It's hard to believe the day is halfway over! Thank you to our most recent group of NAPFA advisers.
Jean, to continue the prior response, how did you feel during the market soon after the Brexit vote? Instinct usually tells us to be defensive and protect what we have. Doing so would have caused you to miss a substantial recovery. If you had in fact gone to cash, do you think you would be able to reinvest at higher levels.
Joining us now will be Mark Wilson, Michael Gibney and Adam Leone. Welcome!
I am not aware of a reason but it is likely a futile exercise to look for reason in the tax code. Are you still working? If not, is you 401k plan more attractive than a self-directed IRA? Depending on the amount you wish to donate, this might tip the scales towards a rollover or a partial rollover.
Andy, the "4% rule" isn't much more than a very rough rule of thumb. There have been many studies that come up with slightly different results but most of them to not address the tax characteristics of the funds you are withdrawing. As you are aware, $40k from an IRA is not that same as $40k from an atter-tax cash account.
Gene, we are advocates for a diversified allocation across all market environments because it is exceedingly difficult to time the changing trends.
International stocks would have carried your portfolio during the 2000's but US stocks have been the leaders for the last several years. US stocks have felt richly valued relatively to International stocks for several years but nobody knows when the trends will change.
Brirt, I don't know of any books but that fact that you are thinking about it must be a good sign. Try to set new defaults for yourself; if you usually charge everything, try leaving your credit card home or simply hide it somewhere in your wallet so that you have to think a second longer before taking it out. If you spend cash too easily, set a budget and take out a specific amount each week or month. If you have $100 for the week, it may be easier to control your spending if you can see the physical money dwindling.
Eric, Hybrid policies can be tricky. The ones I have looked at could generally be described a compromise between life and LTC insurance. They are not the best option either need but if there are two needs and only enough premium to cover one, they can be appropriate. They are tricky to understand and compare so be sure to work with an agent or advisor you trust and ask lots of questions.
Eric, The articles will be helpful and my best advice it to work with an advisor or agent you trust. First try to define your goals and needs, then start to compare products.
Suzanne, is social security the $1k/month? If not, how much is your ss benefit?
Suzanne - Comfortably retiring is all about spending. I'd recommend you do a little work to figure out what you'll need to cover your monthly financial needs and wants. Compare that to the amounts you are receiving from your Social Security and pension to see what your investments have to generate. You can then see if you are on track.
Jerry, They will very likely be taxable if they are received while you are a resident of that state.
Jerry - (I'm not a tax professional, but...) You will pay state taxes when you become a permanent resident of a state that has income taxes.
Brad - If the RMDs will be used to cover your monthly spending, I like the "1/12 draw plan." If the funds are going to be resaved, November/December draws make sense to keep the tax deferral going as long as possible.
Jeery, all I can tell you is what I've read. Social security income in Washington is not taxed but withdrawals from retirement accounts. I couldn't find a quick answer on pensions but here is the contact info for the Oregon Dept of Revenue 800-356-4222 firstname.lastname@example.org
Brad - Withholding from your RMDs is generally less painful than writing estimated tax checks.
Good afternoon. I'm Bobbie Munroe, a NAPFA registered fee-only advisor. I'm looking forward to answering your questions this afternoon.
Good to "see" you Bobbie!
Hi Kyle -- The queue is pretty long, but we're working to get through as many questions as possible.
George - You are considering trying to time the market... a great strategy IF IT ACTUALLY WORKED. "The market timing Hall of Fame is empty." I'd recommend you look at how much you have invested in stocks/bonds/cash and change your allocation to one that is appropriate for your age, risk tolerance and goals. For example, you might target 40% in stocks and 60% in bonds/cash - if you are not there, change now. There are folks that have waited for a 20% pullback for five years and left a lot of gains on the table.
George, " However just in the last year there were two large drops ( aug 2015 and Jan 2016) which recovered in full." Exactly. And just since the beginning of the year which started horribly with BREXIT to follow in June, people who have stayed the course are probably up 5-7%. So your head understands the truth of it but you know your heart will hurt if you suffer a big loss. That is why it is so hard to do the right thing after a big drop. The question is how much do you NEED to make on your money to have the lifestyle you wish. I tell people why take any more risk than they need to to have everything they want....within reason of course. A financial planner could really help you answer this question.
Ed - Social Security makes adjustments for non-covered pensions. It sounds like you will be impacted. A visit to your local Social Security office (with an appointment) might be a good idea.
Bonnie - Find a fee-only advisor (www.napfa.org) that can work with you on an hourly basis to answer your questions, set up a spending plan and help you allocate your investments (in your best interest).