Nope -- We're just giving the advisers the chance to answer thoroughly!
Therese, love your comment re hobbies/part-time work. They can make a big difference both mentally and financially as you point out.
Thanks for joining, Lloyd!
Patricia -- It will show the adviser's name and photo.
Maria, you and your husband will have to start taking required minimum distributions when you are age 70.5 and you will pay taxes on those distributions. Any remaining amount that is left to your children when you die will have to be taken out over their lifetimes (they cannot wait until age 70.5) and will be taxed. IF (and only if) you are planning to leave some money to a charity, I strongly suggest carve out that amount into a separate IRA and name the charity as the beneficiary as they will pay little if any taxes on the distributions. Then leave the funds in taxable accounts that you were going to leave to the charity to your children instead.
Salvador congrats, I am not sure what options your plan has for investments. At 64 I believe you need some exposure to a more diversified fund to temper inflation etc. One of the thing that you need to understand is that you will probably need money for another 25 years. If this is all the funds you have and assuming that you will be taking SS soon you may want to carve out pieces and allocate it amongst different categories depending on your needs. An advisor may be able to tell you whether its better to do a rollover depending on whether the Entity you worked for is a TAx exempt entity or a Government Entity. LTC is extremely important in your retirement strategy. You should talk to someone soon about that as the longer you wait, the more costly it becomes Most LTCI policies will let you select the amount of your coverage, typically running anywhere from $60 to $150 or more per day. Make sure it has an inflation rider. When buying your policy, you may want to choose the longest period your money can buy. LTC should be priority in your planning. I suggest you meet with a fee only advisor to guide you at thus critical stage
Hi Mike T -- Deb actually signed off for the day. Could you resend the original question so one of the advisers can tackle it.
Collin: REITs are preferable in retirement accounts because 75% of income is paid to shareholders, if the REIT wants tax preference. Therefore, the REIT is an inefficient asset class and the after-tax return will be greater for you if the REIT is in a retirement account. Try to use global REITS for diversification.
Molly -- We have you now :)
Hi Sam. Makes a lot of sense to make a plan for when your wife might be managing the finances on her own. I can't give specific investment advice on this call, but an asset allocation fund (a fund that holds cash/bonds/stocks in a diversified portfolio and rebalances back to a stated target) like the Vanguard Lifestrategy series, is a great option for people who basically want to set-it-and-forget it. The usual principles of investing apply: select an asset allocation that's consistent with your (and her) risk tolerance, your time horizon for tapping the funds, and your required rate of return. And pause to think about a single mutual fund in a taxable account; if you decide you don't like it, you have to sell the whole balance and incur whatever capital gains that generates!
Hi Ric T: to clarify -- you are taking your pension as a lump sum, rolling it to an IRA, and you're asking how to invest it? Or how to invest pension checks you don't need?
Larry: why pay the mortgage off with such a low rate? Are you benefiting from a tax deduction? If so, talk to your CPA if you should do it. If not, then question is - are you getting a better rate of return on your investments than you are by paying 4.25%. I imagine that your liquid savings is not paying much, this is an option but by paying off the $33k are you depleting your savings to un uncomfortable level. Finally, if you withdraw $33k from IRA, are you creeping up to the next tax bracket. I suggest asking your CPA for assistance. But, if you have ample reserves (liquid savings for 1 -1.5 years if retired and 6-8 months if working)
and only receiving .5% or 1% and your are not getting a tax benefit, then I would pay off the mortgage with savings.
Bayem Good question. Managing investments gets very complicated when you have it all over and funds have certain built in feature where the underlying securities are held by a custodian to help protect the investor. Many brokerage service also has SIPC coverage up to 500k and beyond sometimes to protect you. The best approach for the average investor is to have a brokerage fund and design an allocation across multiple asset classes and then select the funds to match your objectives. Once your funds are regulated, you should be more concern about the asset classes. If you get that down first then you can probably diversify across four or five funds . I do not have a rule of thumb so to speak
Hi Trecia: Way to save like crazy! I don't know the rules about naming non-US citizen/residents as IRA beneficiaries -- either the tax impact, or custodian rules. For the latter, start by talking to the retirement planning department of each institution where you have funds, and ask them the specific question of what info they need on the beneficiaries, and how they would handle the distribution at your death. An estate planning lawyer with cross-border experience would be helpful here. Any other advisor on the call have any resources for Trecia?
Molly - correct you will be taxed on your earnings and income on a LIFO basis.
Pres, hang on as this can be complicated. If you do NOT have a traditional IRA with deductible contributions, you can make non-deductible contributions to an IRA and then convert them to a ROTH. There is no tax on the conversion as the contribution to the IRA was not deductible. THIS DOES NOT WORK THIS WAY IF YOU ALREADY HAVE AN IRA WITH DEDUCTIBLE CONTRIBUTIONS IN IT. For instance, if you have 95K in an IRA that was deductible and you make a 5K non-deductible contribution, when you convert $5K to a ROTH you WILL pay taxes on 95% (95K deductible contributions/100K total value) of the converted amount. Opening a separate IRA for the non-deductible contributions will not avoid the tax as you have to make the proration based on the value of all of your IRAs totaled together. IF you are still working, you can roll your current IRA with deductible contributions to your current employer plan. Then, as you have no deductible contributions in an IRA, the strategy would work and the conversion would be tax free.
Bobintexas, here's our retirement calculator, which Therese mentioned. Plus, you might consider these costly retirement surprises. Good luck!
Hi Sam. Makes a lot of sense to make a plan for when your wife might be managing the finances on her own. I can't give specific investment advice on this call, but an asset allocation fund (a fund that holds cash/bonds/stocks in a diversified portfolio and rebalances back to a stated target) like the Vanguard Lifestrategy series, is a great option for people who basically want to set-it-and-forget it. The usual principles of investing apply: select an asset allocation that's consistent with your (and her) risk tolerance, your time horizon for tapping the funds, and your required rate of return. And pause to think about a single mutual fund in a taxable account; if you decide you don't like it, you have to sell the whole balance and incur whatever capital gains that generates!
