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Old 09-02-2014, 09:20 PM
 
852 posts, read 932,477 times
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Wow!!! OP and I could be twinkies as my DH and I are almost in the exact same boat, including age difference. House is about paid off and it's only a few years old, expecting little for maintenance, one level in anticipation of old age snap, crackle, pop. All but one car is paid off but my employer pays that bill and then some. Fully funding 401k's that are well diversified and stashing additional 600 per month into savings account. Our savings is also similar in amount. My only concern is the DH.

I think because of the age difference he is afraid by the time I retire he'll be too old to do what he wants in retirement i.e. Travel so he wants to do it now instead of continue to save. He's been great for the most part but I want to really get aggressive in paying off the house and build wealth so hopefully I can retire early. I'd like to live on just one income now and stash the other check of about 130k per year before deductions. We could totally do it and be completely fine. I just can't get him talked into it. He's not receptive to budgeting and likes to just go buy what he wants, when he wants it.

Our age difference has never been an issue before but I think it is now because he thinks he's gonna check out before he gets a chance to actually live without the worries of work. His dad passed at 72 and I think that is playing a part. Anyone else in this boat and any offers of advice?
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Old 09-02-2014, 09:41 PM
 
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If you have the money you might consider opening an IRA with the full amount which would come from after tax- money probably and then convert that IRA into a Roth IRA so that you have the advantage of tax-free withdrawals in the future and don't have to take the money at 70.5....
that could be an advantage to you in future since SS is taxable after a certain income level which could become more painful/lower in the future...
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Old 09-02-2014, 10:12 PM
 
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Quote:
Originally Posted by loves2read View Post
If you have the money you might consider opening an IRA with the full amount which would come from after tax- money probably and then convert that IRA into a Roth IRA so that you have the advantage of tax-free withdrawals in the future and don't have to take the money at 70.5....
that could be an advantage to you in future since SS is taxable after a certain income level which could become more painful/lower in the future...
Totally plan to be on top of the IRA's this year. Wish we'd started those long ago but the focus has been on being debt free before retirement and we are so dang close I can taste it
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Old 09-02-2014, 10:16 PM
 
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And it is the roll-over into the Roth that makes this desireable to us
before they lifted the income limit for conversion we couldn't do them--
we didn't benefit really long-term by putting more money into a retirement fund that will be taxed when we take it out...

you also have more flexibility for how you will-away a Roth if you have heirs...
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Old 09-02-2014, 10:22 PM
 
4,650 posts, read 6,498,868 times
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Why not start thinking about starting a side business for when you turn 55 and leave the working world. Work your full-time job and build a business in nights and or weekends.
Would You Join A Multi-Level Marketing Company For Retirement Income? - Forbes

What I have seen is be debt free and save as much as you can but still live life. Consider Long Term Care issues and your life insurance needs. What you will need to know when your husband retires is what is the guaranteed amount of income coming in going to be. The base is the guaranteed amount and go from there.
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Old 09-02-2014, 10:25 PM
 
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IF your husband is 59 that means his full retirement age is 66 and some months (NOT 65) -- so he won't get his full SS. So it will be docked a little bit, a very little, but still.....And your's is 67.

And any Soc. Security projections regarding monthly benefits is based on making the same salary you are now UNTIL you retire. Take a pay cut or become unemployed and the payments would be less.

With retirement still that many years away, I'd say start trying to figure out what you might do....but the landscape could be completely different so staying aware of retirement issues is about all you can do at this point.

(Of course, you should already have certain estate plans in place regardless os when you retire.)
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Old 09-02-2014, 10:44 PM
 
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Mine retires at 66 1/2. He's pretty antsy about it too. Great advice folks, thank you
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Old 09-03-2014, 02:00 AM
 
72,003 posts, read 72,043,164 times
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Quote:
Originally Posted by loves2read View Post
And it is the roll-over into the Roth that makes this desireable to us
before they lifted the income limit for conversion we couldn't do them--
we didn't benefit really long-term by putting more money into a retirement fund that will be taxed when we take it out...

you also have more flexibility for how you will-away a Roth if you have heirs...
roth conversions, and even doing roths at this age have to be run through a large amount of scenerios. it may not be worth it so late in life .

there are a number of reasons you may not want to do it.

first off tax brackets expand out each year letting more and more income go through at lower and lower tax rates. even if taxes stay the same you would do better not doing it.

biggest issue is if you delay ss. you can draw up to 42k as a retired couple with as little as 1800 bucks tax from your retirement money and any equities held in a taxable account would have zero capital gains taxes. this is never taxed money for the most part as even 20k of it can be had tax free each year with good planning. this is a gift from uncle sam.

if you delay ss until 70 you can draw over 320k over that time frame with under a 5% tax rate and that is money you took the deduction on at higher tax rates.

what rate would you pay on those conversions? 25% ?

doing roths or roth conversions without a total tax planning plan makes little sense.

very few americans that did not start the roths at the beginning of their careers will be in a higher tax bracket with no pay checks as compared to possibly two pay checks coming in.

so when are roth conversions worth it?

when your income is marginal to getting ss taxed or you getting hit with the medicare surcharge tax.

other wise the only given is roths are great when started very early on and it has nothing to do with tax free compounding.

since most folks have their income ramp up over decades of time , the average tax rate for their working career and not just the final years will be lower then their tax rate usually by retirement.

it is this long term lower average tax rate you paid along the way that will likely put you in a higher tax bracket in retirement since generally your income and lifestyle is planned around your end of career earnings.

just that fact can give you 20% more spendable cash at retirement. but if you missed doing the roth during your early ramping up days you blew it. the biggest reason for doing it is missed.

our generation had no roths early on so we had no chance to get in on the deal. now it is very very very individual scenerio specific if any roths are helpful or leave us behind.

as far as leaving money to heirs. a single premuim life insurance policy is leveraged and will not cost you what you leave so the tax free life insurance money may be a better deal since local estate taxes or inheritance taxes may apply to anything but life insurance passed outside of the estate. many states like new jersey have very low state estate tax levels.


i can leave my wife a million bucks in taxable ira's and she will have rmd's and taxes to deal with. but if i take some taxable ira money , pay the taxes and buy a million dollar single premium policy i will pay way less and she gets 1 million of tax free money with no taxes and it is guaranteed and not subject to the whims of the markets.

quite franly while i can invest that ira money many wives out there ,and some husbands have no clue what to do with it once the spouse who handled it is out of the picture.

the kids can inherit what is left in the ira's and pay the taxes streched out over their lifetimes further screwing the tax man.

folks tax planning is a very complex subject and i will say this , any simple answers like some of the above to a complex question are usually the wrong answers.

i consider myself pretty savvy with this stuff and we just got both an estate attorney and a financial planner (who is commissioned i might add) as the scenerios and stuff i don't know about this stuff makes my hair hurt.

if you think seeking profesional advice is expensive i will tell you this , you can not afford free!.

Last edited by mathjak107; 09-03-2014 at 03:10 AM..
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Old 09-03-2014, 03:36 AM
 
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the big wild cards that will make each situation different is the taxability of your ss both before and after they are combined with the rmds. if your income is high enough the medicare surcharge is an issue as well.

working with ss can be very tricky since you have two moving targets. the more your modified income the more ss gets taxed and the more the ss gets taxed the more the modified income which taxes more ss which goes round and round in a circle.

tax wise you really have to look at all the scenerios including drawing that ira money out first to get uncle sam's gift . delaying ss and getting that whopping payment combined with rmd's may make taking ss earlier a better deal in some scenerio's.

we pay taxes at an effective rate but we save taxes at a marginal rate. this can be tricky stuff to do so many complex calculations on.

like i said complex questions that get simple answers are generally the wrong answers.

Last edited by mathjak107; 09-03-2014 at 04:11 AM..
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Old 09-03-2014, 04:59 AM
 
Location: Tucson for awhile longer
8,872 posts, read 13,584,229 times
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I belong to a credit union and they offer seminars on how and when to apply for Social Security so you get the benefits that work best for you. Some community colleges and public libraries have them, too. It can get very complicated if one is a widow or widower of a primary earner, if one or both spouses in a couple were married previously, if the spouse have a wide gap in their ages, etc., etc. It's good to hear all this in lecture form where you can ask questions either during or after the seminar.
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