Overfunded Retirement Strategies

[audreyh1]

We are pretty much overfunded. Over the last 4 years I have taken 5% out of the equity AA. We are remodeling the house a bunch and splurging on travel. Blow that dough!

Alright! Way to go!

Spend at least a good chunk of the excess while you are younger and in better health.

 

[street]

I think most here got to FI by being over achievers in the saving department. I would be very hard to beleive, anyone that is FI have not overfunded their accounts. It is a good problem to have.

 

[Paulz]

We are definitely overfunded, but there is no way to do anything about it for a few years. Still working, so have a much larger than anticipated in each of our 401ks. No way to move it until we hit 59.5 or until we retire, and we won't do that until 60. Of course we keep putting money in to capture the matching, so it keeps compounding.

 

[cyber888]

I've read billionaires who went bankrupt during the 2008 financial crisis. It depends on what you feel are your discretionary funds. Many people who are not FIRE donate to charity, so it's not a hard and fast rule.

 

[jasg]

Never really thought about being overfunded but at 72 with 27x spending, perhaps we are. Spending is not lavish and I expect to leave the step-kids a bunch.

Current 50/50 AA seems odd since I stayed at 95/5 well into retirement. Over the last few years I have been moving profits into a 3.25% stable value fund which is now 40% of total portfolio - roughly 11 years of spending.

As a mental trick, I think of the other 60% as a separate, aggressive portfolio so I can feel like that devil-may-care guy again.

An unplanned result is that for the last 14 years, I have had roughly the same amount in equity index funds. I tolerated that, even when it lost 40+% in 2008. I sleep well.

 

[rk911]

well, if we are "overfunded" (didn't know one could have too much but whatever...) then our charities, some friends or their kids and my nephew will inherit. it's all good.

 

[t49eng]

The Land of Plenty

Retired at 56, DW at 60, I am now on the cusp of taking RMDs & agonizing over how to use them. We have NW nearly 40X annual expenses. AA adjusted from 60/40 to 50/50 in the last year. Taxable is all in stock MFs with large CG, which are tagged as legacy. Pension from day one & SS starting last year are more than enough for our live style, though cramped now by Covid travel restrictions. Had been taking at least one international trip each year. We are now on our 3rd remodeling project since retiring (kitchen/FR & 2 baths). Stepped up charitable contributions this year & am thinking of gifting the max/year to our DS rather than having him wait to inherit.

 

[Souschef]

Our baseline is $70K from SS and pensions, which covers our expenses. I am 82, so the RMD is 5.6%. I have been giving much more to charity as QCD's, as a $1000 contribution really costs me $750, considering taxes.

Every year we give our 4 sons some of the RMD $, also.
We are definitely over funded, but it is a good place to be.

 

[davidfin]

Excellent Question

Excellent question I’ve been thinking about. Currently at 35x but anticipate jumping to 65x next year when beginning social security. WR well below accepted 4%. Running firecalc with an admittedly optimistic longevity the average at demise is substantial in my view. DS is well past launched and is sole heir who really has no idea of the potential size of the estate. Decades of a saving mentality and desire to minimize the tax bite on deferred accounts or avoid the Medicare income limits has artificially restrained spending. I have no desire to be richest guy in the cemetery but changing habits is difficult. I have begun considering that in a few years RMDs (assuming existing RMD regulations remain fairly constant) are going to force the issue. So why wait to 72 or so to enjoy what I worked hard to accumulate? What do others think?

 

[pacergal]

We are probably overfunded, with pensions and ss meeting our planned expenses now, but you never really know.
If there is some left, which we hope there will be, our kids will benefit.
If we need it for ourselves, well, thats why we saved!!

When we reach RMD age, if we do not "need" that money, we will most likely gift it to our kids.

Right now, it's a nice position to be in. We feel blessed.

 

[audreyh1]

Decades of a saving mentality and desire to minimize the tax bite on deferred accounts or avoid the Medicare income limits has artificially restrained spending. I have no desire to be richest guy in the cemetery but changing habits is difficult. I have begun considering that in a few years RMDs (assuming existing RMD regulations remain fairly constant) are going to force the issue. So why wait to 72 or so to enjoy what I worked hard to accumulate? What do others think?

If there is something you want now, go for it! Don’t let taxes/IRMAA limit your enjoyment of life now.

 

[Bamaman]

My father always said it's a shame that most families are relatively old before they receive gifts or inheritances from their families. They could better use the money earlier in life when they started buying homes and having families. It would be nice to be overfunded, and give away money if all our heirs were fiscal responsible.

Our "wild child" daughter was given a nice home, but she didn't care enough to pay the expenses or get a job. We took back the home and sold it.

We set up a 28 year old grand daughter last week in order to buy her first home. She went into a savings mode and we met her 50/50. And we feel good about that.

We have 3 children, and only one took up our offer to pay for education. The other two are still fiscally irresponsible adults and have no money for retirement saved. If they're not going to save for their future, they're on their own.

It's time to change our beneficiaries on Rollover IRA accounts and setup a trust to pass on an inheritance for the two grandchildren we're essentially raising.

 

[Spanky]

We reduced allocation to stocks to 40% once FI had reached in 2007. Since 2008, the stock market has done well. Had we not cut back on equity, the portfolio values would have been bigger. However, we have no regrets and slept quite well.

 

[Spanky]

I think that I have won the game, as Dr. Bernstein says, but my current retirement assets seem to be more than adequate. I plan on living to age 100, as does Mrs. mickeyd, so my calculations going out 25+ years are really foggy. Will SS, military pensions, corporate pensions continue to be adequate over that time? Hard to tell. Hope so!

Nothing to worry - military pensions and SS will be around albeit some discussions about possible cutbacks in the future. Not sure about corporate pensions, however.

Live long, stay healthy and be happy.

 

[gerntz]

Retired at 56, DW at 60, I am now on the cusp of taking RMDs

RMD's don't start till age 72 for the two of you. So that's even 12 years away for her.

 

[gerntz]

One of the ways I like to blow the dough is to take greater investment risk as we age. If that's a losing proposition, we've blown the dough. If it's a success, we can help others more.