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Old 03-24-2013, 11:46 AM   #21
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Seems like an example of the bagel problem:

What The Bagel Man Saw - New York Times

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But he will say that telecom companies have robbed him blind, and another bagel-delivery man found that law firms aren't worth the trouble. He also says he believes that employees further up the corporate ladder cheat more than those down below. He reached this conclusion in part after delivering for years to one company spread out over three floors -- an executive floor on top and two lower floors with sales, service and administrative employees.
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Old 03-24-2013, 12:12 PM   #22
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Seems like an example of the bagel problem:

What The Bagel Man Saw - New York Times
Does anyone know whether this is an apocrophal story? It is very interesting, but it sounds like it is made up rather than real.

Ha
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Old 03-24-2013, 12:14 PM   #23
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Does anyone know whether this is an apocrophal story? It is very interesting, but it sounds like it is made up rather than real.

Ha

https://en.wikipedia.org/wiki/Paul_Feldman
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Old 03-24-2013, 12:53 PM   #24
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Thanks Eridanus. Amazing story, and a very interesting character.

Ha
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Old 03-24-2013, 01:21 PM   #25
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Thanks a lot for all the constructive feedback, especially those involving legal issues. There are a lot of smart people on this board and I plan to make full use of your advice. They will help me fortify my plans for my retirements. As for comments of moral nature, I would say there are many diverse points of view and I appreciate comments, even those and perhaps especially those which are critical, on my actions. Thanks again for all your thoughts.
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Old 03-24-2013, 07:49 PM   #26
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Sorry if my question is a bit naive, but is the problem about giving one's assets to your friends and family while keeping control of it and declaring it as not being yours for tax reasons ?
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Welfare cheats in the 1%? Who woulda thunk it?
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I'll just leave this here.
Old 03-24-2013, 09:25 PM   #27
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I'll just leave this here.

Judge Learned Hand famously wrote in the case of Gregory v. Helvering 69 F.2d 809, 810 (2d Cir. 1934), aff'd, 293 U.S. 465, 55 S.Ct. 266, 79 L.Ed. 596 (1935):

“Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one's taxes. Over and over again the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands."
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Old 03-25-2013, 03:14 AM   #28
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kmt,

I know you have to speculate to model healthcare costs into the future, but have you actually looked at the cost projections? The delta between the 400% subsidy level and unsubsidized is not that big, and I think your marginal savings may not be anywhere close to being worth the complexity of managing all those gifts.

Separately, I'm a fan of working the tax system within the bounds of the code, but even successful legal defenses are expensive. Just one audit might trigger a cascade of expenses that wipe out all the savings you were trying to achieve, even if you are in the right with your "gifts." (And I'm not at all sure that you are.)
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Old 03-25-2013, 04:04 AM   #29
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Age 41, wife age 39. Both of us are in high paying professions and our yearly compensation is around 1 million. We live in Scarsdale NY. I am in software and she is in investment banking. We have one two year old child.

...

One major decision point eventually will be:

1) Stay in Scarsdale paying high real estate and NY state taxes but have our kid go to a very good school and then move to PA (where social security, 401k are not taxed, as well as much lower state income taxes) when our child goes to college

or

2) Move to fairly good school district in PA when our child is about to go to junior high.


I'm kind of living out your option 1. I'm 44, retiring next Friday. Similar income range, though its mostly from me, wife makes a relative pittance (though good $ in most parts of the country).

We are moving from the city to a town near you with our preschooler this spring. So we are signing up for the high RE taxes (26k for us) but its still a significant financial downsizing since the house we purchased cost about 35% of what we'll sell our NY loft for.

The benefit I have is my wife really likes her job - so while her income doesn't cover our expenses, it does provide health care. I don't know how many more years she'll want to do it, but at the end of the day we can afford a policy in the individual plan market without jumping through hoops for a subsidy. For us the key is *access*, since we have pre-existing conditions to deal with. Fortunately ACA takes away that concern.



Welcome to the forum!
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Old 03-25-2013, 04:25 AM   #30
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Just read your post about living on the DE/PA border. You seem to be optimizing one particular variable (minimizing taxes) while ignoring lots of other factors. THink about it, of that 120k you spend in a year, how much is actually subject to sales tax? Is the 4 figure sum you'll save worth planning your life around? (i'm talking being in PA vs being in PA next to DE).
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Old 03-25-2013, 10:39 AM   #31
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Sorry if my question is a bit naive, but is the problem about giving one's assets to your friends and family while keeping control of it and declaring it as not being yours for tax reasons ?
Yes, with the added expectation that the money will come back to you when you ask for it because it's not really a gift or even a loan.

But, hey, a tax lawyer approved the plan. That means it's legit, right?
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Old 03-25-2013, 11:42 AM   #32
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Now having read about your 13k/relative/year gift 'repo' plan -

Seems really risky. If you're 'giving away' 3MM in assets over that time it must be to a good number of relatives - more than just parents. Are 10-12 people really to be trusted with this over a 40 year timeframe? What about their heirs?

Seems like a lot of trouble and risk to go through just to pay reduced amount of healthcare costs for 20 years.


Also - you're going to work extra years to give yourself time to 'gift' away the money? Why not just work 1 year at full rates to earn enough to pay for non-subsidized health premiums between 45-65?
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Old 03-25-2013, 12:24 PM   #33
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Now having read about your 13k/relative/year gift 'repo' plan -

Seems really risky. If you're 'giving away' 3MM in assets over that time it must be to a good number of relatives - more than just parents. Are 10-12 people really to be trusted with this over a 40 year timeframe? What about their heirs?

Seems like a lot of trouble and risk to go through just to pay reduced amount of healthcare costs for 20 years.


Also - you're going to work extra years to give yourself time to 'gift' away the money? Why not just work 1 year at full rates to earn enough to pay for non-subsidized health premiums between 45-65?
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Old 03-25-2013, 01:31 PM   #34
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I'd just like to volunteer to hold $13,000 a year. PM me for my post office box number.
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Old 03-25-2013, 01:46 PM   #35
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Questionable scheme, but no judgment here. I still wonder what the OP will do with himself at age 45 after retiring. He's talking about being retired for pretty much half his life - 45 years (or so) is a VERY long time. Absent a clear plan for post-retirement, it's hard to imagine the scenario sufficiently to give any practical advice.
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Old 03-25-2013, 01:51 PM   #36
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Well, I'm in that boat. But like the OP the first 15 years of retirement I'll have a kid at home. So I'll definitely ease into free time, not like your average retiree.
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Old 03-25-2013, 01:52 PM   #37
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In fact, when I look at it that way I'm kind of retiring at a normal age (~60) and just taking up a second career between now and then...
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Old 03-25-2013, 02:00 PM   #38
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Questionable scheme, but no judgment here. I still wonder what the OP will do with himself at age 45 after retiring. He's talking about being retired for pretty much half his life - 45 years (or so) is a VERY long time. Absent a clear plan for post-retirement, it's hard to imagine the scenario sufficiently to give any practical advice.
Is being retired for 45 years materially different than being retired for the "normal" 30 years when it comes to entertaining oneself?
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Old 03-26-2013, 09:56 AM   #39
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Is being retired for 45 years materially different than being retired for the "normal" 30 years when it comes to entertaining oneself?
I believe it does. Most of your same-age cohorts will still be at work rather than retired. Furthermore, we've seen discussed on this board the significant mindset adjustment needed to handle true ER (i.e., below the age of 50). Indeed, to FIRE so young often requires, as the OP has described, a high-paying, high-stress career. It's not so simple to "turn it off".

To me, FIRE does not mean true retirement from work. Rather, it means the freedom to choose whether to work and what to do. The closest the average person comes to this type of freedom is in college, and even then, only the choice of one's career is available - choosing not to work is not an option.
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Old 03-26-2013, 12:56 PM   #40
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I believe it does. Most of your same-age cohorts will still be at work rather than retired. Furthermore, we've seen discussed on this board the significant mindset adjustment needed to handle true ER (i.e., below the age of 50). Indeed, to FIRE so young often requires, as the OP has described, a high-paying, high-stress career. It's not so simple to "turn it off".

To me, FIRE does not mean true retirement from work. Rather, it means the freedom to choose whether to work and what to do. The closest the average person comes to this type of freedom is in college, and even then, only the choice of one's career is available - choosing not to work is not an option.
Is that based on your own experience of retiring below the age of 50?

Personally I see a lot of young folks milling about every day. Heck, it's hard sometimes to get a table at Starbucks in the middle of the week.
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