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Old 06-10-2018, 07:58 AM   #21
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COcheesehead - indirectly related to this thread, for Fidelity's RPM calculator I have been given 2 different responses on the results of the calculator regarding taxes.
Example - if one has an input of expenses of 100k (not including taxes as that is not a category) and a score of 105 and taxes are 10k/10%, then is one's maximum spending 105 or 115?
I realize there is input for an effective tax rate, but it is not one of the expense category inputs.
I think it accounts for it by increasing your draw. Look at the data in the table, not just your raw score. It should show a higher amount taken out each year to account for taxes. So a 105 is 105 including taxes. That is how I interpret my results.
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Old 06-10-2018, 09:09 AM   #22
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I think it accounts for it by increasing your draw. Look at the data in the table, not just your raw score. It should show a higher amount taken out each year to account for taxes. So a 105 is 105 including taxes. That is how I interpret my results.
Yes that makes sense. Thank you.
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Old 06-10-2018, 09:29 AM   #23
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Then I wonder is social security will even exist in 13 years....
If the US still exists in 13 years then so will SS. I would not worry about that at all. Maybe, MAYBE, plan on a reduced amount just to be conservative but it WILL be there in 13 years. 30+ years, not quite so sure.
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Old 06-10-2018, 09:29 AM   #24
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All, thanks for the great replies. Very useful info!

For the past 6 months ,we've been living off what would equate to $20k per year in expenses, plus $21k per year for mortgage payments. If we had to, we could easily live of $45k-$50k per year. But I don't want to simply exist. I'd like to do some traveling and take up a few hobbies. We've even talked about full time RV'ing for a few years before settling on a permanent retirement location.

I currently make $130k per year. Wife does not work, so we only have the one income.

I had been putting 15% in my NQDC plan, but I'm thinking i should drop that to 6% just to get the match. When I leave the company it pays out in one lump sum. Assuming I am still with this company, taking that large lump sum in 13 years will for sure put me in a much higher tax bracket. I wish I could still participate in a 401k...

I'll take that money that was going into the NQDC plan and start putting that in taxable account.

So the plan is $8k/yr into the NQDC (down from the current $20k/yr), $5,500 into the Roth(bumping up to $6,500 in 3 yrs), and another $20k-$25k going into a taxable account. Thought about opening another Roth IRA under my wife's name and maxing that out as well.

Seem like there is a lot to learn on tax avoidance, most tax efficient with drawl methods, learning to move money around, etc.
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Old 06-10-2018, 09:38 AM   #25
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I currently make $130k per year. Wife does not work, so we only have the one income.
If you are only going to have one income for a couple then it helps that that one income is equal to more than 2 average incomes. You should be just fine if you keep your expenses down and savings up.
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Old 06-10-2018, 10:21 AM   #26
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As Gumby mentioned - the second best time to start saving for retirement is NOW. And you're doing it. One of the 'benefits' of getting serious about retirement savings is the more you don't spend, but put in saving you get 2 benefits... 1) bigger savings. (duh), and 2) reduced spending. If you are spending less (because you're saving more) then you don't need as large a nest egg to retire on. The key is to figure out how to have a quality of life that makes you happy, and still allows saving. Once I got serious about this (at about your age) I increased my savings significantly by finding simple ways to save money each month. (Change cell phone carriers, renegotiate cable or cut cable, mow my own lawn, start cooking gourmet food at home instead of eating mediocre food at a restaurant.)

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Old 06-10-2018, 10:31 AM   #27
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You’ve received a lot of good advice. Remember you are in your prime earning years and be sure to save your pay increases.
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Old 06-10-2018, 04:43 PM   #28
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A lot of good guidance for you already. I would add that (if you haven't already) you might want to binge read "mr money mustache" one week end. I'm not a member of his cult, but you can cherry pick ideas to reduce expenses, and thus help secure your goals.
Best of luck!
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Old 06-10-2018, 06:53 PM   #29
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Lots of great advice. Just to emphasize, your desire to max out your savings is also an opportunity to see how you really need. You need to seriously look at your ongoing expenses and look for ways to reduce them.

Do you need a new vehicle every x years, or can you make do for a longer period of time.
Do you need a new smart phone? Do you need the unlimited data plan? Do you need the $160/month cable plan? And so on. These things make a big difference over time.

Remember, if you need 25X to produce X $ in retirement, the lower the X the lower the amount needed in total.

For example: I am constantly amazed at some of my nieces and nephews and the "need" to get a new (leased) vehicle every couple/few years. Compare that to (cheap) me, who made a lot more $ than them while working, but would buy a fairly middle of the road vehicle and keep it ten or more years. That is just one of many, many examples of why the typical person isn't able to retire early.

I'm not saying you have to eat rice and beans every night for the rest of your life. But rice and beans once a while is fine. (The generalization here is that another area where many people spend lots of money is in dining out and entertainment. A side benefit is that prepared from scratch home cooked meals can taste great and you have more control over what is in them, e.g. sodium, etc.)
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Old 06-10-2018, 10:56 PM   #30
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To the OP, you are ahead of this game. A quote from this article (https://www.fool.com/retirement/2017...merican-h.aspx), in October 2017:


Quote:
So how much does the typical worker in his or her 50s have saved for retirement? The Economic Policy Institute reports that for households between 50 and 55, the average savings balance is $124,831. For those between 56 and 61, that number comes in a bit higher, at $163,577.

But these figures don't tell the whole story. Because a select pool of strong savers can bring up the average and compensate for poor savers, it's often more helpful to look at the median savings amount for these age groups. For households between 50 and 55, the median retirement account balance is just $8,000. For those between 56 and 61, it's $17,000 -- not much better. And when you have a situation where the median is considerably lower than the average, it means that most 50-somethings have less than average
Consider yourself ahead, and with lots of runway to improve. At your age we had less in retirement savings that you do, and where dealing with kids in and about to go to expensive colleges. As everyone says really get to know what your expenses are, figure which ones are truly needs vs. wants, LBYM, do not raise your lifestyle with any income increases, delay some gratification, if married do not get divorced, and you will do well.

13 years removed from age 47, our savings + investments have more than tripled and I am retiring. The bulk of that growth was not due to picking spectacular investments, but from increasing our savings rate from the mid-teens to 25-40% of our gross income over those 13 years, and steady investing in basic index funds.
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Old 06-11-2018, 02:36 AM   #31
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If you are only going to have one income for a couple then it helps that that one income is equal to more than 2 average incomes. You should be just fine if you keep your expenses down and savings up.
Yep. But remember that the USA is filled with unemployed/underemployed former 6 figure earners who were "downsized" in their 50's, then never able to come close to that income when re-hired (if re-hired). Age discrimination is alive and well. Plan on your current income until age 50, then have a plan B and C ready (downsize your home?? One auto?? Add a PT job??) on the ready.
It has happened to a number of us here....
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Old 06-11-2018, 06:30 AM   #32
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Yep. But remember that the USA is filled with unemployed/underemployed former 6 figure earners who were "downsized" in their 50's, then never able to come close to that income when re-hired (if re-hired). Age discrimination is alive and well. Plan on your current income until age 50, then have a plan B and C ready (downsize your home?? One auto?? Add a PT job??) on the ready.
It has happened to a number of us here....
Big +1 especially depending on how "young" your industry is.
I took a package but was eventually going to be laid off just due to my age and comp. No one in my office was over 60 years old.
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Old 06-11-2018, 07:53 AM   #33
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Originally Posted by Machine99 View Post

I'm currently at $435k in my retirement accounts...

...Am i really as far behind as I feel?
I can't comment on how you feel, but if it's any consolation you're miles ahead of where I was at 47. I was a paycheck-to-paycheck guy for 20 years before getting serious with retirement planning. I'm now streaking toward 60 and expect to be in position to FIRE in December.

I will, however, offer an observation about savings. Based on my own life experience, having amassed approximately thirty four cents, two slugs and a bottle cap by age 42, a critical element in my later financial story was that the money needed to be invisible and unreachable.

Invisibility via automatic deductions meant it never showed up in my paycheck. Instead of having to deliberately impose painful cuts to the household budget (which might have caused friction in our storybook marriage) our p-to-p lifestyle adapted itself to what was in the bank.

Depositing the savings into tax-deferred vehicles, with their concomitant restrictions on early withdrawals, meant that we were strongly discouraged from reaching into the retirement pile to meet The Big Nonrecurring Expense (BNE) when it would show up.

Surely you've seen The BNE: heat pump craps out, car dies, unscheduled medical bill, etc. It attacks without warning, and demands immediate attention, i.e., $$.

BNEs are particularly pernicious, since they wear the camouflage of legitimacy. They aren't extravagances; who could possibly argue that repairing a leaky roof is wasteful? Or that replacing the water heater which is busily turning your basement into an indoor pool wouldn't be a wise thing to do?

But you must resist the temptation to raid your retirement to fund the BNE. However you do it, you need to keep your RE kitty out of reach. Add a line item to your budget for BNE accruals, build an emergency fund, lock up your IRA statement in a safe... whatever you do, just make sure you leave the long term savings alone so they can grow.

Good luck!
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Old 06-11-2018, 09:22 AM   #34
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Ha! in comparison to the avg folks here (on ER) most people would feel they're behind. I'm 43 with $650k in savings+investments and trust me I feel way behind when I see others post their milestones. However, realistically for my expected expenses and my retirement date I'm on track (according to the calculators, including Person Capital which btw I highly recommend you start using, it's free and tracks all of your savings, investments, expenses and gives you nice monte carlo predictions, you can add life events like marriage, college, SS payouts etc). Based on your expected expenses and your retirement date I think you should be fine- especially if you start putting away even more now.
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Old 06-11-2018, 10:15 AM   #35
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If you leave the company, can you roll the NQDC into an IRA instead of paying taxes on it right away?
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Old 06-11-2018, 10:19 AM   #36
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If you leave the company, can you roll the NQDC into an IRA instead of paying taxes on it right away?
No, NQDC is not 401k. It's usually offered by companies that don't meet the 401K requirements. NQDC is simply tax deferred until the employment ends and you can either elect to take a lump sum or defer it another 30yrs (or such which is not a good idea in case the company goes under).
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Old 06-26-2018, 03:43 PM   #37
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Machine, Are you also maxing out for your spousal Roth also? This can be done despite the fact she does not work.
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Old 06-26-2018, 03:54 PM   #38
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Machine, Are you also maxing out for your spousal Roth also? This can be done despite the fact she does not work.
I opened a Roth IRA in her name last month and plan on maxing both of our Roth IRAs each year.
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Old 06-26-2018, 03:56 PM   #39
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I really dislike my NQDC plan. I plan on dropping my contribution from 15% down to 6% (for match) at the end of the year (can only make changes once at the end of each year). I'm going to invest that money in a taxable account instead.
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Old 06-26-2018, 04:26 PM   #40
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I really dislike my NQDC plan. I plan on dropping my contribution from 15% down to 6% (for match) at the end of the year (can only make changes once at the end of each year). I'm going to invest that money in a taxable account instead.


Your plan is looking good Machine.... I did everything backwards. I borrowed money to retire early and have contributed more money to my Roth in the past 9 years I have been retired than I did when I was working.....Having a pension allowed me to chase ER in a way the real world doesnt have an opportunity to do. Yep, I would still be in the salt mines without that, lol.
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