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Old 10-09-2017, 10:13 AM
 
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Quote:
Originally Posted by cb2008 View Post
Not that it matters, and most certainly not even remotely connected to the topic, but I thought Nefret, the OP, was a she!
My bad! Need a term like Shim to use in here.
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Old 10-09-2017, 10:23 AM
 
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Quote:
Originally Posted by cb2008 View Post
MJ, she was asking what do others in similar situation (more than adequate cash flow from reliable sources, and RMD that just goes back in) do with this post-tax money that seems suddenly available, if it is assumed they withhold adequate taxes on the RMD. She says they lived below their means all their lives, don't have expensive tastes, and now want to do something meaningful.

I kind of identify with her. We always lived below our means - smaller house than we could afford, mortgage paid off early, children in public and state universities with tuition paid off, our cars are 10 and 15 years old, and retired late, not early. Her ideas of for this money, while they have some good years left, seems quite thought out. I would not buy a vacation house, but a lot of people like that as a family gathering place that will become part of their estate.
like i said i would not tell them what to do without a entire picture .

there can be a big disconnect between cash flow vs money needed .

as many of us can vouch there is so much in life that does not fit within the budget .

we have been going through that with dental since we retired . this is the 3rd year in a row one of us needs 5 digits in dental work .

my friend has his wife to deal with who can't walk anymore and is confined to a wheel chair . they need expensive modifications in the house so she can remain at home and not in a snf .

personally i learned with my dad there is no such thing as money that is excess in retirement . the unknowns are just so great and the expenses not in the budget just love poking up every so often .

so i would not tell anyone what i thought they should do with their money not knowing the whole picture .

suppose they have the cash flow to live but limited savings for any long term care issues whether at home home or outside the home ?

Last edited by mathjak107; 10-09-2017 at 11:12 AM..
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Old 10-09-2017, 10:35 AM
 
29,924 posts, read 34,981,661 times
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Quote:
Originally Posted by mathjak107 View Post
like i said i would not tell them what to do without a entire picture .

there can be a big disconnect between cash flow vs money needed .

as many of us can vouch there is so much in life that does not fit within the budget .

we have been going through that with dental since we retired . this is the 3rd year in a row one of us needs 5 digits in dental work .

my friend has his wife to deal with who can't walk anymore and is confined to a wheel chair . they need expensive modifications in the house so she can remain home in not in a home .

personally i learned with my dad there is no such thing as money that is excess in retirement . the unknowns are just so great and the expenses not in the budget just love poking up every so often .

so i would not tell anyone what i thought they should do with their money not knowing the whole picture .

suppose they have the cash flow to live but limited savings for any long term care ?
That then becomes the answer to the OP. Use the at the time not needed RMD's to build up your after tax fund so you do have a much bigger nest egg. Everyone should. Someone like the OP could use FireCalc to measure not their future balance as a result of drawdowns but instead the future growth of their wealth as a result of reinvesting their RMD's. I have done it many a time and it is part of future planning and as you note Long Term Health Care planning/CCRC or my goal a virtual reality room in my old age.

I think I get this all from a Money Magazine case study back in the day. Your case study wasn't applicable to me but others were very right on target. The OP and others similar have a golden opportunity to become wealthier as they age. Only time will tell and set backs could occur but the chance for a Bada Bing is there.
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Old 10-09-2017, 10:37 AM
 
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your points are exactly what i am getting at .

as we know many times what so many think is extra dough really isn't because they are looking at it from a cash flow side and not the bigger picture .

one things our brains can't do is take in to consideration that which we don't know and it takes others to start them thinking in a different direction than they were .

only they know what they are considering and what they are not in their own equation .
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Old 10-09-2017, 10:48 AM
 
29,924 posts, read 34,981,661 times
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Quote:
Originally Posted by mathjak107 View Post
your points are exactly what i am getting at .

as we know many times what so many think is extra dough really isn't because they are looking at it from a cash flow side and not the bigger picture .

one things our brains can't do is take in to consideration that which we don't know and it takes others to start them thinking in a different direction than they were .

only they know what they are considering and what they are not in their own equation .
Again I will say we should have a thread for retirement planning with pensions that stays on that subject and is for people with pensions and how to maximize their value in your retirement planning. As with all things financial not everyone is equally savvy and there becomes a vast gulf in retirement wealth amongst those with similar benefits.
Transplanting isn't just about reducing current retirement cost but also using what ever realized savings there are to invest to accumulate more liquidity.

Everyone, especially those with a pension should understand the rule of 72 and realize that left untouched their portfolio will double in X years and be able to calculate that.

http://moneychimp.com/features/rule72.htm
Quote:
The rule says that to find the number of years required to double your money at a given interest rate, you just divide the interest rate into 72. For example, if you want to know how long it will take to double your money at eight percent interest, divide 8 into 72 and get 9 years.
The link includes the calculator.

One of the beauties of pensions is that if they along with or without SS provide a sufficient income with cushion, you can as you well know take on greater risk with your investments and statistically have a much better shot at your money doubling in a shorter period of time even with market fluctuations. Consider at age 65 what a couple could by age 75.80,85. This is with growth in their tax sheltered accounts and new investments along with eventual RMD's in their after tax accounts.

Money back in the day had some families doing real well using the tools available then to grow wealth in retirement all because of pensions. It also included second homes and how to use them.

Last edited by TuborgP; 10-09-2017 at 10:59 AM..
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Old 10-09-2017, 10:53 AM
 
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Stuff happens. I can't be sure the my extra money will always be extra. Like what if a company pension fails. The most important thing our retirement savings buys is security.
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Old 10-09-2017, 10:57 AM
 
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Quote:
Originally Posted by TuborgP View Post
Again I will say we should have a thread for retirement planning with pensions that stays on that subject and is for people with pensions and how to maximize their value in your retirement planning. As with all things financial not everyone is equally savvy and there becomes a vast gulf in retirement wealth amongst those with similar benefits.
Transplanting isn't just about reducing current retirement cost but also using what ever realized savings there are to invest to accumulate more liquidity.
i am not so sure about that being needed .

the fact someone has a pension does not mean someone is not counting on a safe ,secure consistent income stream from their own investments . for many with pensions it is only a part of their budget and they still need that safe withdrawal rate for the rest of their income .

if the pension fills all your needs than for all purposes the pay check never stopped and basically the same rules and guidelines that applied when you were working still apply . you never left the accumulation stage if that is the case .

my wife has a pension but our budget is designed to utilize our own money as part of the lifestyle we set up , so all the rules for developing a safe withdrawal rate still apply .


basically retirement investing falls in to 2 camps .

you are investing to support yourself and develop a lifetime income stream to combine with your other income sources . .

or you are investing for heirs ,charity's and just some fun money . big difference since almost all the money in this casa has a very long time frame and can be very aggressively invested or freely spent ..

that really is the breakout and not so much pension or not
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Old 10-09-2017, 11:00 AM
 
29,924 posts, read 34,981,661 times
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Quote:
Originally Posted by johnd393 View Post
Stuff happens. I can't be sure the my extra money will always be extra. Like what if a company pension fails. The most important thing our retirement savings buys is security.
Yes, yes and yes. That is very important to help if the pension and or SS takes a hit. That is why building the nest egg can be critical.
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Old 10-09-2017, 11:03 AM
 
29,924 posts, read 34,981,661 times
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Quote:
Originally Posted by mathjak107 View Post
i am not so sure about that being needed .

the fact someone has a pension does not mean someone is not counting on a safe ,secure consistent income stream from their own investments . for many with pensions it is only a part of their budget .

if the pension fills all your needs than for all purposes the pay check never stopped and basically the same rules and guidelines that applied when you were working still apply . you never left the accumulation stage if that is the case .

my wife has a pension but our budget is designed to utilize our own money as part of the lifestyle we set up so all the rules for developing a safe withdrawal rate still apply .
That is all part of the calculation of options you have. It is much easier for couples. Much easier and much easier for couples with each having a pension. The amounts of the pensions are important as is taking the spousal benefit option. Depending on circumstance there are many paths folks go down. However in the case of having pensions that can be a cornerstone. Working a full 35 years of pension eligibility and SS is also important along with a SS benefit strategy. Of course much of my preparation went out of the window with recent changes in SS filing and that can be in some cases a game changer.
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Old 10-09-2017, 11:06 AM
 
72,291 posts, read 72,222,083 times
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again , it is not about pension or not . it is about the two camps i mentioned above . the external income sources can be from anywhere , just not portfolio income .

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basically retirement investing falls in to 2 camps .

you are investing to support yourself and develop a lifetime income stream to combine with your other income sources , one of which could be pension , or ss or rental , etc . . you need a safe withdrawal rate from your portfolio so income flows consistently in good and bad times for life . . you need the whole enchilada to live on .

or you are investing for heirs ,charity's and just some fun money but basically never left the accumulation stage . big difference since almost all the money in this case has a very long time frame and can be very aggressively invested or freely spent as what is left is left ..

that really is the breakout and not so much pension or not

Last edited by mathjak107; 10-09-2017 at 12:04 PM..
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