Someone please blow a hole in this idea

[Pucky Freak]

Do you work with an advisor? If not, I would recommend you consider it.

My takeaway would be this is the type of situation in which they really earn their money. This would actually be a great interview question for them: if their answer is “I honestly don’t know but we work with an awesome accountant, let me check” they might be a keeper.

I’ve interviewed 3 locally so far. When I get into the finer points of tax shelters they glaze over. I’m wondering if I would have better luck interviewing CPA’s instead.

 

[schmalts]

Also, when you convert to a Roth, I think you have a 5yr rule that would make it untouchable without penalties.

correct, conversions are subject to a 5 year rule. however I am not sure it that rule changes or void after a certain age as I thought there was something about that.

 

[schmalts]

I’ve interviewed 3 locally so far. When I get into the finer points of tax shelters they glaze over. I’m wondering if I would have better luck interviewing CPA’s instead.

a red flag with me is when you get them for an interview and they never bother to ask or look what percentage of your account is ROTH. I actually called out the last adviser on that and he admitted yes that since my 401k is over 40% ROTH it opens up a lot of extra strategies. Not to mention that worrying about running out of money is impacted as well. If I need to supplement my pension with 50K spending money from 401K, I just take out 50K instead of having to take say 70K because taxes on the withdraw

 

[Bonasababy]

Assuming that I do not change my career that I began in 2009, I can retire in 14 years at age 55 and collect a pension. Assuming the 6% cost increase per year in health insurance continues (non-compounding), a 22k annual health insurance "gold" plan in 2024 would rise to 42K by 2039, and 55k after another ten years, at which point Medicare would kick in.

Rather than pay well over 50% of my annual pension income towards health insurance premiums, opt for the lump sum payment in lieu of a pension and roll into a traditional IRA. Then, live off 457(b) and Roth distributions for a decade to have a MAGI of $0 and qualify for zero cost heath insurance.

With my current chronic health conditions I would pay the least total amount on healthcare under a gold plan vs. a silver or bronze plan with lower premiums. Health care sharing plans are an option too, with chronic health conditions being the most likely disqualifier.

Personally not a fan--because you are trading a known fixed and guaranteed return for one that has risk.

Been through a lot of retirement planning discussions. Every one of them starts with valueing SS and Pensions highly as guaranteed income--with a COLA--that should be preserved. If at all possible a good goal is to be able to get by on the Pension and SS and have additional income from retirement plans be your money that allows you to live the way you want.

If I were you and you have 14 years to go I would invest in an HSA or HCSP if either is available to you (the latter you generally can't adjust contributions the former you can) so that some of the high cost of insurance pain can be covered if you retire early.

And it is high--we had enough money for me to retire at 62--if not for the high cost of health insurance until I turn 65. Waiting until at least 64 now as each month retired before 65 is costing us $2400 (after 65 it drops dramatically of course). Didn't help that my wife insisted at retiring before I did--in her defense health concerns were shoving her that way anyway.

 

[Bonasababy]

Another tidbit to add--no one has a crystal ball, but we can make assumptions.

One assumption I would make is that if anything there will be more disincentives to retire early coming than we have ever seen before.

Why?

Simple work force demographics.

We are looking at a future with far few workers available for the jobs that are needed. Investing in automation-- and AI-- and more government incentives or support to have children-- and stopping the hard line on immigration (which ironically is BADLY needed to help this situation just to maintain let alone grow the US economy) can help some, but the realities are the scale of this need is going to be hard to achieve.

Put another way, employers will not want you to be able to retire early. If anything the reverse will be true.

 

[SAJ-99]

A DOGE employee getting a Tesla worker back to the plant...

 

[The_Jim]

I’ve interviewed 3 locally so far. When I get into the finer points of tax shelters they glaze over. I’m wondering if I would have better luck interviewing CPA’s instead.

Not sure if this applies to you but I was never happy with the financial advisors in my small town. I ended up finding one in Omaha I am really happy with.

Might be worth looking outside of the local guys.

I do think you need a combination of a good cpa and a good financial advisor.

 

[Bob-WY]

I’ve interviewed 3 locally so far. When I get into the finer points of tax shelters they glaze over. I’m wondering if I would have better luck interviewing CPA’s instead.

You absolutely need one that understands tax implications. Ive been working with mine for close to 25 years. We are now at the fun stage where his variety of investments is getting me what I need while keeping taxable income low enough to take advantage of ACA

I suggest finding an independent one, not one from a major house. Mine is both CPA and certified investment and retirement planner

 

[Bonasababy]

a red flag with me is when you get them for an interview and they never bother to ask or look what percentage of your account is ROTH. I actually called out the last adviser on that and he admitted yes that since my 401k is over 40% ROTH it opens up a lot of extra strategies. Not to mention that worrying about running out of money is impacted as well. If I need to supplement my pension with 50K spending money from 401K, I just take out 50K instead of having to take say 70K because taxes on the withdraw

Might that be because of the total amount you have vs need? Running out of money CAN be an issue with Roth.

Not saying this is you, but I see lots of people overly focused on Roth to their overall goal detriments. Am sure most financial planners do as well.

Say you need a million to reach your goals, but you kicked so much into Roth you only have 2/3's of that--and you want all your future money to go into Roth because of what some talking head or internet expurt says (realize that may well not be you just trying to frame what it might look like from their standpoint}.

I had an advisor recommend we start a rapid process of conversion into Roth right before covid hit. I wasn't keen on it but asked around. My accountant not only said no but H#LL NO! Had we done that we would have taken a hit and had to put off retirement for many more years versus being able to retire about when we want. We aren't paying a huge tax bill--actually it will be quite a bit less than when were working.

Some Roth for everyone is wise, if you can hit your goals AND contribute some to Roth sure go ahead and do that--but we know from the reports on how such a huge percentage of people out there have way less than they need--and I submit that such people would likely be better off not having a huge percentage go to Roth--if doing so means many more years to hit goals for retirement.