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Hi, I am Neil
Old 06-21-2014, 11:42 AM   #1
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Hi, I am Neil

Hi,
So I was wondering if I could roll an IRA to a HSA. So I get to 26 USC 408(d) and I see it's not much use unless you don't have any money. Then I see I don't need earned income to contribute to a HSA. I just need a HDHP and that looks like something I might have in retirement. I see from 1040 and 8889 that my contributions would just deduct from my investment income in retirement.
I wonder if anyone has talked about that and I end up here! Looks like a great resource.

So I still work. I keep thinking I need more just in case anything goes wrong. I have been living off investment income for two years because I eat up all my income in 401k, IRA, HSA and the risky deferred compensation.

Well I will be 50 toward the end of this year (yah! greater 401k etc contribs).
I have no mortgage on ~$400k home.
Married with 2 kids 6 and 10.
Fully funded 529 plans for them (not sure $100k+ each).
Roth IRA/Roth 401k ~$509k
IRA / 401k tax deferred (no basis) ~$484k
Deferred comp ~476k
Taxable investment $4.5M
Some small foreign pensions.
All told ~$6M.

I am pretty sure I can quit anytime but I haven't done any serious calcs beyond just living off the portfolio. Don't spend any money. Use coupons, discount gift cards and buy stuff on sale etc.
Still like work but you know when you really think about it is hard and you have to deal with all kinds of rubbish to make progress.

I believe in passive investments. Low cost ETFs. 38% bonds, US/International, REITs, Munies, various inflation protected bonds (TIP, ITIP).
Thanks.
Neil.
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Old 06-21-2014, 12:15 PM   #2
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Hi Neill and welcome. It looks like you have done well and saved a ton. here is a good thread to start with to decide where you go from here;

Some Important Questions to Answer Before Asking - Can I Retire?
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Old 06-21-2014, 12:21 PM   #3
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Welcome aboard, Neill. Many like-minded LBYM folks here.

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Old 06-21-2014, 12:58 PM   #4
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Mmm. Had to look up dryer sheets. Now LBYM. I can see a pattern emerging.
I live way below my means. When the financial crisis hit I went into 'don't stimulate the economy' mode (not that I believe in stimulus). Was living on beans and rice (taking it to work). Looked in couch cushions (real and virtual) for money. I wanted to buy stocks. Things kept going down.
I have had the young guys at work tell me that I made bringing your lunch to work socially acceptable (I didn't know it wasn't!).
Then there was a news report saying the Chinese saved like 70% of their income or something. So I calculated mine at about 90%. I was extreme at that time though.
We eat out a few times a week. I honestly like the cheaper places better. Expensive steaks just aren't that much better than the outback. Starbucks and the nice pay coffee at work just isn't as nice as the free on a price adjusted basis.
My car is 17 years old (purchased new for $12k) and worth about $500 and I might be deceiving myself there. People tease me about this because my fat ass has worn the seat out.
I have those old CRT TV's with small screens. I can get a big one when the ones I have break.
My current cell phone I got free and my kids cracked the screen a couple of years ago.
I don't deprive myself most of the time. I just can't justify some spending.
I hate to feel I am being ripped off but I would spend if the product is worth it.
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Old 06-21-2014, 01:16 PM   #5
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Quote:
Fully funded 529 plans for them (not sure $100k+ each).
Hard to know what education costs will be by the time they need these. I was shocked to learn private college expenses are nearly $60K per year at many places, and still rising rapidly. As an ER type, I find we qualify for no tuition breaks and merit scholarships only at 3rd or 4th choice schools. Top choices are asking for full list price for all 4/5 years. With travel and living expenses could be in the neighborhood of 200-300K all in. Then grad school, maybe? My mind boggles and doubts this is worth it.
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Old 06-21-2014, 01:55 PM   #6
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growing_older,

Thanks for that. As soon as I got the SS# for the kids we funded the accounts. I used a calculator at Vanguard to get values assuming the most expensive education. I haven't really looked at them since.
Both accounts now I look are at $160k. We put $85k in one and $103k in the other in the first year. We did the 5 year gift tax thing. They are in the IOWA plan.
I run a calculator at Vanguard now and it looks to be saying I am 67% funded. You make a good point about grad school. I think I will top them up this year based on the calculator. Lump sum funding is harder living off the portfolio and not wanting to sell anything in taxable.
I think the 529 is a good deal even with the 10% penalty if we don't spend the money. I don't want to overdo it though.
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Old 06-21-2014, 05:22 PM   #7
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Hard to know what education costs will be by the time they need these. I was shocked to learn private college expenses are nearly $60K per year at many places, and still rising rapidly. As an ER type, I find we qualify for no tuition breaks and merit scholarships only at 3rd or 4th choice schools. Top choices are asking for full list price for all 4/5 years. With travel and living expenses could be in the neighborhood of 200-300K all in. Then grad school, maybe? My mind boggles and doubts this is worth it.
Even merit scholarship is a joke - underneath they must be looking in FAFSA and determining to give/not Merit based. My daughter had 2170 in SAT, got into 6 years PharmD program in state college but zero scholarship. It'll cost me 30K/year and there goes 180K. Fortunately, I've saved 100K in her 529 plan since she was born but not enough. I'm planning to fund 200K/each for my 10 year old twin boys just to get that hurdle out of my future retirement plan.
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Old 06-21-2014, 05:57 PM   #8
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Originally Posted by retire2020 View Post
Even merit scholarship is a joke - underneath they must be looking in FAFSA and determining to give/not Merit based. My daughter had 2170 in SAT, got into 6 years PharmD program in state college but zero scholarship. It'll cost me 30K/year and there goes 180K. Fortunately, I've saved 100K in her 529 plan since she was born but not enough. I'm planning to fund 200K/each for my 10 year old twin boys just to get that hurdle out of my future retirement plan.
Since she can walk out the door with her degree and get a high paying reasonably easy job, why not let her fund the rest of her costs with student loans? If they are made for any situation, it's one like this.

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Old 06-21-2014, 09:17 PM   #9
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Since she can walk out the door with her degree and get a high paying reasonably easy job, why not let her fund the rest of her costs with student loans? If they are made for any situation, it's one like this.

Ha
Of course! I hear you. I'm planning to make her borrow stafford loans - about 31K for first four years. Interest rate is ok for now - 3.8 %. After four years, we'll see how the interest rates are for graduate studies(usually higher, around 6-7%) and I'll loan her money. Since I already have 100K saved for her education I'll help her up to that amount and rest she'll need to borrow.
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Old 06-22-2014, 08:53 AM   #10
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As to your original question, I have had a HSA while both working and retired. My annual contribution is deductible.

It sounds like you are deferring all your income now and living off investment income and your investments are reasonably conservative so you should be all set as long as you can keep your annual spending around $200k. See this link to look at alternatives (and firecalc).

Continue to work if you enjoy it and want to, but you don't have to and can comfortable quit anytime. Congratulations!!
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