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MikeL
Social climber
Southern Arizona
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Mar 21, 2017 - 08:17am PT
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"The retirement game is over in USA. unless you got min 2 mil in the bank, paid-off property and good SS coming, the medical bills will kill you. "
Splatter: Does not apply if you retire from the state, county, or city in Kaliforny, in which case the government will not only give you a ludicrously generous pension, but will also pay most of your health care bills in retirement.
If you get really ill (like terminally), all bets will be off unless you can simply die without a fight. The grand majority of health care costs of the average person shows up in the last 6-12 months of life. Before that, it seems, everything is manageable financially with whatever health care plan that one has. When you get terminally sick, whatever nest egg that you’ve built over the years will melt away very rapidly. It doesn’t make much difference how much money you have.
In many places in the U.S., the state will assume your medical expenses (within some limits) once your net worth falls to a very minimal level. In Wisconsin where my mother lives, it’s $2000.
Fighting mortality in the last period of one’s life is a very expensive delaying action.
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Gunkie
Trad climber
Valles Marineris
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Mar 21, 2017 - 08:20am PT
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There is another paradigm that says to take SS at 62 and invest it, if you can afford to do so.
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skitch
Gym climber
Bend Or
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Mar 21, 2017 - 10:56am PT
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Well the trump bump looks like it's on the decline right now...
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ms55401
Trad climber
minneapolis, mn
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Mar 21, 2017 - 06:03pm PT
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I'm early 40s. Plan to retire in early 60s and forego receiving SS benefits as well as dipping into 401(k)/IRA until I'm 70 1/2.
With that goal I'm setting aside money -- bridge money -- to cover living expenses between 62 (say) and 70 1/2.
Should that pan out, I have to believe I will have no income tax liability, as I'm literally not taking in money but rather living on savings. Anyone do this? Curious if my understanding of taxes is incorrect.
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Moof
Big Wall climber
Orygun
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Mar 21, 2017 - 07:56pm PT
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Married filing jointly with standard deductions lets you take about 35-40k out before taxes rise above $0. You can also have another 70k of long term capital gains and qualified dividends tax free as well. Taxes with modest retirement income will be very low for most.
http://www.gocurrycracker.com/never-pay-taxes-again/
Tryit at a site like this one:
https://www.dinkytown.net/java/Tax1040.html
I can live off my age 70 SSA, so I am trying to fill the planned 22 year gap with comfy margin. With IRA/401k savings and brokerage account savings. Target is to take out 4.5% adjusted for inflation, and I should be fine even if SSA stays underfunded by 25%.
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Moof
Big Wall climber
Orygun
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Mar 21, 2017 - 08:17pm PT
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You paid in for your whole working life, so not eff'ed up at all. Same with SSA, you get what you deserve even if you also saved millions along the way. High earners get less back than they put in, but I find progressive benefits and taxes to be a gud thing!
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mudrock
climber
Eastside
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Mar 21, 2017 - 08:41pm PT
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Lotsa talk these days about "guaranteed minimum income" as the bots take over from people.
Rest assured the gerries will be first in line.
Plenty of gerries want to screw their kids who don't give a f* about skin color or bedroom prefs. The kids will have the last laugh.
SS isn't worth worrying about. But anyone with a pension should do what they can to investigate the actual assumptions and practices that support the scheme. Check nakedcapitalism dot com on CALPERS for an example.
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ShawnInPaso
climber
Paso Robles, CA
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Mar 22, 2017 - 01:18am PT
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If you have a 401k and haven't retired yet.....be sure to read and understand "the rule of 55". Most financial advisors will never tell you about the rule of 55 because they want to profit from your 401k being rolled over into an IRA that they manage.
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Moof
Big Wall climber
Orygun
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Mar 22, 2017 - 11:15am PT
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Beyond your work 401k you can also squirrel away 5.5k in a traditional IRA if you make less than about 100k (if married filing jointly), or 5.5k into a Roth if you make less than about 160k. You can squirrel away another 5.5k in your spouses name (look up spousal IRA) even if you make too much to qualify for a traditional or Roth IRA. It requires they are not working or don't have access to a 401k plan at their work however.
Under 50 that lets you squirrel away 18k+5.5k+5.5k=29k per year in tax deferred/advantaged accounts. Over 50 (the tax year in which you turn 50 to be precise) lets you put away another 6k into your 401k.
Rule of 55 lets you withdraw your 401k balance you built up at your present employer if you quit/retire/leave in the year you turn 55 or later without the usual 10% penalty.
Rule 72(t), aka substantially equal periodic payments (SEPP) lets you trigger penalty free IRA withdrawals for 5 years or age 59.5 (whichever is LONGER). to help bridge the gap if retiring early enough without the 10% early withdrawal penalty. If going this route pay an accountant to set it up, it must be done carefully to not run afoul of the IRS.
If you have enough Roth principle (post tax money), and brokerage balance you can also do a Roth ladder where you live off of the brokerage and Roth principle while slowly doing an IRS to Roth rollover conversion while staying in the lowest tax brackets where most will be converted tax free. rolled over principles can't be withdrawn without penalties for 5 years, so you have to plan pretty far out to take advantage of this one.
You can also just take the 10% penalty, and use up Roth balances and any brokerage balances to minimize how much is withdrawn under penalty. It can result in only a minor overall hit if you are getting close to 59.5 with you quit working.
The rich have setup so many loop holes that can be taken advantage of if you are a good saver and plan on retiring early on a modest retirement income.
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Moof
Big Wall climber
Orygun
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Mar 22, 2017 - 11:18am PT
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What are you waiting for Locker?
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Bad Climber
Trad climber
The Lawless Border Regions
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Mar 22, 2017 - 03:27pm PT
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Good stuff, Moof. Thanks.
BAd
Edit: On the other hand, isn't crazy how our 70,000 pg. federal tax code makes this kind of manipulation necessary? Jeez.
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Bob D'A
Trad climber
Taos, NM
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Mar 22, 2017 - 03:56pm PT
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I'm semi retired, took SS at 62, travel to Mexico five times last year plus Costa Rica and Honduras, climb when I want and we have a little equity in the house that we may cash out in two or three years.
I don't think you need as much as they say, I travel cheap, last trip to climb Mexico for 10 days was around $275 for food, lodging and gas.
Working two days a week and that is more than enough. You could die tomorrow and all that money means nothing. Enjoy the present, there is no tomorrow.
Picture of some of the new routes we did in the Cusarare Canyon area of Chihuahua, Mexico.
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Batrock
Trad climber
Burbank
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Mar 22, 2017 - 04:57pm PT
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I just retired at 50 years of age after 30 years with the Los Angeles Fire Department.
Seeing 3 coworkers die of job related cancer prior to their retirement made my decision a little easier. My pension is pretty good but I also supplemented it with a 401k and a few other savings plans so I don't plan on touching my pension for quite some time if I can help it.
So fare the hardest part of retirement has been finding people to climb with who have the time off I do.
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bvb
Social climber
flagstaff arizona
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Mar 22, 2017 - 07:24pm PT
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I'm with Bob and Batrock. It does not take a lot to be cozily retired. I retired at 56, over 3 years ago, and I live pretty comfortably on my retirement income of about $33,000 (all tax-free, health benefits included.) My health has made it hard to get out and do stuff, but eventually I'm gonna travel a lot more. I got out of the NPS at just the right time!
You just go back to your roots, and live dirtbag cheap, but with a good car, nice clothes, and a big quiver of climbing shoes.
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rottingjohnny
Sport climber
Sands Motel , Las Vegas
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Mar 22, 2017 - 08:34pm PT
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What about the " American Legend " royalties...?
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phylp
Trad climber
Upland, CA
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Mar 22, 2017 - 09:23pm PT
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Congrats to everyone retired or retiring! I've been retired fully for 3 years and I love it!
I never thought I would say I am happy to soon turn 65, but it's going to be nice to go on Medicare. I was an independent contractor for years before I retired so medical insurance and deductibles have been one of the biggest expenses.
Retirement is sure great for climbing enjoyment. No rushing around weekend warrior stuff anymore.
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Roger Brown
climber
Oceano, California
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Mar 23, 2017 - 05:14am PT
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I have been retired 7 years but went back to work this week. I like to keep the body and brain challenged. The money is ok too. It is only a 13 week job but a bit strenuous and risky. Playing good with others is a job requirement so it is nice to be one of the people picked. Life is good, and keeps getting better.
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Bad Climber
Trad climber
The Lawless Border Regions
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Mar 23, 2017 - 06:17am PT
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Hey, Phyllis, I hear you on the week-end warrior grind. I've had a lot more time off than most because I've been a teacher, but still, most of the year, that grind is a reality. Also, now, I'll be able to take advantage of whatever perfect weather comes my way. So often I've been at work, especially in the fall, and watched those clear, cool days pass without once touching rock or hiking the trails. I'm staring down the barrel of a stack of gnarly essays these next few days. Must. Hang. On....
BAd
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phylp
Trad climber
Upland, CA
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Mar 23, 2017 - 09:44am PT
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BAd! And we should climb together midweek once you move to Bishop! I don't live there but I bring my RV up there around Memorial Day, and leave it stored when I'm not using it. Move it further north as the summer progresses.
I haven't decided yet if I'm headed there for Mule Days or right after.
I'm at Smith Rock for a week mid-May.
I'm 90% about heading up for the June COR trip.
10 days in Mammoth for July 4th.
Wait for it, Bad, you're almost there!
I think we need a thread for retired climbers who still climb.
Got to do our own duffer rendezvous.
Phyl
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Bad Climber
Trad climber
The Lawless Border Regions
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Mar 23, 2017 - 09:46am PT
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Hey, Phyllis, that would be great. You and my wife would really get along, methinks.
BAd
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