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

[Torvy]

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.

Investments get wiped out because people buy individual stocks and frequently have no idea how to invest.

The S&P 500 index is, essentially, a mutual fund of 500 of the most stable stocks. This crosses industries. This is just an example. There are other funds that produce consistent results with little risk. Because this stays put and is limited to these safe investment funds (no individual stocks or bonds), the risk is transient. (Meaning your portfolio can go up and down, but consistently trends up over time).

If those got wiped out at the same time, we would be dealing with something so big that money would be meaningless anyway.

 

[Torvy]

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

Oh, I know. As a teacher, I had TRS instead, plus a variation of a 401k. But, I worked in the private sector longer. Regardless, the same system can be in place of all government mandated retirement systems that exempt one from SocSec.

No legal way to "opt out', it's just variations for government workers.

 

[CloverKnollFarms]

Most people can invest in an index fund and beat an active trader, and any government retirement fund.

 

[Bearsixty7]

Wife did something like this. Fixed annual withdrawal for 5 years. I was going to, but we managed to get by until I reached 59.5.

http://httI thought this was th ean... ps://smartasset.com/retirement/new-sepp-rule

I thought this was the answer I've been looking for but not so sure due to the section below. I turn 59-1/2 December 2026 but my 401K has already exceeded what I calculated I would need in it by then for a very comfortable income for 30-35 years. So I was thinking I could retire 12-18 months early (As in May/June 2025) but how to access the "excess 401K" during that 12-18 months without taking a 10% hit.

"A SEPP plan is a method for converting retirement assets into annual payments that continue for five years or until you reach age 59.5, whichever comes later."

If it was whichever comes first I'd be golden!
I'll have to do some math and see what payments would work for those 5 years, maybe I can still retire next year!!

 

[Torvy]

We had the same questions. I'm couple years older than you.

Wife started hers a couple of years ago. Then she went back to work a contract with a good bonus if she stayed a year. I retired last May, so had income too. So, this year, I rode it out. She has 3 more withdrawals coming. I hit 59.5 in November. We can just use mine as needed to ensure we are good after November. Likely nothing this year. She's 7 months younger.

If your wife is younger, have her do the early withdrawals and make it up later (or vice versa if you are younger).

Other options...live really tight for a while; or, eat the 10% on whatever you need to get you from retirement to 59.5.

It's exciting and a tiny bit scary, but very doable for people who handle money well.

 

[ultrarunner]

Investments get wiped out because people buy individual stocks and frequently have no idea how to invest.

The S&P 500 index is, essentially, a mutual fund of 500 of the most stable stocks. This crosses industries. This is just an example. There are other funds that produce consistent results with little risk. Because this stays put and is limited to these safe investment funds (no individual stocks or bonds), the risk is transient. (Meaning your portfolio can go up and down, but consistently trends up over time).

If those got wiped out at the same time, we would be dealing with something so big that money would be meaningless anyway.

People have no idea how to invest is my point.

Oh, I know. As a teacher, I had TRS instead, plus a variation of a 401k. But, I worked in the private sector longer. Regardless, the same system can be in place of all government mandated retirement systems that exempt one from SocSec.

No legal way to "opt out', it's just variations for government workers.

I’m thinking of religious, etc.

Who Is Exempt From Paying Social Security?​

Members of certain religious groups may be exempt from paying Social Security taxes. They must waive their rights to benefits, including hospital insurance benefits. They must also be a member of a religious sect that's conscientiously opposed to receiving private death and retirement benefits and provides food, shelter, and medical care to its members.9


Most foreign students, scholars, teachers, and researchers are exempt if they're nonimmigrant and nonresident aliens.1011 Foreign citizens who work in the U.S. for a foreign government such as diplomats or consular officials don't have to pay in, either.12 State and local government employees who are covered under a public retirement plan don't have to pay twice by paying into Social Security as well

 

[DarkBlack]

I thought this was the answer I've been looking for but not so sure due to the section below. I turn 59-1/2 December 2026 but my 401K has already exceeded what I calculated I would need in it by then for a very comfortable income for 30-35 years. So I was thinking I could retire 12-18 months early (As in May/June 2025) but how to access the "excess 401K" during that 12-18 months without taking a 10% hit.

"A SEPP plan is a method for converting retirement assets into annual payments that continue for five years or until you reach age 59.5, whichever comes later."

If it was whichever comes first I'd be golden!
I'll have to do some math and see what payments would work for those 5 years, maybe I can still retire next year!!

I don’t know your details, but you can probably use the rule of 55.

 

[Torvy]

I'm not explaining myself well.

In my hypothetical, you'd basically have a handful of investment choices. All of the broad-based, low risk indices. Zero need to understand investing. Literally could choose any and come out well above SocSec. Let people move among the indices as they wish. Some will do nominally better than others, but all will do well.

Those 'certain religious' have their own retirement plans fed by their charities. Nothing needs to change for them. They aren't in Soc Sec now anyway.

The foreign teachers, students and govt employees groups don't draw Soc Sec either. They get what is offered in their own countries.

The only group of these that matter is the state and local government employee group. I'd personally end the split system. Trust me, it's a PITA, when you have both. You could continue to exempt them and let them opt out of SocSec.

I'd love for it all to be optional, but just like insurance, some people would opt out and then cry when they are 65 and broke.

 

[Torvy]

I don’t know your details, but you can probably use the rule of 55.

True. I know in my case, my current 401k (ish) plan was too small. Most of my money was in accounts from previous jobs.

 

[ultrarunner]

some people would opt out and then cry when they are 65 and broke.

The back up is senior section 8 housing with some very nice senior only properties, reduced utilities, taxi vouchers, food program, etc…

Quite a few seniors in major metro that have tapped into a huge safety net…

 

[newbury]

I and my wife opted out. We are US Gov. Civil servants from the '70's. Under the Civil Service Retirement System (CSRS) and we chose to stay in CSRS after 1983, neither of us trusted the new plan, thus we effectively paid no SS taxes during our CSRS employment. I did have about 30 "quarters" of SS "contributions", but then it was rigged so if I finished out my 40 quarters most of my SS benefits would be taken away.

 

[ultrarunner]

Almost sounds like the Galveston Plan to opt out?

How Three Texas Counties Created Personal Social Security Accounts and Prospered

Three Texas counties opted out of Social Security 30 years ago by switching to personal accounts, and those workers have made money every year.

www.forbes.com

 

[Bearsixty7]

I don’t know your details, but you can probably use the rule of 55.

I have heard of this before but didn't see any information on my 401K website. A quick search makes it sound like I could do it. I've worked 36 years for my current employer and that's when my 401K started.
I have a one on one scheduled with a financial advisor in November, I will make sure these options are discussed.

 

[CloverKnollFarms]

Only 5% of active fund managers actually beat the average of the indexes. Investing doesnt have to be complex or sexy to make you wealthy over time. The issue is, most people don't want to take the time to do it. They want it now.

Charlie Munger Said 401(k) Plans Should Only Offer Index Funds – No Other Investment Options: 'It's The Logical Thing To Do'

www.benzinga.com

 

[kenmac]

Only 5% of active fund managers actually beat the average of the indexes. Investing doesnt have to be complex or sexy to make you wealthy over time. The issue is, most people don't want to take the time to do it. They want it now.

Charlie Munger Said 401(k) Plans Should Only Offer Index Funds – No Other Investment Options: 'It's The Logical Thing To Do'

www.benzinga.com

as Dave Ramsey says.. slow and steady. The turtle wins the race against the hair every time ! LOL

 

[ultrarunner]

Mom is the only person to retire in the family and spent 40 years as a RN and retired as Charge Nurse.

She was asked to come back to help on the very busy Tuesday and Thursday for whatever hours she could spare.

She really enjoyed it to the max and said it was the best seeing her friends and helping out and made new friends...

Never any conflicts or problems.

Maybe the best retirement is as simple as retiring on your own terms with the ability to choose how to spend your time... even if that isn't a life if leisure...

 

[CloverKnollFarms]

Mom is the only person to retire in the family and spent 40 years as a RN and retired as Charge Nurse.

She was asked to come back to help on the very busy Tuesday and Thursday for whatever hours she could spare.

She really enjoyed it to the max and said it was the best seeing her friends and helping out and made new friends...

Never any conflicts or problems.

Maybe the best retirement is as simple as retiring on your own terms with the ability to choose how to spend your time... even if that isn't a life if leisure...

To me, that is retirement. I'm going flying next week, tutoring a new instrument pilot.
I work on bee equipment that I sell, in my shop, when I want and as long as I want.
I do a lot more than most people do, but I do it all on my terms.

 

[Jstpssng]

When I first read the title I thought the "accountant" was the OPs wife.

 

[Torvy]

When I first read the title I thought the "accountant" was the OPs wife.

In my case, that's pretty close. She's not technically an accountant, but was a Controller with accountants reporting to her. MBA, not CPA.

 

[MMC]

Only 5% of active fund managers actually beat the average of the indexes. Investing doesnt have to be complex or sexy to make you wealthy over time. The issue is, most people don't want to take the time to do it. They want it now.

Charlie Munger Said 401(k) Plans Should Only Offer Index Funds – No Other Investment Options: 'It's The Logical Thing To Do'

www.benzinga.com

That's a really good point. Too many younger folks who may actually want to do the right thing and plan for a responsible retirement are sold...nonsense. Most managed funds or investments do not beat the stock market average over time (and some of that may be luck or a statistical trick of choosing a certain time window for their advertised gains).

Additionally, a real killer is the "fees" charged up front for these esteemed services. That comes right out of your real earned monies in today's dollars. Point is, that money never enjoys the benefit of "compounding" over many decades. For a manager or a fund charging a high load fee, the impact on
final monies available when you go to the window to get your winnings can be startling.

I prepared some suggestions for a smart mechanic that works with me on building his wealth for himself and his family at his retirement.

We went through a lot of the basics like paying off loans early, etc., but I think he really was amazed at how much more money he could have if he just chose a low load/fee index fund(s) versus the charges he would experience with some managed funds and investments he was being offered.

I wish some portion of investment basics was given more emphasis in school. It's too late to learn it later down the road... If we want folks to take care of themselves later (instead of the government doling out its pittances), we need to offer better tools for the task at hand.

In my opinion, naturally.