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Old 04-13-2015, 01:33 PM
 
Location: Idaho
1,456 posts, read 1,158,755 times
Reputation: 5523

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Quote:
Originally Posted by CarolJM7628 View Post
We file our own tax returns (individual and business) and handle our own investments. When I was fresh out of college many years ago, I used Merrill Lynch Brokerage. I quickly learned that the investment advisers had to make a living off their clients and they almost never put clients' interest above their own (which is understandable and expected). So, I learned very early on that I was the best guardian of my own money and investment.
The only one time that I used a CPA (highly recommended by a colleague!) to handle my tax return was when I accepted a job offer and moved to another state. The company bought my old house, paid for moving cost including storage, 2 months of living expenses and helped with buying a new home so I thought that the tax would be a bit complicated. When I saw that I had to pay some additional $12K in income tax, I decided to go through step by step redoing the tax return on my own. To my astonishment and disappointment, I found that the professional tax preparer had made numerous errors, omitted many deductions, entered the wrong information etc. The errors were close to $10K total to the IRS favor!!

I gave the CPA a copy of the return prepared by me and pointed out the errors. He sheepishly admitted the mistakes and refunded me the tax preparation fee!

It was the first time and also the last time that I employed a professional financial service!

Yes, I am of the same opinion that I am the best guardian of my own money and investment.
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Old 04-13-2015, 02:16 PM
Status: "0-0-2 Game On!" (set 9 days ago)
 
Location: The beautiful Rogue Valley, Oregon
7,320 posts, read 15,374,603 times
Reputation: 9511
Do my own taxes, manage my own investments.

Haven't always managed my own investments, but it annoyed me to pay an investment advisor to put my money in mutual funds which paid another advisor, particularly once I looked up their holdings and discovered no matter what the alleged "goal" of the fund was, they were all investing in a list of about 20 main stocks/investment vehicles and only the smaller stocks varied. The heck with that. Parted ways with the investment advisor during the turmoil of 2008.
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Old 04-13-2015, 05:04 PM
 
2,871 posts, read 1,015,737 times
Reputation: 3291
Quote:
Originally Posted by txfriend View Post
I have always invested by myself, be it rental properties, stock or funds. I hit some lows especially during the Texas real estate bust in the 80's and the tremendous dot-com bust. However we recovered nicely. I rolled everything over into a self directed IRA at retirement. I was not concerned about the tax ramification during my investment years. Our retirement income is $10K per month with SS without using the principal. We pay about 11% federal income tax using standard deduction.
That's pretty good. Thanks everyone. Yes I have been reading a lot and also listening to a lot of so called professional experts and I'm leaning on doing it myself five years from now. But I still have time to learn more.
It's great to hear from many of you that have gone thru it already
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Old 04-14-2015, 04:45 PM
 
Location: Houston/Brenham
4,121 posts, read 4,709,249 times
Reputation: 7584
Quote:
Originally Posted by jrkliny View Post
Don't try to be an expert. Don't try to play the markets. Don't pretend you are an analyst and can wisely pick individual stocks.

Buy mutual funds with low management fees. Set a stock:bond allocation that relates to your risk tolerance and personal financial situation. That should be somewhere in the range of 40-70% stocks. Then STICK with that allocation. If the stock market drops, don't panic and sell. Instead maintain your allocation; i.e., buy stock funds. If the market goes up, do not get greedy. Maintain your allocation by taking some profits and selling some of the stock funds. Diversify. Not just stocks and bonds but some medium/small cap stocks in addition to the large cap stocks. Consider additional means of diversification such as real estate investment funds. Keep some cash on hand such as bank accounts, money market or short term bond funds.
<snip>
You asked about investments. I also mentioned costs. In addition you need to think about social security. Consider delaying starting social security. Delaying social security is one of the best steps you can take. That will give you a return of 8% plus cost of living on that amount.
This one post alone could save you substantial money. Smart, concise, accurate info!

Well said.
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Old 04-14-2015, 05:01 PM
 
71,811 posts, read 71,919,037 times
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Keep in mind that while ss increases by about 6% from 62 to 66 it isn't really going to be that much of a difference since you are giving up checks by waiting. If you delayed to 70 you would have to live to 95 to see even a 6% difference. at 84 there is only a 3% difference for waiting once you add in the checks you missed. ..

If you are spending down investments while waiting you have to figure in loss of gains and compounding on that money you spent down as well . That reduces that difference even more.

also what if markets are down and you have to sell assets to delay ss ,then what ?


perhaps the answer might be to keep delaying and use your own money if markets are trending up . but if they take a good hit default to collecting earlier rather than excessively spend assets trying to delay.

according to calculations, using a 6% return from a balanced portfolio , waiting 8 years from 62 to 70 and using your own money has a break even of 22 years between lost gains and lost checks bringing the break even point to 84...

but after that point the delayed ss starts to take the lead. and does so going forward without the risk of markets.

so the question really is are you more comfortable with market risk ? or longevity risk ?

that is what it boils down to. if you have longevity delaying is the best deal.

but which is best hinges on your own mortality so don't believe for one second that delaying is better as a general statement..

The fact it can take 22 years to break even Is a risk many don't want to take on as they are more comfortable with market and interest rate risk.

Last edited by mathjak107; 04-14-2015 at 06:23 PM..
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Old 04-14-2015, 06:38 PM
 
6,312 posts, read 4,760,180 times
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Quote:
Originally Posted by mathjak107 View Post
Keep in mind that while ss increases by about 6% from 62 to 66 .....

....... if you have longevity delaying is the best deal.

but which is best hinges on your own mortality so don't believe for one second that delaying is better as a general statement..
.......
The increase is 8% not 6%. That is what the tables showed for my retirement choices and on checking the internet I believe that applies to everyone.

If you die young, you never get paid much from social security. You lose and the government wins. Of course that makes little difference because you are dead. If you live to a ripe old age, then that extra money will be very welcome and could substantially improve your lifestyle and level of comfort. Don't forget not only do you get the 8% for every year you delay, but the cost of living increases will be compounded by that amount.

Certainly some people retire and do not have a choice. They need to start social security immediately. I can think of no other reason that delaying would make sense. Well I guess there is one other reason. For someone in poor health or with a life threatening disease, it would make sense to take social security as early as possible.
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Old 04-14-2015, 07:48 PM
 
2,871 posts, read 1,015,737 times
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Quote:
Originally Posted by jrkliny View Post
The increase is 8% not 6%. That is what the tables showed for my retirement choices and on checking the internet I believe that applies to everyone.

If you die young, you never get paid much from social security. You lose and the government wins. Of course that makes little difference because you are dead. If you live to a ripe old age, then that extra money will be very welcome and could substantially improve your lifestyle and level of comfort. Don't forget not only do you get the 8% for every year you delay, but the cost of living increases will be compounded by that amount.

Certainly some people retire and do not have a choice. They need to start social security immediately. I can think of no other reason that delaying would make sense. Well I guess there is one other reason. For someone in poor health or with a life threatening disease, it would make sense to take social security as early as possible.
Not sure where you got the 8% rate. If I take it at 62 is 70.8% of what I would get at full retirement age of 66 and 8 months. So as you can see an 8% increase would add up to more. I believe the 8% is from your FRA to 70
I think if you add the cost of living increase then maybe you get that 8% increase per year. As you said it all depends on how long you live.
Another question to ask is Do you spend more in early retirement let's say 62-75, than you do do from 75-90 or vice versa. From looking at my parents and uncles the answer is the early years when they spent traveling and eating out, didn't see them spending much on that once they passed into their 80s
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Old 04-14-2015, 07:59 PM
 
6,312 posts, read 4,760,180 times
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Beach Sportsfan, You are correct. The increase is 8% beyond FRA. Taking social security earlier than FRA results in a deduction that is less than 8%. In my case I never looked at taking social security early. I looked at the effect of a delay. Mathjak is correct for early withdraws the penalty is about 6%/year.
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Old 04-14-2015, 10:07 PM
 
Location: Saint Johns, FL
1,193 posts, read 944,554 times
Reputation: 1267
Manage my investments myself. It's fun for me. Building an ever increasing income with dividend paying stocks and working the funds in such a manner (conversion, etc) that more and more of it is becoming "Roth-based". In Jan 2014 only 2.41% of my non-governmental (SS and Military retirement) retirement income was coming from a Roth. As of this month I've worked it up to 13.42%
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Old 04-15-2015, 01:08 AM
 
71,811 posts, read 71,919,037 times
Reputation: 49380
Quote:
Originally Posted by jrkliny View Post
The increase is 8% not 6%. That is what the tables showed for my retirement choices and on checking the internet I believe that applies to everyone.

If you die young, you never get paid much from social security. You lose and the government wins. Of course that makes little difference because you are dead. If you live to a ripe old age, then that extra money will be very welcome and could substantially improve your lifestyle and level of comfort. Don't forget not only do you get the 8% for every year you delay, but the cost of living increases will be compounded by that amount.

Certainly some people retire and do not have a choice. They need to start social security immediately. I can think of no other reason that delaying would make sense. Well I guess there is one other reason. For someone in poor health or with a life threatening disease, it would make sense to take social security as early as possible.
22 years to beak even when almost all is considered is an awfully long time. it actually will be MORE than that too.

the reason is if you are collecting a hold harmless law insures that your medicare increases will never be more than the colas . you have no such protection when you delay. your increases are the full amounts .

the full amounts have been more than those collecting have seen. some increases have been 7% .

personally i think i am more comfortable with market risk then the longevity risk of taking 22 years or longer to just end up at the same point.

the difference in ss if i take the gamble wouldn't mean a thing in our case since any difference first gets taxed too reducing that advantage,

i think i may strive for 66 but only if markets hold or rise.

if they fall rather than spend assets in to a down market i will collect.
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