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Re: Consumer Reports "Retire in the Black"
Old 12-05-2004, 03:10 PM   #21
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Re: Consumer Reports "Retire in the Black"

I'm surprised at the level of skepticism this thread is throwing at the basic idea: that retirement income is dependent on a whole set of variables, some counterintuitive, such as higher lifetime marginal tax rates resulting from higher IRA/401 balances.

My take on the CR article was to think about interrelation of the variables, and then do a bit of research on the method. I'll go to the library to read the article. Before that, here's some 'advertising' I found about the model from a Google search:

"ESPlanner gives the most flexibility in figuring retirement income and expenses and is the most comprehensive" -- BusinessWeek

"...if you demand the deepest and most powerful planning engine, look no further." -- The Washington Post

"... its (ESPlanner's) approach to financial planning profoundly challenges well known programs ... Its formula generates the correct level of consumption for each period -- something that takes hours and hours of diddling in other programs...Through efforts such as theirs, a concept (consumption smoothing) that economists have embraced for years may finally start penetrating the world of financial planning." -- BusinessWeek
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Re: Consumer Reports "Retire in the Black"
Old 12-05-2004, 03:48 PM   #22
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Re: Consumer Reports "Retire in the Black"

Here's an explanation of the IRA/401K contribution issue, from the ESPlanner Tutorial, available on the web:

"When it comes to reducing lifetime tax payments, there are several options to consider. One thing to check is whether your family should contribute more or less to tax-deferred accounts. Although it is commonly believed that maximizing contributions to taxdeferred
accounts, including 401(k) and traditional IRA plans, lowers lifetime tax payments, this is not necessarily the case for three reasons.

First, withdrawals of principal plus interest from taxdeferred accounts can put your family into higher tax brackets.

Second, these withdrawals can trigger federal income taxation of your family's social security benefits.

And third, tax rates may be higher when your family makes its withdrawals."

Food for thought...
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Re: Consumer Reports "Retire in the Black"
Old 12-05-2004, 06:13 PM   #23
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Re: Consumer Reports "Retire in the Black"

It seems that if you are at a high tax bracket you should contribute to a 401(k) to the extent possible. * But then again, there are advantages in paying tax now and then paying tax on the gain at the lower capital gains and dividend rates. * Anyone give some thoughts to this issue? *It is important for those planning an early retirement.
Not sure of all the subtleties today, for someone already in ER, but I converted the bulk of our regular IRA to a Roth some years back and so don't spend much time any more worrying about the tax consequences of IRA withdrawals. *People can argue back and forth on Roth Conversions, but it might make sense to consider 'harvesting' some of the 10% or even 15% income tax bracket (in the tax code for at least a few more years) -- basically anything up to 70k or so for a couple gets you into the 15% Fed income tax bracket, which incidentally also happens to qualify you for the 5% cap gains tax rate on other (non-IRA) capgains in your portfolio. *

In our view, 10-15% is not a high price to pay to get out from under all the future uncertainty and liability for income tax withdrawals on the ( presumably) much bigger IRA you'll be withdrawing from decades from now. *With deductions, exemptions etc and little or no earned income, the actual tax could be even lower.

If you are going to do a (full or partial) Roth Conversion, you need to do it before the end of the year, so it might be a good time to discuss this with your accountant...

ER for 10 years; living off 4.3% of savings (and a few book royalties ;-)
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Job offers & Roth IRAs
Old 12-05-2004, 08:37 PM   #24
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Job offers & Roth IRAs

I haven't noticed ANY sort of "opportunities" like this once I *retired. The only kind of *"opportunities" that come up with any reliability/recurrence are grunt labor. *stocking shelves *at Christmas time, and H&R Block.

Nobody from Alpine ski resorts or South Sea Island getaways *that cater to Arab Shieks, and movie stars *ever calls me with "opportunities"
Maybe you're not hanging out in the right places, Actually. Or maybe Billy & Akaisha have such sweet & trustworthy faces...

As I approached retirement I had a couple GS-11/12 govt offers and several "civilian" offers. None of them were solicited. All were extremely flattering considering what I felt was my lack of qualification/experience, but they all had the common factor of explaining complicated concepts with simple vocabulary to complete neophytes.

Now that I'm solidly in retirement I haven't had an unsolicited offer (of any kind!) in months. I think people are able to tell that you're having too much fun to seriously consider returning to work.

But don't knock those grunt-work jobs. One of my retirement heroes was Vince Capra who, at the young age of 80, took a part-time job restocking liquor-store shelves at the Naval Postgraduate School's exchange. They didn't need the money but it got him out of the house three days a week (for which he & spouse were grateful). He'd spend the day lifting cases of beer & hard liquor while swapping WWII sea stories with a new generation of naval officers. He didn't particularly enjoy driving so he used to walk the eight-mile round trip from Pacific Grove to Monterey. He stayed hale & hearty well into his 90s.

Bob, I agree with you about Roth IRA conversions. We just completed the first increment of an eight-year conversion of our conventional IRAs. By the time it's done I'll be 52. We're comfortably inside the 10-15% bracket up until age 60 so it's a great tax move to avoid later RMDs & SS taxation. And that's even if you believe that today's tax rates will stay at their current low level...

It's compelling from the tax perspective-- but it's even more compelling after watching my father-in-law wrestle with his first RMD. And, yeah, I know it's a simple matter of looking up a couple charts and picking off the numbers, but I feel the same way about nuclear-reactor pre-critical checkoffs, crank-starting Model T Fords, and slaughtering my own chickens. I know how to do them but I'll avoid them whenever possible!

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Re: Consumer Reports "Retire in the Black"
Old 12-06-2004, 04:24 AM   #25
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Re: Consumer Reports "Retire in the Black"

Hello Nords!

I too had some unsolicited offers just after I ERed.
Really helped me out financially and without the old pressures
(although time was still passing). Like you, these
have dried up which is fine. If I ever did
(perish the thought) go back to some kind of work, I would be self employed. It comes
naturally to me.


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