Need advice, newly ER'd

[TimSF]

Hi all - Into my second week of ER and I have a lot to learn. I pulled the trigger quickly and walked away from megacorp with only a general notion of FI. ( I have run Firecalc etc). I am 50 years old with about $2 million in investable assets, about half in an IRA. I need some direction in two areas specifically. (1) what's the best expense tracking software out there. (2) what's the best software for planning and implementing a withdrawal strategy.

Thanks for your help

 

[Katsmeow]

For expense tracking I like YNAB which is You Need A Budget which you can find at www.youneedabudget.com.

 

[Cooked]

Just my opinion but to track expenses Quicken and to plan: any spreadsheet Excel/Numbers. Quicken is good because tracking expenses is fairly static for individuals/families. Spreadsheet skills are essential to dynamically model at any level you want.

Just My Opinon

 

[jollystomper]

Just my opinion but to track expenses Quicken and to plan: any spreadsheet Excel/Numbers. Quicken is good because tracking expenses is fairly static for individuals/families. Spreadsheet skills are essential to dynamically model at any level you want.

Just My Opinon

+1

 

[Katsmeow]

While I think Quicken is a fine program, I did try it (I used Microsoft Money for many years). I found it adequate for tracking expenses but did not like its budgeting which I found much better in YNAB and I really do mean life changing better in YNAB. Of course, not everyone wants budgeting in which case Quicken probably works just as well. But, for those who do want budgeting I really do suggest a trial of YNAB.

I do also do spreadsheets. The data from YNAB can be exported.

 

[NanoSour]

While some worry about the security of it, I like Mint.com for tracking expenses and monitoring my budget. The mint widget works great as a tool bar app on my macbook. A great early warning system to any unusual account activity.

 

[Focus]

This is the online application I was planning to use to develop a withdrawal strategy: ORP. But maybe there's something better out there.

 

[2B]

On budgeting, Quicken is a great way to keep track of history but it's forward planning options are limited. I don't think many individuals need anything more than Quicken which interfaces nicely with tracking assets. Being able to access most accounts on line also is a positive. For big ticket items, these can be budgeted with separate accounts and "payments" can be scheduled to fund the accounts properly.

Good grief. You're retired so how much effort do you want to put into budgeting? If you want to complicate your life that much, go back to megacorp.

For withdrawl strategies, ORP gives a detailed plan. Unfortunately, it only uses fixed rates of return or Monte Carlo so I don't have as much confidence in it as FireCalc. Of course, FireCalc is only a historical model. We really have no clue what really awaits us. That's the problem you get into when trying to predict the future.

One nice thing about ORP is that it shows how transferring from an IRA to a Roth IRA can be used to smooth your tax rate. You've got a long time before you'll get any SS so you should be able to move most of your nominal $1MM into a Roth before then.

Of course, you also have the option of joining other ER millionaires getting your health insurance for free (via subsidy) by keeping your taxable income below the cut off. You can search for that topic which has run here or go into the archives at Retire Early Home Page -- The Retire Early Home Page..

 

[TimSF]

Thanks. I will give your suggestions a try. I don't want financial planning to take over my life, but I do want to get a system in place that is easy to use and will give me confidence that i'll not run out of money. I like the notion of opening up a Roth IRA and gradually funding it through my "pre-retirement" years. What is the annual max contribution? [I know this is baby stuff for many of you old timers.]

 

[Koolau]

Thanks. I will give your suggestions a try. I don't want financial planning to take over my life, but I do want to get a system in place that is easy to use and will give me confidence that i'll not run out of money. I like the notion of opening up a Roth IRA and gradually funding it through my "pre-retirement" years. What is the annual max contribution? [I know this is baby stuff for many of you old timers.]

I've been retired too long to answer your Roth contribution amount question, but just to be certain you understand: If you have no earned income, you can not "contribute" to a Roth IRA. I think what 2B was suggesting was that you slowly move most of your traditional IRA to a Roth IRA. For that process, you do not need earned income. There are, of course, restrictions. There can be many advantages to Roth IRA conversions (and some disadvantages). Before you adopt such a strategy, you should be completely familiar with adv/disadv. I have done a fair amount of conversion and am a BIG fan of the Roth IRA. But, it does mean you end up with (nominally) fewer dollars in the beginning. Again, unless you know the ins and outs, you must research this subject thoroughly before beginning. A place to start is the Fairmark site. I think this is the main site Fairmark.com

Never forget, YMMV

 

[TimSF]

Thanks, Ko'olau, I did misunderstand 2B's reference. The notion of paying in to a Roth from savings was a new concept for me and now I know why. So, I guess, one needs a plan to withdraw gradually from IRA so that the realization, plus other earnings, does not kick into a higher tax bracket? From all I had read (a while ago) the Roth conversion only makes sense if you convert at a lower tax rate than the rate you'd be withdrawing from IRA in future. Have I got that right?

 

[Willers]

Just my opinion but to track expenses Quicken and to plan: any spreadsheet Excel/Numbers. Quicken is good because tracking expenses is fairly static for individuals/families. Spreadsheet skills are essential to dynamically model at any level you want.

Just My Opinon

+2 I've "sold" Quicken to so many people I should probably get a commission from them. There are lots of great Excel models out there if you don't want to develop your own or don't feel comfortable doing so, including on this forum. Just make sure to always double-check formulas. Formula errors are common!

88% of spreadsheets have errors - MarketWatch

 

[walkinwood]

I use Quicken because I have so much historical information in it. If starting today, I'd look to some online service like Mint or ynab - but make sure that I can export my data in a meaningful format - for import into another program or spreadsheet.

 

[2B]

Thanks, Ko'olau, I did misunderstand 2B's reference. The notion of paying in to a Roth from savings was a new concept for me and now I know why. So, I guess, one needs a plan to withdraw gradually from IRA so that the realization, plus other earnings, does not kick into a higher tax bracket? From all I had read (a while ago) the Roth conversion only makes sense if you convert at a lower tax rate than the rate you'd be withdrawing from IRA in future. Have I got that right?

Based on the 2013 estimated tax tables, you can have $14,300 of income and pay no tax assuming you are married and take the standard deductions. If you are living off after tax savings, most of that amount can be moved from an IRA to a Roth IRA. Using the same assumptions, anything between 14,300 and $37,850 is taxed at 10%. The difference of $37,850 and $92,500 is taxed at 15% (plus what was taxed at 10%). Figure out how low you want to get your IRA and go from there. ORP does a pretty good job suggesting how much to transfer to stay under the tax brackets but double check their suggestions.

Go to the IRS site and find their estimated tax form. Without withholdings from an employer, you'll need to start filing estimated taxes anyway.

 

[In-control]

My Bank - Bank of Internet - it includes Quicken Finance works and links to your CC and other accounts. Basically their web site is outsourced to quicken. It has alarms etc... It's easy, automated and free if you have an account. I have my Checking and Savings account with them as they have a high yields and good customer service.

 

[pb4uski]

Thanks. I will give your suggestions a try. I don't want financial planning to take over my life, but I do want to get a system in place that is easy to use and will give me confidence that i'll not run out of money. I like the notion of opening up a Roth IRA and gradually funding it through my "pre-retirement" years. What is the annual max contribution? [I know this is baby stuff for many of you old timers.]

I think Quicken and Quicken Lifetime Planner (which is included in Quicken is the best/easiest). My bank, credit card and investment accounts all import into Quicken and feed into QLP. I can easily update all my accounts (probably 10 min a week) and look at my plan anytime I want. Easy once it is all set up.

On the Roth, what they are talking about are "conversions" (not contributions) where you convert a certain amount of your taxable IRA money to your Roth IRA each year at a lower tax rate then when you were working and hopefully lower tax rate than when you would be taking RMDs from your taxable IRAs. Most people do this from ER to age 70 and design the conversions to bring them to the top of the 15% tax bracket when combined with their other income and deductions.