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Old 05-06-2021, 09:34 AM   #41
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Originally Posted by old medic View Post
We plan on continuing to build our savings as we can.... That way when we come across something... just say yes

But that does bring up a question....
say you wanted to pull 50K out of your 401K to buy a new truck... for the purpose saving or spreading the taxes out...
pull 25K in dec, then 25 in Jan
This, I think, is really the central point of the question, which is how to manage your AGI and hence, your taxes in retirement, including Medicare IRMAA for many of us.

For folks with large tax-deferred accounts, a key strategy is doing at least modest Roth conversions in the years prior to age 72. My annual Roth conversion amounts are computed, not by my Federal income tax bracket range, but by the next higher IRMAA tier threshold and by my projected AGI once I start RMDs at age 72.

And if you are fortunate enough to have excess retirement income from SS + pensions + annuities, then that $$ can be invested in a taxable account.

Then when the time comes to do that $50,000 purchase, you withdraw funds from some combination of your Roth and taxable accounts.
Funds from your taxable account will generally have capital gains to be dealt with, so sell the lots with lower gains, so as not to impact your AGI too much...
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Old 05-06-2021, 09:56 AM   #42
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I'm actually trying to think what I'd call a big ticket item now. Last car was $13K used. We just wrote a check - well, talked the dealership into accepting $5K on the cash-back CC and wrote a check for the rest. A couple of gifts (kids or charities) have been bigger than that and we just wrote checks from our RMD that year.

Never thought I'd find myself in this situation - but it's kind of nice. I don't need much, but if I do, I just write a check. Yeah, I'm sure I could finesse a bit more interest, growth or income from my cash-stash. It's just more effort that I want to invest since it will all be gone by the end of each year anyway. IF I need more, I can always go back to the 401(k) and get it. Don't even consider breaking into a ROTH, though, that's what it is there for, so YMMV.
This is a good point: defining the approximate boundary for Big Ticket items in retirement.
I have no savings account but do try to have around $10,000 in checking, so this, combined with normal monthly income, has proven sufficient to cover all travel and household expenses with one exception.

The exception is new vehicle purchases, including a travel trailer if I ever decide on that.
These purchases are in the $50k ballpark and require a different strategy to put the money together...
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Old 05-11-2021, 04:09 PM   #43
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When you have no income (no pension and delaying SS) there is no income really to save from. In drawing down mode, not savings mode. Preserving becomes the priority for both living and unexpected expenses.
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Old 05-11-2021, 05:27 PM   #44
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I viewed the question as how we account for big ticket items (separate bucket, or what?), not actually saving a portion of some income.
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Old 05-11-2021, 08:15 PM   #45
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OP here. I mean did you continue (if you even started) putting a bit of cash into each savings "bucket" for vacation, car repair, new car, house repairs, etc) from your monthly income during retirement, or stop doing so once you became retired.
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Old 05-11-2021, 08:35 PM   #46
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With no mortgage, pre-retirement planning for estimating retirement expense cash flow included putting away 2000 per year in the house maintenance fund because at some point we're going to need a new air conditioner, roof, paint, etc.. That's on top of [known] taxes and insurance. It's not actually kept in a separate fund but it's a spreadsheet column entry so that when we have to buy that roof or HVAC we're not blindsided. Initially budgeted 1% of house value but capped it at 2k when the zirp everything bubble started.
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Old 05-11-2021, 09:16 PM   #47
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OP here. I mean did you continue (if you even started) putting a bit of cash into each savings "bucket" for vacation, car repair, new car, house repairs, etc) from your monthly income during retirement, or stop doing so once you became retired.
Confusion arises because many people do NOT HAVE MONTHLY INCOME once retired. Some have a pension, annuity, or SS. Others live solely from their investments.
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Old 05-12-2021, 05:22 AM   #48
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Confusion arises because many people do NOT HAVE MONTHLY INCOME once retired. Some have a pension, annuity, or SS. Others live solely from their investments.
Right. What you have saved overall is what you have for any expense. When we retired we had a lot of cash and we did - and still do- have a couple of savings accounts so for specific things like a new car or vacations. But really not necessary now because all our emergency/cash/ and some investment money is considered one big bucket now in a way.

I understand the OP- it does take getting used to the fact that if the furnace breaks down you can take the money out of the new car fund or the vacation fund- it really doesn’t matter anymore.

But my comment refers to people with no additional income coming in other than their own investments.

I suppose if you have large pensions and SS income and with left over money after expenses you could put the excess into specific buckets.
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Old 05-12-2021, 05:47 AM   #49
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Some of us retirees treat our steady annual withdrawals as income in terms of annual cash flow, so budgets for big ticket items can certainly be filled from that.
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Old 05-12-2021, 06:32 AM   #50
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No real budget anymore.... I have a number set (total NW) that I will start watching my spend rate, if I ever reach it. A few years ago, I never thought I'd get to that number in my lifetime, but with inflation really picking up, it's possible.
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Old 05-12-2021, 08:22 AM   #51
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No real budget anymore.... I have a number set (total NW) that I will start watching my spend rate, if I ever reach it. A few years ago, I never thought I'd get to that number in my lifetime, but with inflation really picking up, it's possible.
Heh, heh (he said, sheepishly) we NEVER had a budget. We always planned on and DID spend considerably less than we made, so came out "ahead" at the end of the year. That's carried over into retirement which is why I alluded to not actually saving for "big ticket" items but just writing a check for what we wanted. Additionally, during accumulation we had the "pay yourself first" items like funding the 401(k), etc

While I have only tracked actual spending one time (for a year) I always seem to have a "sense" of where we are and DW keeps the check book pretty well up to date. If we want to BTD, we do check the balance just to be certain. I think once or twice, we've gone back to the 401(k) for "reinforcements" for the check book - following our RMD. We may need to do that this year as we've got a couple of things coming up which are a bit unusual. In any case, this far along - almost 16 years - we're not too concerned about running out of money - black-swan events excepted as always, of course. Just another YMMV possibility.
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Old 05-12-2021, 09:25 AM   #52
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Budgeting?
Are you askin' ME or the DW
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Old 05-12-2021, 07:40 PM   #53
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Yes. Deferred, planned, and pop-up spending. We retired on pension income primarily. Now, our excess income is in savings, ibonds, and vanguard.
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Old 05-13-2021, 05:08 AM   #54
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Back in the early 70s we had a budget. Money was really tight. Being frugal as well as doing my own repairs was a necessity. Once we paid rent/mortgage, utilities, insurance, and car payments the paycheck was pretty much spent. Then came the divorce after 10 years. After 5 more years I remarried and continued with a budget but had extra dollars to save/invest.
Then 33 years later we are still frugal out of habit but the money is there if we want to spend it for anything. I stopped making a budget once we retired. It is no longer a factor.


Cheers!
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Old 05-13-2021, 05:12 AM   #55
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Except when I was younger and specifically saving up for a house down payment, I've never saved for any specific purchase. It's all in one big pool and if we need it, we buy it.

Cheers.
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Old 05-13-2021, 02:35 PM   #56
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Having been at this for nineteen years, I gave up the detailed plan 2 years ago. Just spend and gift with abandon subject to cash management chores.
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Old 05-13-2021, 05:34 PM   #57
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A well known financial figure once advised.
Enjoy broad market indexed*returns as long as your mental capacity does.
When you notice your mental capacity changing shop for SPIAs & their historic solvencies.

Otherwise, keep a small 100hp outboard motor on the sail boat,........... for emergencies!

Good luck & best wishes.....
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Old 05-13-2021, 06:58 PM   #58
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No saving or buckets.
No pension $ for 12 years, drawing on investments.
As long as we keep our WR rate low we're good.
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Old 05-13-2021, 07:40 PM   #59
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Hmmmm .... weird year to base an answer on, but, we have, since we stopped working, saved, by accident ��

We live far below our means - and, we have not yet begun drawing from IRAs or SS.

Edit - jeez, after writing this ... need to start spending. Note - friend of mine drinks Caymus cabernet Sauvignon ... told him I just couldn’t do that at $80 a bottle ... he said, no problem, your children will.
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Old 05-13-2021, 08:02 PM   #60
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Got that right.

Rombauer is good enough for me -
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