NOT touching 401K after retirement

[RunningBum]

Rolled my 401Ks into a tIRA, and have only done Roth conversions with them. But I have touched the Roth--I bought an SPIA with a chunk of the Roth. I will spend down the Roth before selling the highly appreciated funds that make up a lot of my taxable account, since they are better to pass down.

As far as OP's friends go, it depends. If they have a good plan to manage taxes and their estate, it could make sense not to touch them yet. But if they are just hoarding it or afraid to pay some taxes now for a conversion or withdrawals and looking at steep taxes later, that's nothing to brag about.

[dmpi]

8 years retired and I haven't touched mine except to convert some to a Roth 401K.

[Drake3287]

Yep, I think it's a combination of saving it for a rainy day and the fact that so many of us have lived a frugal life style for so many years that we're now a little gun shy in spending it. I'm guilty of that.

I retired 9 years ago at age 54 and I'm lucky enough to have a pension that pays me roughly the same amount as when I was working so there's no big need to tap into either my 457 account or investment account. In a sense I guess I think of it as kind of an insurance policy.

Still looking to spend it on that big purchase down the road if I can ever figure out what is. Until then I'm fine with my life style.

[luckydude]

Quote:

Originally Posted by Enuff2Eat Several retired friends and colleagues that I know haven't touch their 401K for years after retirement. I just wonder if it's unusual and if anyone here is doing it. I think some of us are over saved and end up not living or enjoying as much in their younger days. How much is enough? 2 millions?? 3 millions? Why?? so you died left over a big chunk of your wealth for your kids and son/daughter-in-laws? Your thought? enuff

I think the roaring bull market in the last decade is a big reason why so many FIRE folks have ended up with more $ than they ever expected. There are many retired posters on this forum whose NW has grown substantially thanks to the bull market, even though they are no longer in the accumulation phase.

[Koolau]

Quote:

Originally Posted by Enuff2Eat Several retired friends and colleagues that I know haven't touch their 401K for years after retirement. I just wonder if it's unusual and if anyone here is doing it. I think some of us are over saved and end up not living or enjoying as much in their younger days. How much is enough? 2 millions?? 3 millions? Why?? so you died left over a big chunk of your wealth for your kids and son/daughter-in-laws? Your thought? enuff

I think it's important to be aware of all the sources of income one has and then evaluate which to spend or alter (as in tIRA to Roth) in order to squeeze the most out of them. Ignoring tIRAs would be a mistake in my opinion.

[Badger]

Earlier we made conversions to Roths then stopped when RMD kicked in 4 years ago. Now that money goes into a separate account for CDs. So far we have been living on SS and small pensions since house is paid for and medical taken care of with Medicare and Tricare. We live in a modest home and still have a frugal lifestyle but do a bit of travel (previously international travel but recently road trips to go hiking) when we can although, Covid stopped flying and international travel since 2019/2020.
The tIRAs are more than enough so we would be covered for taking care of ourselves in our last years. What ever is not used then my 2 grown stepchildren (60 and 55 yrs) will be alright when we are gone.
I would be glad to spend it if it would correct some medical issues and a bit more time but neither of those are possible.

Cheers!

[f35phixer]

We don't need any money for living expenses besides our pensions and SS...

My rollover fidelity account dividends/Cap Gains, i have decided to dump into my debit account and have some fun money's to play with. Was a nice chunk last year, we'll see what this year will bring.

[street]

I also have not taken anything out of the 401K. I did however roll it over to an IRA and shouldn't have to touch it till RMD's.

[flyingaway]

Why is it a big deal not to touch the 401k accounts? If you have other money to spend, you don't need to touch your 401k accounts. Some people may not touch their taxable accounts if desired.

[target2019]

Quote:

Originally Posted by Enuff2Eat Several retired friends and colleagues that I know haven't touch their 401K for years after retirement. I just wonder if it's unusual and if anyone here is doing it. I think some of us are over saved and end up not living or enjoying as much in their younger days. How much is enough? 2 millions?? 3 millions? Why?? so you died left over a big chunk of your wealth for your kids and son/daughter-in-laws? Your thought? enuff

There's plenty of factors involved in their decision. No need for me to rehash them.

We don't know if they're withdrawing from other accounts, so there's that. And I agree that they may have over-saved.

Before RMD time, I am tapping my SEP-IRA for smaller Roth conversions.

401(k) accounts were consolidated to an IRA, and that is untapped for now. I may pull RMDs from this IRA.

[rmorris50]

My parents have gov and private pensions and social security so their 401(k) is their “fun” money. I hope they spend it all before shedding their mortal coil.

[Toocold]

It's been almost 5 years since pulling the trigger and we haven't touched the 401k. I was considering transferring it to a IRA, but too lazy to do so.

[Midpack]

We haven’t touched our 401k’s, TIRAs or my Roth IRA. Won’t until RMDs start. But then that shouldn’t be unusual - more likely later in retirement when 10-30 years of COL really have an impact. If you need or even spend your 401k right away, might be a bad sign unless you have all the SI you’ll ever need.

[CindyBlue]

Quote:

Originally Posted by Enuff2Eat Several retired friends and colleagues that I know haven't touch their 401K for years after retirement. I just wonder if it's unusual and if anyone here is doing it. I think some of us are over saved and end up not living or enjoying as much in their younger days. How much is enough? 2 millions?? 3 millions? Why?? so you died left over a big chunk of your wealth for your kids and son/daughter-in-laws? Your thought? enuff

I am not using my 403b because I have enough to make it with SS (assuming the government settles its differences before June 1st!) along with a small pension. I have under $1 million in that account. I'm saving it as long as I can for until/if I need it for assisted living/nursing home care. I will wait (if possible) until I have to take the RMD and then put it into savings or CDs or whatever I feel is necessary at that time.

[Out-to-Lunch]

I've only been at this 2 years. I have not touched the 403b/tIRA/Roths yet, but I've been running my small taxable account down for living expenses and taxes on Roth conversions. (I also have a pension covering ~1/2 of my expenses.) But I will start tapping the deferred accounts in a year or two.

[pacergal]

How much is enough is really not an answerable question. MY "enough" is surely different than yours.

We rolled our 457b into an IRA last year, we wanted no more connection with prior work places. We have no plans to do Roth conversions.

We are blessed to have a pension and do not need our retirement savings for daily life expenses. We have it primarily for health care/LTC needs in the future if needed, odd one off expenses that we can't handle via pensions, or to pass on to our kids.

We have taken some out here and there for some one-off expenses, but those are pretty much few and far between. And the market has replaced that $ anyway.

We don't have multiple millions in our accounts, but we have enough for us.

[Andre1969]

Most of my immediate family members, that I know the history of at least, didn't touch their 401ks or IRAs until the RMDs forced them to. That would include my Grandmom, my Dad, my Mom and stepdad, and one of my uncles.

For whatever reason, none of them felt the need to. They either had decent pension plans, or just had enough money in other accounts, that they saw no pressing need to get into those IRA/401k/whatever the federal gov't equivalent is/etc. accounts until the RMDs forced them to.

My Mom and stepdad both retired in 2011...her at 62 and him at 59. Mom had 40+ years in the federal government that she maxed out on the old CSRS retirement plan. My stepdad took a reduced, early retirement from his employer, but between the two of them, it was more than enough to cover their needs and wants. In fact, I remember Mom getting annoyed that she just missed the cutoff when they raised the RMD age a few years ago. She turned 70.5 in 2019, so she had to start taking the RMD, and boy, was she miffed about it!

I'm hoping to retire a few years before I hit 59.5, so once I stop working, I might look into doing some Roth conversions. And, once I actually hit 59.5, even if I don't do a Roth conversion, I thought about starting to pull a little bit out of my 401k/IRA accounts, just to get a head start. I've gotten to the point that my invested assets are probably about 50% taxable/Roth and 50% tax deferred (401k/IRAs/2 inherited IRAs). So, it might pay me to start tapping the tax deferred side a bit, so that when the RMDs kick in, they aren't quite so hefty. For people my age (53) I think the RMD age has been pushed back to the year I turn 73? If left untouched, those tax-deferred balances could grow to something kinda obscene over the course of 20 years!

[TheWizard]

This is a confusing thread, with a variety of unrelated answers.
There are a number of different tax-deferred accounts, most commonly: 401(k), 403(b), TSP, IRA.
They are more similar than different: all require RMDs at the same starting age and all distributions are taxed as Ordinary Income.

Rolling over funds from a 401(k) to an IRA, or vice versa, is a nontaxable event and hardly counts as doing anything, aside from giving one better investment choices.

Moving funds from tax-deferred to a Roth account or to a taxable account is a fully taxable event, but does not involve "spending" any of the tax-deferred funds, except maybe to pay the additional income tax.

And finally, one can withdraw funds from a tax-deferred account to SPEND on worldly goods!
So what exactly is the OP trying to discuss with this thread?

[scrabbler1]

Fifteen years ago, when I ERed at age 45, I had to empty my 401k as a condition for using NUA (Net Unrealized Appreciation) to cash out the company stock which was about half the 401k's total value. (NUA allowed me to save a lot of money in taxes.)

I did a direct, trustee-to-trustee rollover of all the pretax money in the 401k into an IRA. That account, without adding or withdrawing anything, has more than tripled since late 2008, with an AA in the 60/40-40/60 range.

Along with a small, frozen company pension and SS, the IRA is the third part of my "reinforcements" which have started becoming available to me after I turned 59.5 last year. I haven't needed to tap into it right now because the taxable part of my portfolio has been more than sufficient to pay the bills. Also, and withdrawal or Roth IRA conversion would increase my income and reduce the hefty ACA premium subsidy I have been getting the last few years.


I'll eventually have to take RMDs from the IRA, and I'll start taking SS at some point, probably not until 65, 66, or 67. The frozen pension will start at 65.

As long as I can get by on the taxable portfolio, I'll leave everything else along for the next 5 years.

[Kabowest]

I'm heading into year five of retirement and other than Roth conversions no withdrawals yet, but they'll likely start in about 2+ years.