I wish I knew before (or after) I retired???

[Koolau]

I see a lot of Roth vs Trad-IRA remorse. I get it, I have large RMDs looming, but I wonder?

It would be rather tedious to go back and look at my true marginal rates for the IRA/401K contributions, but my taxes would have been pretty high during my working years. I'm not sure it was a mistake, or if so, maybe not a big one?

But Roth conversions certainly appear to make sense for me (based on what we know now), while I delay my pension and our SS. But I never could have predicted that, it's an opportunity that arose.

-ERD50

I've occasionally wondered if my "fear and loathing" of qualified money is justified (vs more in Roths.) I guess my thinking is that RMDs are only gonna get worse so taxes may eat up ever more of my funds. AND I could end up breaking through the limits for "cheap" Medicare and other indexed goodies. So there's that.

As far as Roths go, I guess I think of them as pretty much bullet proof. The only thing that might (logically) go wrong is if the gummint figures how to tax them - again. I don't totally discount that, but there would be quite a dissatisfied constituency against it. Politicians could care less about us but they still love our votes! YMMV

 

[jollystomper]

I cannot remember the exact offering, but about 3 years before I retired my base salary hit a level that made me eligible in Megacorp to set aside some small percentage of my salary into some special "executive pot" that provided some tax benefits, the caveat being that anything that went into this pot was not guaranteed, so if Megacorp went belly up you could lose it all. I looked at what I could put into it and decided not to. Of course Megacorp is doing fine so I wonder what that could have grown to. Maybe a little "extra", but not having it did not impact our desired retirement lifestyle.

Other than that I cannot think of any. We would like to have done Roth IRAs when I was working but our household salary made us ineligible. I was getting an extra "kicker" on top of my 401K match due to Megacorp freezing part of my pension with and being so close to retirement eligibility, but it did not apply to Roth 401k contributions, so I did not consider a Roth 401K. Our savings rate was so high those last several years before retirement that We were fine with things as they were.

I probably could have planned better to avoid future large RMDs, but that is a first world problem and I have no regrets.

 

[Perryinva]

What I basically missed by not taking Roths earlier is the advantage of the lower brackets I was in for those earlier 1999 through 2005 years, (which certainly didn’t seem low at the time) which, admittedly, I know would not be THAT much, based on the small amounts that I would have been limited to putting in, when Roths started. But the tax free earnings of that amount for the next 14 years would have been a nice compliment to what is in there today, with a subsequent smaller tIRA amount.

I agree with others here, that the difference between saving taxes opportunity plus taxable earnings in an IRA, vs the after taxed amount is not a lot. And the crux of the matter is no one could have predicted the huge gains we made in many of the years of this long bull, but it would be easier today to have had much more of those gains completely tax free in a larger Roth vs a much larger tIRA, as no matter how much I convert now, it refuses to shrink in size. The growth of the tIRA amounts is much more than I can convert to Roth w/o it not making any tax sense.

That is one of the (first world) problems with basing prediction amounts on conservative returns. In my mind, I think “Well, if returns are even better, then I will just have more money, and will pay more taxes, but that is STILL a good thing!” And it is. I would much rather be in the higher tax predicament I am in now, than the lower tax and lower portfolio size that I originally predicted for retirement, by far!

Things have turned out financially far better than I had ever predicted. And much of that is luck of when being born and choosing some better choices in life. So maybe “regrets” is too harsh but certainly “had I been better educated, I would have” done a few things differently.

 

[Koolau]

I'll mention briefly that one thing I've been doing of late - to blunt the future effects of RMDs and potential limit-breaking is to take more than my required RMD. Then I either BTD or transfer to taxable funds. I've actually considered doing Roths, but so far I've decided not to tie up the money too tightly. Very much a YMMV kind of thing.

 

[Letj]

Well, three things come to mind.

1. I should have stayed in the Air Force after my 4 year tour was up in 1968. If I stayed until they threw me out, I would probably have a pension and better health care insurance (Tricare).

2. My skill at picking a spouse could have used an upgrade as I really made some bad choices. Consequently, a failed marriage at age 50 cost me about $1 million in 1992. Even my golf game suffered!

3. The last wife (current one) is a keeper and we have been together since 1996, which is a record for me. But we started saving for retirement from scratch back then as I was near broke and she had $50.

I am intrigued. Having such a setback and having to start from scratch so late did you still manage to FIRE at retirement age? I imagine it’s possible if you are a high income earner.

 

[aja8888]

I am intrigued. Having such a setback and having to start from scratch so late did you still manage to FIRE at retirement age? I imagine it’s possible if you are a high income earner.

I was not an exceptionally high income earner. I was an experienced Mechanical Engineer at the time of the expensive California divorce.

I had two teenage daughters to raise and get through college when I got divorced (they were awarded to me by the court). That, and buying a house to live in (I moved to Texas for a job), broke me at age 49. I worked and saved like a dog and put the girls through college and paid the house off by 2012. My new wife and I lived below our means for many years and managed to retire a bit late. She at, 64, and me at around 71, although the last few years of my employment was as an engineering consultant on a part time basis, but paid pretty well.

Fortunately, in Texas where housing costs and living expenses are not outrageous like other parts of the country, it wasn't too difficult to plan and execute a realistic retirement program, even with a real late start. Currently, we have no debt, two paid off cars and the paid off house, a healthy portfolio, and all is good.

 

[rwdflynavy]

I wish I'd known to invest more in Roth vice Trad IRA
I wish I'd known you can avoid the VA loan funding fee *after* you get your VA disability percentage
I wish I'd known that neither my military pension or my VA disability payment count as income for further retirement account investments

 

[db79]

I was thinking about the Roth, myself, and if I could have done better. In searching online, it looks like it first became a retirement option for 1998. I opened one in 2000, by converting a traditional IRA and paying the taxes on it. I started with $3,980.

I added $1000 in 2001, only $300 in 2002, and $400 in 2003. But from 2004 on, I've been maxing it out. So I guess I haven't done too badly.

Never realized how lucky/fortunate I was. I opened my Roth in 1998 when I was 18 after attending a nighttime adult seminar for retirement planning hosted at a local high school. Next person closest to my age at the seminar was probably in their mid 40's. Wasn't aware at the time that the Roth was a newly available option.

 

[CincyDave]

Like many here, wish I'd have put more in ROTH instead of TIRA. Also, think I've over saved. Great stock market has had a lot to do with that, however. Certainly better than having under saved.

 

[Ally]

Before I retired, I was so anxious about not having enough money. I postponed retiring from a very stressful job for 2-3 yrs longer than I wanted to for this reason. Even though we aren’t wealthy like some here, my husband does have a good pension that will continue for me, if he dies first. Our medical through his retirement is fabulous, and I saved quite a bit in a 403b plan. Plus we both have social security and no debt.

All this to say, we both could have retired earlier without worry. I really regret the stressful years we suffered, being unnecessarily anxious about money. I could kick myself.

 

[cat4ever]

More ROTH!

Lot's of back and forth on this question on these forums. Any of your ROTH'ers care to expand, but just in very general terms and as few words as possible, first mention of IORP and I'm out of here Is it all just about RMDs?

 

[cat4ever]

Didn't buy that vacation home in the mountains immediately on retirement. Most advice was to wait a year before doing anything like that. It's now a year later and I can't get near the house I could have gotten. But there is some 20/20 hindsight going on, who knew it would keep on going up at the rate it did.

 

[CincyDave]

Lot's of back and forth on this question on these forums. Any of your ROTH'ers care to expand, but just in very general terms and as few words as possible, first mention of IORP and I'm out of here Is it all just about RMDs?

Having ROTH to take money from makes it easier to control income in a given year for things like ACA subsidies and Medicare premiums.

 

[azxracer]

Right now, our savings are split like this.

13% is in our taxable investments,
62% is in tax deferred investments (my IRA),
25% is in our tax free Roths.

I thought I was setting up a good plan but if I really understood what our post retirement income structure would look like (and the potential impact of that income structure) I definitely would have tried to get more savings that will produce tax free income. Roth of course, HSA if available. But talk to an FA or tax accountant about all ways to generate tax free income in retirement and after you die. I always shied away from whole life in favor of term life. But now I wonder if that was a good move. If we had paid up whole life policies in the order of 500K - 1M total it would definitely change the way our estate plan/wills are structured. It also would have changed plans for survivors' benefits on my pension.


So, my input is to try to decide what your income structure should be and work to get a good balance between the different types of income. Model what those types of income mean for things like medicare costs and SS taxation.

 

[albundyz]

My retirement has pretty much worked out as I envisioned. We retired (at 59) on a strict budget. My ONLY big surprise was 5 yrs ago, at age 66. My wife and I decided to take Social Security. With SS paying for a lot of our living expenses, I significantly reduced my fully taxable distributions from my IRA. Counting California and federal, we had our income taxes reduced by $8,000. That was like an unexpected windfall.

 

[Letj]

I was not an exceptionally high income earner. I was an experienced Mechanical Engineer at the time of the expensive California divorce.

I had two teenage daughters to raise and get through college when I got divorced (they were awarded to me by the court). That, and buying a house to live in (I moved to Texas for a job), broke me at age 49. I worked and saved like a dog and put the girls through college and paid the house off by 2012. My new wife and I lived below our means for many years and managed to retire a bit late. She at, 64, and me at around 71, although the last few years of my employment was as an engineering consultant on a part time basis, but paid pretty well.

Fortunately, in Texas where housing costs and living expenses are not outrageous like other parts of the country, it wasn't too difficult to plan and execute a realistic retirement program, even with a real late start. Currently, we have no debt, two paid off cars and the paid off house, a healthy portfolio, and all is good.

What a great story. This is the classic live below your means and focus on your goals and of course it helps to have a like minded partner.

 

[Jeb-NY]

First what I did right. I listened to my first boss and mentor after college when he told me I should invest part of my profit sharing each year instead of blowing it all on new toys, I was in my early 20s. He said it is never too early to start saving for retirement and I should also invest as much as possible in the retirement fund and then increases it every time I get a raise, I but at least half towards retirement and long term investments.

When I decided to retire at 57 I talked to two advisor to be sure I could afford it they both said no I needed to have enough to draw 110% of my current salary in retirement. I asked why when We were living on 50% now, they both agreed then I was ready.

I waited till 70 to start Social Security. Nice annuity.

Put enough in to Health Savings Account to bridge to 65 and it last till we were 72.

Made my share of mistakes but none where too big.

I was too heavily invest in tech when the bubble broke in 2000, I was on track to retire at 50 and that stretched it to 55 with a better balance of investments. I ended up waiting to 57 just because I was enjoying work at the time.

Several friends were using an investment advisor and were doing really well so I decided to try him. I luckily went in easy with only $10,000 This was back when that was still a lot of money. He lost half of it in two years but that wasn't the bad part, he talked me out of buying Apple twice, split adjusted that would have been at 25 cents and 50 cents. But it probably was good advice at the time because Apple could have went either way, it was before Jobs came back.

Dabbled in penny stocks for awhile and lost all that, but again it was plait money only $4000.

Now the things I should have know but took a couple of years to figure out. I thought it would be smart to balance our money withdrawals to pay little or no taxes for a couple of years early in retirement. Then it dawned on me I should be pulling from the IRA for expenses and rolling enough into Roth to touch the top of one of the lower tax brackets.

Should have moved to a lower cost of living and a better climate sooner, waited almost 10 years after retirement to move out of NY. We are now happy with less snow, less taxes and less politics.

Most years we reinvest most of our RMD and take advantage of QCD. If I had rolled more to Roth my taxes on RMD would be a lot less but not complaining.

Life is good.

 

[sengsational]

I wish I had gotten "an attitude" long before I got one.

It was 2008 and the company I worked for packed-up the data center and moved it overseas. I probably could have retired right then, at 49, and been fine, but instead I just did all of the stuff around the house that I never could get to with a full time job. It was intended as a respite. But I saw a job description that I knew I could nail, and went into the interview with the attitude of "I can save you guys a lot of money, but I'm not going to have someone second-guessing me", and to my surprise, they hired me! I got them out of the jam and then it was corporate buyouts and loss of my "good boss", so I walked at 54. But I think I should have had that attitude my whole career. Certainly if you've got exit plans, you don't need to walk on eggshells.

 

[FIREarly]

Originally Posted by conversationalphrase View Post
Less IRA more Roth.

Me too.

In addition, we should have contributed to an HSA.

Still w*rking and love the idea of tax free withdrawals from Roth and HSA

As previously stated, wish I started maxing these accounts earlier.

 

[FIREarly]

Have been doing good after retirement. Did a few boners before.

1) Sold the townhouse in Huntington Beach, CA for what I bought it for. Should have kept and rented. Could have sold for 3X six years later.

Thank you, DW and I are less than a year before moving and deciding between LTR our townhouse or selling it to provide money for the 1,000+ mile move.

Your post is helpful towards the value in letting someone else pay the mortgage and make a few extra dollars.

Do you know a good third party company to allow LTR renters auto-pay their monthly payments?

 

[PointBreeze]

Less IRA more Roth.

OMG, me, too!! The only major mistake I made in preparing for ER. Lots of minor mistakes…

 

[Janet from FIRE Planet]

Hi,
What is "If you can.." ? Thanks!

 

[LakeRat1]

Unfortunately I wish I had done ROTHS, Did 401ks for both my DW and Myself for 30+ years...... Retired at 52, DW at 59.5 all our income has and does come from taxable portfolios ..... We are living a great life in retirement ..... Endless Summers, Travel

 

[ArmchairMillionaire]

Hi,
What is "If you can.." ? Thanks!

Looks like a decent financial book for younger people.

https://www.amazon.com/If-You-Can-Millennials-Slowly/dp/098878033X

 

[ychuck46]

Echoing what others said

Like so many others here, I should have pulled the trigger earlier. Been over 8 years now for me and over 12 for the wife. We are enjoying life immensely with lots of travel, and now that they are open again we are also back to cruises. Money wise we have more than we had when I retired due to great stock market returns during 2017-2020 (yes, including 2020 since I played the options market heavily, taking advantage of the fact that good companies were beaten down unnecessarily). We have always lived below our means yet still have a great time. If you find yourself in similar circumstances and are undecided, give some serious thought to going out early as well. There is much more to life than working and slaving for companies that will discard you the moment it is in their best interests to do so. Best wishes.