from social security have never paid in any to social security or any other plan. Think about the woman with four young kids and a dead spouse.

I understand. I also provided a solution if that is something we think the government should provide.

We are often told (lied to) that you only get SocSec if you pay in. The spouse, in your example, is getting the benefits her spouse paid in on her behalf.

With a 401k, that spouse is the beneficiary and gets all of the deceased spouse's savings.

If we narrow confiscatory taxation to only cover those unfortunate few who are literally incapable of doing for themselves (like the kids in your example), they can simply take some of thr collective retirement funds at age 65. Everyone is still better off.

 

[ultrarunner]

I've done the math. Everyone would have been better off investing their SocSec rather than having it to through the government. Even in 100% safe investments. 50+ years of just S&P500 indexed funds would return about 7% after inflation. Even low-income people would have much more than they get today. No one else should be funding your retirement unless you have a severe disability.

It does overlook that many would have nothing if not for social security…

I know quite a few in this situation and chalk it up to a bad marriage, bad decisions, or simply never thinking they would reach old age and spend every penny and then some.

 

[Torvy]

So you moved $500k from one taxable brokerage account to another?
I’m still a bit confused

The accounts aren't taxable. Income from accounts may or may not be taxable depending on how it was set up originally.

That money is only taxed when it is withdrawn and at the rate that anyone else would pay for that as annual income.

The Roth is already taxed, so those funds wouldn't be subject to tax again.

 

[Torvy]

It does overlook that many would have nothing if not for social security…

I know quite a few in this situation and chalk it up to a bad marriage, bad decisions, or simply never thinking they would reach old age and spend every penny and then some.

Not at all. My plan would basically just replace government operation of Social Security with private management and (like 401k plans) a limited set of investment choices. Since it cannot be withdrawn until retirement, they would still have money, just more of it.

The government just has the power to compel participation, like they do with Social Security anyway.

They cannot spend this money any more than they can spend their Social Security now.

 

[ultrarunner]

I don't understand what you are saying.

The US currently confiscates a little more than 15% of your wages for SocSec. The returns are abysmal.

Literally taking the same money and putting it into a 401K style instrument and locking it there until retirement would be infinitely better.

Many people save just fine, others don't. The fact is that the government takes that money and wastes much of it and gives you back a pittance. They are already doing it. I'm just saying do it better.

Like the person I know that had all his retirement in ENRON with a few tech companies added.

Maybe the lesson is whatever he was in is exactly what avoid…?

I doubt social security will be wiped out but we all know those with investments wiped out.

I do like the ability to pass on the remaining 401k after death.

But then I know a guy that passed early but social security is sending checks to his widow and children and he never earned much and the math shows his heirs will make out quite well… the youngest was 2 when he passed.

 

[CloverKnollFarms]

So you moved $500k from one taxable brokerage account to another?
I’m still a bit confused

No. For several years prior to retirement I made regular investments in our brokerage account, from my income. This was to create a buffer between 47 and 59.5 years of age.

We only have about 1/3 of our investments in pre-tax accounts. Some in a traditional 401k and some in an HSA investment account.

 

[ultrarunner]

Not at all. My plan would basically just replace government operation of Social Security with private management and (like 401k plans) a limited set of investment choices. Since it cannot be withdrawn until retirement, they would still have money, just more of it.

The government just has the power to compel participation, like they do with Social Security anyway.

They cannot spend this money any more than they can spend their Social Security now.

Not everyone pays into social security or at least some opted out but not well enough informed to detail.