Stupid boomers; how is this possible?

TCABM said:
Don’t forget in-service withdrawals begin at 59 1/2, allowing workers with a 401k to roll it over to a corresponding IRA.

The second part.

As boomers fly west, their generation will begin the largest transfer of wealth in history. Between all their assets and life insurance, up to $30T (or more) has the potential to move to the next generation.

https://www.forbes.com/sites/nextav...make-the-greatest-wealth-transfer-in-history/
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I would expect that all that new "wealth" transferred to the young'uns will place upward pressure on prices.
 
TCABM said:
Life insurance isn't taxed at all. Liquid assets can be set to Transfer on Death, bypassing or deferring the tax obligation. Just went thru this when my mother passed. For her non-qualified accounts, we only paid tax on the gains, not the basis.
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This isn't the full story. Liquid or not, "transfer on death" does not affect whether the tax man cometh. Now, you might be able to avoid probate. But that's another matter.

Also, life insurance may be taxed if not handled properly.
 
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Cooter said:
I heard recently from a reputable source that we only have 12 more years left on the planet. I don’t understand all this talk of retirement.
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Well maybe if you’d get with the program and start riding a bicycle to work and go vegan we could extend that 12 years to at least 15.
 
I need to look into something a bit further - that is whether retiring earlier and taking SS and 401k withdrawals earlier will actually put me in a lower tax bracket and as a result of being taxed less will result in more of my money regularly coming to me rather than the government. Does that make any sense? I haven’t quite thought through how to do that in a spreadsheet yet.
 
455 Bravo Uniform said:
I need to look into something a bit further - that is whether retiring earlier and taking SS and 401k withdrawals earlier will actually put me in a lower tax bracket and as a result of being taxed less will result in more of my money regularly coming to me rather than the government. Does that make any sense? I haven’t quite thought through how to do that in a spreadsheet yet.
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No. The higher rate starts at the higher income and doesn't revert to your first dollar .
 
Cooter said:
I heard recently from a reputable source that we only have 12 more years left on the planet. I don’t understand all this talk of retirement.
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I hadn’t heard that one. Can you cite your source? Hopefully it isn’t based on some silly cockeyed numerology from some old book of fables and myths.
 
Plenty of boomers that have make sound retirement investments but there are also those that could care less about living in wealth during their twilight years. That statistic about some living off $29K a year is where my parents are. No debt and no desire to travel and that number is easily doable. My neighbors are the opposite. They’ve made investments during their younger years to have a much more lavish lifestyle. They take long trips and cruises all the time. All depends on what type of lifestyle you want to lead in retirement.

I’d also say that the pension and SS numbers in the article are a bit skewed. With my military pension and early retirement SS (62) I’ll be close to $60K a year. Just enough to pay for a “tiny home” with solar panels, a Model 3 (used of course) and an LSA. ;)
 
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SkyDog58 said:
I hadn’t heard that one. Can you cite your source? Hopefully it isn’t based on some silly cockeyed numerology from some old book of fables and myths.
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The 12 years is taken a bit out of context. We have about 10-12 years to do something about our cow farts before Armageddon.
 
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1. I absolutely believe the $58K number. And that's the Vanguard average of people who do have a 401. Keep in mind the number of people who have NOTHING saved.

2. Back to my theory of the average person. Sadly, I think people on this board tend to be on the right side of the curve when it comes to intelligence and income.

3. On your stop at Wal-Mart tonight glance over at a random ten people and ask yourself if you think they put ANY money away for retirement.

4. There's a website that lists all the counties in the nation along with the percentage of people on foodstamps (whatever it's called now). The percentage is staggering. I live in a fairly affluent county and the percentage is still 14%. If you're living off welfare now, those plans aren't going to change when you hit retirement age.
 
The one thing some people overlook is the amount of retirement money they have in qualified funds like 401k and IRAs (tax-deferred) and at what age they plan to withdraw that money. The age 70 1/2 RMD requirement has caught a few off guard and caused their tax rates to elevate due to the added influx of taxable income at 70. Since I retired early and am living off savings, I basically have no income. To offset my 70 RMD hit I'm withdrawing qualified monies now at a very low tax rate and using that to live vs my savings which has no tax liability. It was the best advice my account offered before I retired.
 
This board is an echo chamber of above median earners who readily dismiss national economic insolvencies as mythical because their personal street looks posh. Look at the far end of the runway for once. The level of retirement insolvency in this country is staggering, and I'm no friend of the boomers mind you. But a spade is a spade. 401k and the loss of pensions was a bait and switch, and we re gonna see the outcome of this dynamic with the boomers first. Most people make nada, with employers who offer jokes of a retirement vehicle, in a country that demands high levels of consumption as a function of your already paltry income ratio.

SS WILL be the national benchmark for retirement income in this country going forward, on a median basis, good bad or indifferent. No amount of finger wagging and self patting about being above that benchmark will ameliorate the fact that the majority will pull down on that rope. We need to prepare to deal with how this will change the look and feel of american main street and our own lives as future caretakers and eventual dependents ourselves. Not everyone will be able to expat to run away from insolvency in the home country.

I recognize its all good advice here, but talking about 50k/yr retirement contributions while attempting to appropriate a "middle class" self reporting, will always come off as tone deaf. Don't shoot the messenger.
 
Eh, I know people that are pulling in decent money and still not investing wisely. They blow it on stupid stuff. I get there are the poor that will never get ahead, but there are also the stupid who will screw themselves over due to shortsightedness.
 
hindsight2020 said:
This board is an echo chamber of above median earners who readily dismiss national economic insolvencies as mythical because their personal street looks posh. Look at the far end of the runway for once. The level of retirement insolvency in this country is staggering, and I'm no friend of the boomers mind you. But a spade is a spade. 401k and the loss of pensions was a bait and switch, and we re gonna see the outcome of this dynamic with the boomers first. Most people make nada, with employers who offer jokes of a retirement vehicle, in a country that demands high levels of consumption as a function of your already paltry income ratio.

SS WILL be the national benchmark for retirement income in this country going forward, on a median basis, good bad or indifferent. No amount of finger wagging and self patting about being above that benchmark will ameliorate the fact that the majority will pull down on that rope. We need to prepare to deal with how this will change the look and feel of american main street and our own lives as future caretakers and eventual dependents ourselves. Not everyone will be able to expat to run away from insolvency in the home country.

I recognize its all good advice here, but talking about 50k/yr retirement contributions while attempting to appropriate a "middle class" self reporting, will always come off as tone deaf. Don't shoot the messenger.
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EdFred said:
Eh, I know people that are pulling in decent money and still not investing wisely. They blow it on stupid stuff. I get there are the poor that will never get ahead, but there are also the stupid who will screw themselves over due to shortsightedness.
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You betcha. We have friends who make pretty good money, but I'm betting their retirement plan is hope. I know I'm one to talk, with an airplane in the hangar and a classic Mustang getting restored in the garage, but these guys make me look like an amateur with the toys. I've got family members who are older than me and have, I would estimate, essentially zip saved. Their only income will be Social Security. It's crazy.

My wife and I had exactly zero saved up until I was 40. We were young, I had a good paying job, but we had five kids and were so far underwater we couldn't see the surface. I was lucky enough to double my income over a period of 3 years, so now we're doing OK. We're still playing catch-up, but I would guess we're much better off than most.

Having been there not all that many years ago, I do feel for the people who aren't able to save anything for retirement. Some of our kids are in that boat. They can barely make it from one paycheck to the next, let alone contribute to a 401(k) -- and since it's not mandatory, the money goes elsewhere. We've counseled, encouraged, and offered to help with planning and budgeting, but there's really only so much you can do.

One of our jobs now is to set up our estate so that if we die with a lot left over, it doesn't provide a quick-burning pile of cash to our kids. We're trying to figure out how to budget what we leave behind to provide maximum benefit without supporting short-term stupidity.
 
Rule of thumb, take the amount of money you need per year, divide it by 4% and that is how much you should have in a portfolio balanced for your risk level, which at retirement or near should be low. This is all I have.

So if you need $100,000 per year all in, divide by 4% or $100,000/.04 = $2,500,000 . With 2.5 million supposedly you will be able to withdraw 100k without draining your capital.
 
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DaleB said:
One of our jobs now is to set up our estate so that if we die with a lot left over, it doesn't provide a quick-burning pile of cash to our kids.
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Does your estate planner know these wishes?
 
One aspect I have been curious about is how much of the market is tied up in retirement accounts and whether retirement withdraws will affect the market value by any appreciable amount. In other words, as boomer's retire and draw down their retirement accounts, will that drag the market down? Does anyone have any insight/data on that?
 
TCABM said:
Does your estate planner know these wishes?
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Well, considering that our estate planner is currently me, then yes. I need to hire more estate planning staff... but trying to determine who is going to be worth what they cost has been a challenge. For that matter, getting them to disclose what they cost without investing a lot of time and information has been a challenge.
 
SkyDog58 said:
I hadn’t heard that one. Can you cite your source? Hopefully it isn’t based on some silly cockeyed numerology from some old book of fables and myths.
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No, this is a new type of fable and myth. Way more harmful than the old ones.
 
DaleB said:
Well, considering that our estate planner is currently me, then yes. I need to hire more estate planning staff... but trying to determine who is going to be worth what they cost has been a challenge. For that matter, getting them to disclose what they cost without investing a lot of time and information has been a challenge.
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Oh you’re thinking about it all wrong. Play favorites; you’ll be dead anyway.
 
JOhnH said:
I am sure this doesn't apply to most of the boomers here, but:



https://www.cnbc.com/2019/04/01/the...st-will-be-unable-to-afford-a-solid-life.html

At first, I couldn't believe it. But then I got to thinking about a lot of boomers I know, and realize it probably is very common. And these are some of the people that b1tch about millennials.
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Yes, that value is the average retirement savings for boomers. Subtract the substantial debt of the homes, cars, and credit cards from that value.. And there are ones this site who also carry debt on an airplane.

If you are willing and able to work until you die it is not an issue.
 
TCABM said:
Oh you’re thinking about it all wrong. Play favorites; you’ll be dead anyway.
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I just want to try to do my part to encourage, through example, less stupid fiscal practices than what I used when I was young and poor. I like the idea of inherited wealth that doesn't encourage or even enable people to become lazy twits with money (which will soon be gone), but rather shows how it can be managed to improve the lives of those about whom you care. Ideally, I'd like to provide some way that they can also contribute something of substance financially to their grandkids and great-grandkids. Even if it's not a lot of money, maybe it can be a good example of how things can work.

Idealistic and naive, I know.
 
455 Bravo Uniform said:
Can you explain please? I’m dense...
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First, if you're a pilot, you aren't dense. I'm talking about marginal rates. If tax is 10% for the first 10,000, and 20% if you make more than 10,000, you'll pay 10% on the first 10,000, or 1000, and 20¢ for each dollar you earn after the first 10,000.
 
SkyDog58 said:
I hadn’t heard that one. Can you cite your source? Hopefully it isn’t based on some silly cockeyed numerology from some old book of fables and myths.
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Thats pretty much what it is based on.
 
PaulS said:
Rule of thumb, take the amount of money you need per year, divide it by 4% and that is how much you should have in a portfolio balanced for your risk level, which at retirement or near should be low. This is all I have.

So if you need $100,000 per year all in, divide by 4% or $100,000/.04 = $2,500,000 . With 2.5 million supposedly you will be able to withdraw 100k without draining your capital.
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Or multiply by 25 which is an easier concept for many people.
 
Too lazy to quote, however in my experience most of the people that say they have nothing left over to put away for retirement probably have things they can cut out of their spending. We're talking cigarettes, the daily trip to Starbucks, getting the highest level of cable when all you do is watch MSNBC.

My biggest fear in retirement is that my savings will somehow be used to supplement those that didn't save.
 
Anymouse said:
My biggest fear in retirement is ...
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Mine is a lengthy period of disability (wheelchair bound, for instance) where you pay a fortune for care unless you want to be chucked into the equivalent of a dog kennel for old people. Disability insurance is helpful, but usually times out after a few years, putting you back in the dog kennel.
 
Anymouse said:
...My biggest fear in retirement is that my savings will somehow be used to supplement those that didn't save.
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Oh, you mean income redistribution? That's already happening. The problem will be keeping the socialists from expanding these programs through higher income taxes on the "wealthy". They still haven't figured out that the truly rich don't have taxable income the way hourly and salaried employees do. So, those of us that have good jobs, mortgages, kids to send to college, and parents to worry about will continue to be subjected to bracket creep, under-witholding, and AMT.
 
wilkersk said:
Oh, you mean income redistribution? That's already happening. The problem will be keeping the socialists from expanding these programs through higher income taxes on the "wealthy". They still haven't figured out that the truly rich don't have taxable income the way hourly and salaried employees do. So, those of us that have good jobs, mortgages, kids to send to college, and parents to worry about will continue to be subjected to bracket creep, under-witholding, and AMT.
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Yep, kinda like how I got taxed to supplement the people that couldn't/wouldn't pay their mortgages a few years ago. I ended up paying my mortgage and some deadbeat's mortgage as well.
 
Crashnburn said:
First, if you're a pilot, you aren't dense. I'm talking about marginal rates. If tax is 10% for the first 10,000, and 20% if you make more than 10,000, you'll pay 10% on the first 10,000, or 1000, and 20¢ for each dollar you earn after the first 10,000.
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Thanks for the benefit of the doubt, lol!

What I was meaning is that by pulling the retirement ripcord sooner, my combined monthly income from SS, pension, and mandatory 401k/IRA withdrawals will not hit the next margin and thus stay at a lower tax when it’s eventually taken out (stays in and continues to grow tax free, and gets taxed at a lower marginal rate because I took SS and pension earlier than normal). I think I can make a couple Excel scenarios, but I need to figure out the various time triggers and subsequently the benefit payment amounts. The pensions (2) and SS will be easy to calculate totals, it’s the 401k and IRAs that I need to study when withdrawals can or need to start.
 
Matthew said:
That's decent advice - max out the company contributions in your 401(k), then put the rest of your savings somewhere else.
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You guys are airplane owners AND you max out your company match AND you put the REST somewhere else???


Man I need a diff job
 
WannFly said:
You guys are airplane owners AND you max out your company match AND you put the REST somewhere else???Man I need a diff job
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I figure that I put roughly 30% of my top-line income into various retirement vehicles. And I'm still not comfortable with the accrual rate. ;-)
 
455 Bravo Uniform said:
Thanks for the benefit of the doubt, lol!

What I was meaning is that by pulling the retirement ripcord sooner, my combined monthly income from SS, pension, and mandatory 401k/IRA withdrawals will not hit the next margin and thus stay at a lower tax when it’s eventually taken out (stays in and continues to grow tax free, and gets taxed at a lower marginal rate because I took SS and pension earlier than normal). I think I can make a couple Excel scenarios, but I need to figure out the various time triggers and subsequently the benefit payment amounts. The pensions (2) and SS will be easy to calculate totals, it’s the 401k and IRAs that I need to study when withdrawals can or need to start.
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Make sure that in all of the scenarios you dont lose the forest for the trees and reduce your overall cash available due to the desire to 'save taxes'.

As for the premise of the entire thread, the amount boomers have in their 401ks is a meaningless number to assess how they are set for retirement. It doesn't account for real estate, pensions and non-deferred investment accounts. Plenty of folks out there who retire owning more than one home because they moved around for work and turned their respective residences into rentals along the way.
 
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