* Official Retirement Accounts/Planning Thread * (401k/IRA/Annuities/RealEstate/Etc)

[LurkoLantern]

Wanted to make a thread specifically about all things retirement. The stock trading thread and long-term investing threads are great but still deal with some degree of active trading.
So here's a place to talk about retirement-specific things.

Some topics:
- How much do you figure you need to have saved in order to retire?
- Where do you want to retire to?
- Does real estate factor into retirement? What about continuing to work?


I have my own item I want to bring up - I currently work at a job that offers a pension...IF you're vested for 2 years. I joined the company 1.6 years ago, and our facility was just sold. I'm grateful to still have my job, but I'm going to miss out on the pension.
So I've been debating setting up my own annuity program with my Fidelity broker. Right now I only have a 401k (a very healthy 401k, but just that). Would it be advisable to focus on a IRA/RothIRA instead of an annuity? I'd prefer security over gainz with this.

And another side question: Let's say you're maxing out your 401k and your IRA. What should come next?

[ajctennis]

I’m a huge Roth believer. I think taxes now are lower they they will be in the future and average life expectancy will go up in the future making the Roth even more superior as you won’t be forced to take distributions when you hit a certain age at with a traditional Ira.

If your income is above what you can put in to a Roth- you can always convert an Ira to a Roth IRA after. Also max out your Roth 401k.

My thoughts - The holy trinity for paying as little taxes as possible.

Roth IRA , HSA, and real estate. If you want to put even more money away I think there’s another plan you can use or you can make a corporation for yourself.

I think as a single guy I could comfortably retire with 5 mil in today’s dollars in a Roth. With a family, 10 mil in a Roth. The goal is to live off of 2-3 percent of my investments so My account can continue to grow even with inflation.

In terms of locations to retire right now probably Texas- Dallas or somewhere in Florida- Miami maybe. Have that as your primary residence and then have another home in San Diego or La Area you can spend 5 months in.

You’re in Chicago right?

Wanted to make a thread specifically about all things retirement. The stock trading thread and long-term investing threads are great but still deal with some degree of active trading.
So here's a place to talk about retirement-specific things.

Some topics:
- How much do you figure you need to have saved in order to retire?
- Where do you want to retire to?
- Does real estate factor into retirement? What about continuing to work?


I have my own item I want to bring up - I currently work at a job that offers a pension...IF you're vested for 2 years. I joined the company 1.6 years ago, and our facility was just sold. I'm grateful to still have my job, but I'm going to miss out on the pension.
So I've been debating setting up my own annuity program with my Fidelity broker. Right now I only have a 401k (a very healthy 401k, but just that). Would it be advisable to focus on a IRA/RothIRA instead of an annuity? I'd prefer security over gainz with this.

And another side question: Let's say you're maxing out your 401k and your IRA. What should come next?

[ooph]

Wanted to make a thread specifically about all things retirement. The stock trading thread and long-term investing threads are great but still deal with some degree of active trading.
So here's a place to talk about retirement-specific things.

Some topics:
- How much do you figure you need to have saved in order to retire?
- Where do you want to retire to?
- Does real estate factor into retirement? What about continuing to work?


I have my own item I want to bring up - I currently work at a job that offers a pension...IF you're vested for 2 years. I joined the company 1.6 years ago, and our facility was just sold. I'm grateful to still have my job, but I'm going to miss out on the pension.
So I've been debating setting up my own annuity program with my Fidelity broker. Right now I only have a 401k (a very healthy 401k, but just that). Would it be advisable to focus on a IRA/RothIRA instead of an annuity? I'd prefer security over gainz with this.

And another side question: Let's say you're maxing out your 401k and your IRA. What should come next?

# needed to retire? It's constantly changing. Constantly.

What do you consider retired? Completely out of every investment and sitting on a stack of $? Or "semi retired" where you own a mountain of real estate and have a PMC handling everything for you? In my book that is retired, and I wouldn't need anything "Saved" besides the assets themselves.

Real estate is the end all/be all to my goal of retirement. I want to own my house free and clear, and own 10+ properties free and clear. Right now my home is worth 1mil and I owe $500k on it. I am finishing building a 12 unit apartment complex, should be finished by February. I have a partner on that I'm 50/50 with. The property itself should net around $10-11k/mo in profit after everything. The goal is to hold these long term 20+ years. If I can have 10 of these even owning 50% of them. I'll be a happy camper. That would be $75k/mo profit by age 50. Essentially completely passive. Not counting ANY equity being built.

I max my IRA every year but really I give my financial advisor 25k/yr and just forget about it. Let them be aggressive with it and I forget it even exist. Will probably keep some bitcoin that I have for the long term too, who knows where it is in 5 years from now.

I want to retire to Scottsdale AZ, and possibly have a place in FL just because I have some good good family like friends that all just moved there and will probably be there forever.

[LurkoLantern]

You’re in Chicago right?

Wow good memory! I actually left Chicago about 2 years ago and moved back to my home state of Texas. Really glad I did.
Thanks I'll look deeper into Roth IRAs

[mikebadg3]

I know enough to reason out matching employers contribution is free money, and its generally a steady earned amount og income. I think they should lower the age to pull it out though. I want money when im mobile not when im in a wheel chair

[EasternHammer]

I know enough to reason out matching employers contribution is free money, and its generally a steady earned amount og income. I think they should lower the age to pull it out though. I want money when im mobile not when im in a wheel chair

Don't count on Congress lowering the age to withdraw without penalty from 59.5. Much more likely imo that they raise it as people live and work longer, just as they did back in 2019 with the RMDs.

[cazzo1]

Tpyically it is 25 year expenses. So if you spend around 40k a year, you need 1 mil.

[ajctennis]

I’m impressed with the real estate. Could you go into further detail with building the 12 units?

1. What market research did you do? Or did you build near where you live?

2. Did you run any financial models or just intuition?

3. What was it like in terms of dealing with the zoning/ permits/ buying land?

4. Did you have any contractors and what was it like dealing with them in the project?

5. Any tips for some who who wants to build more units on their lot?

I would like to buy a property that has enough lot space to build multiple units so I’m curious as to the steps you went through. Obviously have to make sure the financials work and it doesn’t take too long to get the project done. Seems like that’s what kills ground up units- cap ex expenses higher than anticipated or timing- takes way longer to build than expected.

# needed to retire? It's constantly changing. Constantly.

What do you consider retired? Completely out of every investment and sitting on a stack of $? Or "semi retired" where you own a mountain of real estate and have a PMC handling everything for you? In my book that is retired, and I wouldn't need anything "Saved" besides the assets themselves.

Real estate is the end all/be all to my goal of retirement. I want to own my house free and clear, and own 10+ properties free and clear. Right now my home is worth 1mil and I owe $500k on it. I am finishing building a 12 unit apartment complex, should be finished by February. I have a partner on that I'm 50/50 with. The property itself should net around $10-11k/mo in profit after everything. The goal is to hold these long term 20+ years. If I can have 10 of these even owning 50% of them. I'll be a happy camper. That would be $75k/mo profit by age 50. Essentially completely passive. Not counting ANY equity being built.

I max my IRA every year but really I give my financial advisor 25k/yr and just forget about it. Let them be aggressive with it and I forget it even exist. Will probably keep some bitcoin that I have for the long term too, who knows where it is in 5 years from now.

I want to retire to Scottsdale AZ, and possibly have a place in FL just because I have some good good family like friends that all just moved there and will probably be there forever.

[ooph]

I’m impressed with the real estate. Could you go into further detail with building the 12 units?

1. What market research did you do? Or did you build near where you live?
Built in the same city as I live. But our city hasn't moved its urban growth boundary in ages and wont be for about 5 years from what they have said. They've become a bit more lax when it comes to building multi-family residential. The city is near a major metropolitan area that is pricing people out and they are flooding down to our city in droves. Massive undersupply right now

2. Did you run any financial models or just intuition?
We calculated everything out as far as our potential income/cost etc. But I ran everything with really low projections just to be safe. I think our rents are going to be $1600/1400 instead of the 1300/1100 I initially projected because the market has moved up so much

3. What was it like in terms of dealing with the zoning/ permits/ buying land?
It wasn't too bad. We lucked out buying a property that was already zoned for multi-family. Permits were a PITA just due to covid slow downs and how every damn person for the city/county were working from home and backed up as ****. Buying the land was easy, we did a cash purchase of that. Funny part is we found the lot/land because we went to go look at a 4plex on the lot next door to it, the 4plex sucked and we asked the guy about the lot next door and he said his client own that too and would be interested in selling, so we said **** it and figured we'd either hold the land for a while its in a good location. Or do this

4. Did you have any contractors and what was it like dealing with them in the project?
Yes we had a builder and my business partner has a contractors license and has flipped quite a few houses/built before. Has been a cake, but he has been handling most of the **** I don't know anything about.

5. Any tips for some who who wants to build more units on their lot?
If you have a house or decent amount of property, go to the county/city, see if you can subdivide and build.

I would like to buy a property that has enough lot space to build multiple units so I’m curious as to the steps you went through. Obviously have to make sure the financials work and it doesn’t take too long to get the project done. Seems like that’s what kills ground up units- cap ex expenses higher than anticipated or timing- takes way longer to build than expected.

Bolded above.



We were a little behind on building, due to permit bs but it shouldn't affect us any. Project should be a cash cow though, we had originally planned to just build it and then sell the whole thing to an investor but with what has happened to the local rental market, we decided to just keep for the long haul.

[SouthDakotaBrah]

Don't count on Congress lowering the age to withdraw without penalty from 59.5. Much more likely imo that they raise it as people live and work longer, just as they did back in 2019 with the RMDs.

Agreed this is the direction government-sponsored subsidies are headed. Technology and healthcare have advanced considerably since the magic number of '65' has been established as the standard for retirement. As life expectancy continues to increase, the age associated with retirement accounts will also increase, as seen in Sweden.

https://www.mercer.com/our-thinking/...nable-age.html

"Phased pensionable age increase. The youngest age to draw state old-age pension benefits will increase to 62 years beginning in 2020 for individuals born in 1959 or 1960, to 63 in 2023 for those born in 1961 or 1962, and to 64 in 2026 for those born in 1963 or later. For individuals born in 1958 or earlier, the youngest pensionable age remains 61 years.

Retirement age. Employees will be protected from forced retirement until age 68 in 2020, increasing to 69 in 2023. The usual retirement age in Sweden is 65, but employees currently are protected from forced retirement until age 67.

Benchmark age. The government will introduce a “benchmark age” linked to the average life expectancy, which will be the youngest age at which individuals could draw a public pension or receive a guaranteed pension and housing supplement. The benchmark age will undergo annual review, but any increase would take effect six years later and remain unchanged for at least three years."

[SouthDakotaBrah]

I personally believe in the traditional 401k. My plan in retirement is to minimize my income tax burden - I want to have several million in stocks outside of my 401k so that qualified dividends alone can sustain my living expenses. This way the only income I would have to report is the RMD on my 401k - which would assuredly put me in a lower income tax bracket than I am in today (regardless of tax structure changes). Any additional cashflow needed will come from qualified dividends which are currently taxed at 15% - significantly lower than my income tax bracket today. I believe if you make enough money that you can forecast having several million in both a 401k plus individual stock account, you can minimize your long-term tax burden by going traditional 401k vs roth

[_zman]

I personally believe in the traditional 401k. My plan in retirement is to minimize my income tax burden - I want to have several million in stocks outside of my 401k so that qualified dividends alone can sustain my living expenses. This way the only income I would have to report is the RMD on my 401k - which would assuredly put me in a lower income tax bracket than I am in today (regardless of tax structure changes). Any additional cashflow needed will come from qualified dividends which are currently taxed at 15% - significantly lower than my income tax bracket today. I believe if you make enough money that you can forecast having several million in both a 401k plus individual stock account, you can minimize your long-term tax burden by going traditional 401k vs roth

You can withdraw your Roth IRA contributions tax and penalty free at any time. It acts like an emergency savings account.

Some topics:
- How much do you figure you need to have saved in order to retire? Probably a million or less in stocks/cash, rest will be in assets, probably use a reverse mortgage around age 50-55. About to upgrade to a bigger house, so I'll do a 15yr mortgage and that will be paid off by 50-55. I have an Excel sheet started with projections of my portfolio and how much I'll be able to withdrawal etc before running out of cash. Right now it looks like retirement should start around 50-55, depending how much money I spend annually and the type of job I have at the time. If I'm single this will be easy, if I'm married, probably not happening.

- Where do you want to retire to? Somewhere cheap, warm, simple, possibly international.

- Does real estate factor into retirement? What about continuing to work? Only plan to own my own home. I've tried real-estate, not a fan. I'll probably always work or have a side gig in retirement, but at my own pace, maybe only work 20 hours a week just to keep busy. I have a pretty wide set of skills from mechanics to computers to photography to finance, so I'm sure I'll think of something to keep me somewhat busy. Travel with the remaining free time.

[SouthDakotaBrah]

You can withdraw your Roth IRA contributions tax and penalty free at any time. It acts like an emergency savings account.

Some topics:
- How much do you figure you need to have saved in order to retire? Probably a million or less in stocks/cash, rest will be in assets, probably use a reverse mortgage around age 50-55. About to upgrade to a bigger house, so I'll do a 15yr mortgage and that will be paid off by 50-55. I have an Excel sheet started with projections of my portfolio and how much I'll be able to withdrawal etc before running out of cash. Right now it looks like retirement should start around 50-55, depending how much money I spend annually and the type of job I have at the time. If I'm single this will be easy, if I'm married, probably not happening.

- Where do you want to retire to? Somewhere cheap, warm, simple, possibly international.

- Does real estate factor into retirement? What about continuing to work? Only plan to own my own home. I've tried real-estate, not a fan. I'll probably always work or have a side gig in retirement, but at my own pace, maybe only work 20 hours a week just to keep busy. I have a pretty wide set of skills from mechanics to computers to photography to finance, so I'm sure I'll think of something to keep me somewhat busy. Travel with the remaining free time.

Thats true on the Roth IRA (which I do have). My plan for my Roth IRA is to never withdraw from it, as it is the investment any one person can have that will generate them the most return on average (if somebody were to have $1-2M in their Roth IRA, they'd be able to generate more return than if they had the same amount in any stock account, so my logic is to maximize the Roth IRA balance at all times). If I can just use the RMD payment from my 401k (to keep me in the lowest income tax bracket) then any supplemental income can come from qualified dividends/capital gains, which would keep my effective tax rate between 10-15% (compared to ~30-35% now... hence the traditional vs roth 401k argument for me)

As for when I want to retire, I'm not sure. I'd want a large enough investment account (stocks+real estate if I ever get into it) to generate cashflow (dividends, options income, rental income) to cover all my expenses PLUS retirement account contributions... I'd want to keep maxing my 401k/IRA if possible (haven't looked into how this would change without an employer). 401k and IRA are just too good of investment opportunities not to maximize them (in terms of maximizing your net worth)

Some random fun numbers:
Maxing out retirement accounts starting from age 25 until age 65 (I choose 65 because as mentioned above, even if I retire early, I plan to continue to max my retirement accounts)
Long-term return rate: 10% (total return from the S&P 500 over the last 90 years)
IRA: $2.5M
401k (100% equity, no bonds): $8.5M

If you land a job that allows you to max your retirement accounts, pay down a house, and have money leftover for stonks, these are realistic (aggressive) numbers you can build up to. Imagine having a paid for house and another $3M in stocks... you could live off the 401k RMD + qualified dividends from your stock account, while still generating seven figures each year in passive income and paying next to nothing in taxes

[_zman]

Thats true on the Roth IRA (which I do have). My plan for my Roth IRA is to never withdraw from it, as it is the investment any one person can have that will generate them the most return on average (if somebody were to have $1-2M in their Roth IRA, they'd be able to generate more return than if they had the same amount in any stock account, so my logic is to maximize the Roth IRA balance at all times). If I can just use the RMD payment from my 401k (to keep me in the lowest income tax bracket) then any supplemental income can come from qualified dividends/capital gains, which would keep my effective tax rate between 10-15% (compared to ~30-35% now... hence the traditional vs roth 401k argument for me)

As for when I want to retire, I'm not sure. I'd want a large enough investment account (stocks+real estate if I ever get into it) to generate cashflow (dividends, options income, rental income) to cover all my expenses PLUS retirement account contributions... I'd want to keep maxing my 401k/IRA if possible (haven't looked into how this would change without an employer). 401k and IRA are just too good of investment opportunities not to maximize them (in terms of maximizing your net worth)

Some random fun numbers:
Maxing out retirement accounts starting from age 25 until age 65 (I choose 65 because as mentioned above, even if I retire early, I plan to continue to max my retirement accounts)
Long-term return rate: 10% (total return from the S&P 500 over the last 90 years)
IRA: $2.5M
401k (100% equity, no bonds): $8.5M

If you land a job that allows you to max your retirement accounts, pay down a house, and have money leftover for stonks, these are realistic (aggressive) numbers you can build up to. Imagine having a paid for house and another $3M in stocks... you could live off the 401k RMD + qualified dividends from your stock account, while still generating seven figures each year in passive income and paying next to nothing in taxes

Agree on all accounts.

I'll only withdraw from the Roth IRA contributions if I decide to retire early. And I'll avoid that withdrawal at all costs. Just depends how desperate I am to leave the corporate environment.

[Harry362]

Bolded above.



We were a little behind on building, due to permit bs but it shouldn't affect us any. Project should be a cash cow though, we had originally planned to just build it and then sell the whole thing to an investor but with what has happened to the local rental market, we decided to just keep for the long haul.

What state is this? How much did this cost to build?