What is Your Retirement Target?

[Joe Public]

Can I transfer money out of one account and into another if it was matched by my employer and I've finally become vested?

Do some research on rollover IRAs.

[old_gregg]

I need a significant crash course on this. I've always just put in the minimum into my 401K that would make me feel like I was doing something. Now that I'm dropping nearly 25,000 this year into retirement plans (and plan to do so for the next 10 years), I should figure out a plan. In fact, my previous 401K is still in a wells Fargo account set up by my previous employer. I don't even know what to do with it. Can I transfer money out of one account and into another if it was matched by my employer and I've finally become vested?

Obviously I have a lot to learn. Most articles are written for the average American, and my income doesn't fit this, so I don't know what I can or can't do. In the meantime, I'm saving a significant amount of my income every month. I'm still living the same lifestyle as a resident, but 800 more a month (car lease, phone, house payment) . I guess I'll figure it out later.

via a galaxy s3 far far away

I can't think of a more effective way to piss on viking's ashes than this post. He is the best person to ask.

[Surfah]

I can't think of a more effective way to piss on viking's ashes than this post. He is the best person to ask.

That and I thought doc was once following in his footsteps before going to medical school.

[Paperback Writer]

I can't think of a more effective way to piss on viking's ashes than this post. He is the best person to ask.

Diversify by putting all your retirement saving into a Brazilian hedge fund. BYU71 will no doubt back me up on this wise investment strategy.

[Northwestcoug]

http://cougaruteforum.com/showthread.php?t=65946

Riiiight...

[doctorcoug]

That and I thought doc was once following in his footsteps before going to medical school.

I was an econ major, not a financial analyst.

We don't talk much and I prefer to pay for my advise because it is respectful for the one giving the advice.

via a galaxy s3 far far away

[falafel]

I was an econ major, not a financial analyst.

We don't talk much and I prefer to pay for my advise because it is respectful for the one giving the advice.

via a galaxy s3 far far away

Do you ask for payment when Viking or Haute calls with medical questions?

I thought this sort of advice was meant to be free for family members. I certainly don't make my immediate family pay me for legal advice.

[doctorcoug]

Do you ask for payment when Viking or Haute calls with medical questions?

I thought this sort of advice was meant to be free for family members. I certainly don't make my immediate family pay me for legal advice.

Personally, I give out advise because it is the right thing to do. It isn't my favorite thing, because we are so far away and I can't examine them. For this reason, I don't want to ask them and respect their privacy.

via a galaxy s3 far far away

[Pheidippides]

Do you ask for payment when Viking or Haute calls with medical questions?

I thought this sort of advice was meant to be free for family members. I certainly don't make my immediate family pay me for legal advice.

Right? My bro gives me computer help all the time. I give him legal and corporate advice with some macroecon finance guidance. I've coached another bro to a sub 3:00 marathon in his second ever. Our other bro has all the ins and outs of financial nuts and bolts on a specific level. My sis gives us medical help. My other sis begs to teach my kids how to snowboard. We all help our parents and I'll end up papering a transaction for my dad that would cost him $50k otherwise - money he can't afford to use like that.

It's called being a family - share what we can when we can.

[doctorcoug]

Right? My bro gives me computer help all the time. I give him legal and corporate advice with some macroecon finance guidance. I've coached another bro to a sub 3:00 marathon in his second ever. Our other bro has all the ins and outs of financial nuts and bolts on a specific level. My sis gives us medical help. My other sis begs to teach my kids how to snowboard. We all help our parents and I'll end up papering a transaction for my dad that would cost him $50k otherwise - money he can't afford to use like that.

It's called being a family - share what we can when we can.

Most physicians will tell you that caring for family members is a recipe for disaster, sooner or later.

If I feel uneasy caring for my family, do they feel uneasy giving me financial advise? I don't know, so I respect their professionalism and leave them alone.

via a galaxy s3 far far away

[Jacob]

Some general advice I give for this: determine how much annual income you hope/anticipate to live on in retirement and divide that by 5%. For example, if you want to live on $100,000 of income annually, you’ll need to save about $2 million. With a $2 million balanced portfolio (roughly 1/3 equities and 2/3 fixed income), you can draw about 5% of your portfolio annually in perpetuity while your income and portfolio increases roughly in pace with inflation.

There are some factors to consider:
1) Account for the time-value of money given the historical rate of 2.5-3% annual inflation: $100,000 purchasing power today is not the same purchasing power as $100,000 10-20 years from now.
2) Account for taxable consequences: earnings in an IRA or 401k are not taxed, but the withdrawals from those accounts will be taxed as ordinary income; vice-versa, earnings on taxable accounts will be taxed at various rates depending on the asset type (ST/LT gain/loss, qualified dividend, bond interest, etc). In other words, will your $100,000 be withdrawn pre-tax from an IRA, or will it be drawn from a taxable account?
3) Interest rates are at historical lows, but that pendulum will probably swing in the opposite direction before too many years.
4) Will your income be supplemented by social security? I’m not counting on it myself.

What's the simple equation if you want to account for factor #1? IOW, say I want to live on 100k per year in today's dollars for 50 years without diminishing my portfolio?

[old_gregg]

What's the simple equation if you want to account for factor #1? IOW, say I want to live on 100k per year in today's dollars for 50 years without diminishing my portfolio?

[Uncle Ted]

Some general advice I give for this: determine how much annual income you hope/anticipate to live on in retirement and divide that by 5%. For example, if you want to live on $100,000 of income annually, you’ll need to save about $2 million. With a $2 million balanced portfolio (roughly 1/3 equities and 2/3 fixed income), you can draw about 5% of your portfolio annually in perpetuity while your income and portfolio increases roughly in pace with inflation.

There are some factors to consider:
1) Account for the time-value of money given the historical rate of 2.5-3% annual inflation: $100,000 purchasing power today
is not the same purchasing power as $100,000 10-20 years from now.

Of course, the actual inflation rate may be higher:

Inflation: Not as low as you think

Forget the modest 3.1 percent rise in the Consumer Price Index, the government's widely used measure of inflation. Everyday prices are up some 8 percent over the past year, according to the American Institute for Economic Research.

The not-for-profit research group measures inflation without looking at the big, one-time purchases that can skew the numbers. That means they don't look at the price of houses, furniture, appliances, cars, or computers. Instead, AIER focuses on Americans' typical daily purchases, such as food, gasoline, child care, prescription drugs, phone and television service, and other household products.
[...]

2) Account for taxable consequences: earnings in an IRA or 401k are not taxed, but the withdrawals from those accounts will be taxed as ordinary income; vice-versa, earnings on taxable accounts will be taxed at various rates depending on the asset type (ST/LT gain/loss, qualified dividend, bond interest, etc). In other words, will your $100,000 be withdrawn pre-tax from an IRA, or will it be drawn from a taxable account?

Doesn't it depend on the type of IRA? My understanding is that a Roth IRA is taxed on the front end (on what is put into it) and not on the withdrawals. It seems if one wanted a more predictable payout of their retirement they would convert their IRA to a Roth.

3) Interest rates are at historical lows, but that pendulum will probably swing in the opposite direction before too many years.
4) Will your income be supplemented by social security? I’m not counting on it myself.

What? I am fully vested. If social security is not going to pay out then why do we continue to pay into this ponzi scheme?

[CardiacCoug]

Don't you guys think it's good to have a mix of pre- and post-tax savings for retirement? That way you would have some flexibility regarding tax situation by drawing from one or the other depending on your situation.

I'd be worried about having an exclusively pre-tax nest egg that could be redistributed.

[ERCougar]

Don't you guys think it's good to have a mix of pre- and post-tax savings for retirement? That way you would have some flexibility regarding tax situation by drawing from one or the other depending on your situation.

I'd be worried about having an exclusively pre-tax nest egg that could be redistributed.

This is what I've been thinking about.
I talked to a financial planner on the phone a couple of months ago, a number I had randomly picked from the napfa website. He said he was already full, but he'd be happy to talk on the phone for a few minutes. He ended up spending about an hour on the phone with me--I kept saying I'd be happy to pay him or schedule an appointment but he refused. He argued very strongly in favor of a post-tax retirement savings, even for the highest current tax brackets. He recommended a book to me:
[ame="http://www.amazon.com/Go-Roth-Guide-Other-Accounts/dp/1938797000/ref=sr_1_1?ie=UTF8&qid=1359347872&sr=8-1&keywords=go+roth"]Go Roth!: Your Guide to the Roth IRA and Other Roth Accounts: Kaye A. Thomas: 9781938797002: Amazon.com: Books@@AMEPARAM@@http://ecx.images-amazon.com/images/I/51qu1UF3PvL.@@AMEPARAM@@51qu1UF3PvL[/ame]

I've read the book and I'd highly recommend it if you're curious about the subject.
The book makes the argument that even if you don't believe that tax rates across the board are likely to go higher, there are still big advantages to the Roth accounts (at least the 401k, which is the one that I paid the most attention to):
1) You'll end up with more retirement savings with the Roth. The yearly contribution limits are the same, but you've already paid taxes on the Roth. Assuming a 33% future tax rate (could easily be higher for some of us), that makes a 33% higher end amount, all of which has accumulated tax-free.
2) More flexibility with the Roth. You can withdraw the original contribution at any time, for any reason. You can even use it as a college savings account, realizing that you're limited to your original contribution amounts.
3) No inheritance taxes if you pass these to your kids
4) No forced withdrawals. You have to start withdrawing funds from traditional accounts at age 65. No such requirement with the Roth.

There are some other advantages, but those are the ones I remember off the top of my head. I'm in the process of setting up my I 401k as a Roth account this year (in the past, it's been traditional). This planner even recommends going back and converting my past traditional accounts to Roths. I'm not sure I agree with his reasoning here.

Get the book if you're curious. It opened my eyes to a few things.

(Oh yeah, and he's not one of the authors... )