NOT touching 401K after retirement

[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]

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]

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.

 

[Koolau]

After FIRE, I did what I could to reduce tIRA and 401(k) money while I had some flexibility (no "income" and low taxes.) So I eventually converted all tIRAs to Roths, created some tIRAs from my 401(k) and converted them to Roth. Now, I have Roth IRAs and just one 401(k) to deal with (aka RMDs.) I find it easier to manage this way and I've smoothed out my tax situation quite a bit as I now take RMDs (and quite a bit more) from the 401(k). My taxes and IRMAA etc. situation is more or less well in hand. I consider each vehicle type (401(k), tIRA, Roth, taxable, etc.) as a piece of the personal financial puzzle. Moving them correctly limits taxes and especially "gotchas" like IRMAA and perhaps for some ACA, etc. Not saying I'm good at this "game" but I'm competent, I think.

Simply saying "I'm not touching so-and-so" should be for an overall portfolio/plan reason not just a statement to be proud of. Everyone is different so YMMV.

 

[jollystomper]

With the benefit of a good pension, the main thing I have touched my 401K since retirement for has been for paying taxes, in lieu of making estimating tax payments (something I learned on this site). I did make a couple of relatively small withdrawals just to "celebrate" my retirement and spent them on something foolish . Even with that, after almost 5 years my 401K is still significantly (IMHO) larger than when I retired. That will likely still be the case in 8 years.

I have tIRAs for myself and DW that I have performing Roth conversions before attempting that with my 401K. DW's IRA conversion was completed this year. It will take me about 5 years to complete my IRA conversion, so the bulk of my 401K will be in place at RMD age. RMDs + pension + max SS payment = a lot of taxes and increased Medicare premium costs. But that is fine by me. Odds are that the 401K will be our LTC insurance and/or the bulk of what we pass on to our heirs.

 

[RunningBum]

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.

Or probably not. A lot of people will be almost entirely relying on SS and their 401K, and are just fine withdrawing from the latter immediately.

What is SI?

 

[Koolau]

With the benefit of a good pension, the main thing I have touched my 401K since retirement for has been for paying taxes, in lieu of making estimating tax payments (something I learned on this site). I did make a couple of relatively small withdrawals just to "celebrate" my retirement and spent them on something foolish . Even with that, after almost 5 years my 401K is still significantly (IMHO) larger than when I retired. That will likely still be the case in 8 years.

I have tIRAs for myself and DW that I have performing Roth conversions before attempting that with my 401K. DW's IRA conversion was completed this year. It will take me about 5 years to complete my IRA conversion, so the bulk of my 401K will be in place at RMD age. RMDs + pension + max SS payment = a lot of taxes and increased Medicare premium costs. But that is fine by me. Odds are that the 401K will be our LTC insurance and/or the bulk of what we pass on to our heirs.

Heh, heh, join the club! You may still have time to finagle your assets (pay more taxes now) and drop your later withdrawal rates below IRMAA levels.

Isn't it fun - having enough money that it's a pain to deal with?

 

[aaronc879]

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.

To me it would mean I saved a lot more than I needed to and worked a lot longer than I needed to. I would not be ok with that. I won't have the money any of you have but I also won't have spent 30+ years working 40+ hours a week.

 

[Telly]

As soon as I could, I rolled the pre-tax portion of my 401k to a TIRA. That was 21 years ago. Never spent any of it. Did and doing Roth conversions last 10 years or so.
Never felt that I/we over-saved. Never know what tomorrow might bring. The monthly nursing home dollar amounts some of y'all are quoting on another thread seems to say plan for a large chunk to fund one of those. Most likely for my DW. Very unlikely for me.

When I got rid of the 401k, the post-tax portion, which was much smaller, I transferred into some bond funds, and many years later I switched the gains there to bank, rather than re-invest. So maybe one could say that I DID "spend some of my 401k", though I've never viewed it as that. The only reason for the post-tax contribution to 401k was to keep the payroll deduction constant, when I hit the "highly compensated individual" limit for pre-tax 401k.

 

[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.

Or probably not. A lot of people will be almost entirely relying on SS and their 401K, and are just fine withdrawing from the latter immediately.

What is SI?

SI is Secure Income like Soc Sec, Pensions, Annuities et al. A significant number of people here don't need their nest eggs (401k, IRAs, portfolio) if all past history repeats - we've done several polls over the years.

 

[MarieIG]

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

Thoughts? What are your plans OP?

 

[oldtimer]

It is interesting that a number of people fully convert their IRA to Roth, but keep their 401ks. They have lost a flexibility of qualified charitable distributions (QCDs) that is available for IRA, but not 401k or other qualified employer plans. We have rolled over our 401k to our IRAs. We have been doing Roth conversions for the past 5 years and plan to continue until at least 70 when claim SS. Being able to take QCD will help us stay under IRMAA threshold once RMDs begin at 73.

 

[jollystomper]

To me it would mean I saved a lot more than I needed to and worked a lot longer than I needed to. I would not be ok with that. I won't have the money any of you have but I also won't have spent 30+ years working 40+ hours a week.

It just depends on one's situation. I enjoyed my work, so never looked at it as 'working longer than I need to". As for having "saved a lot more than I needed to", I just look at that as benefitting those people/organizations I choose to leave an inheritance to. So I am fine with "too much" , but I understand how others can have a different perception.