401ks bad?

[svelte]

[quote=scaredyclassic]

Well, yeah, i should appreciate my tiny success. But i dont. It was way more fun to be young, stupid and broke and see so much potential than to be old and narrow with a cash buffer, but to have eaten the bitter truth.

. I used to blow $$$ on a housekeeper 20 years ago and we were broke. I was an idiot. I even had my shirts pressed at 2 bucks a pop. No way in hell nowadays.
401k? Haha! Why?

Its difficult for me connect my current self with the blithering young idiot who HAD A BALANCE ON hiS CREDIT CARD.
[/quote]

Sounds like you’ve went from one extreme to the other.

Here is what I’ve done:
a. Calculate how much money we’ll need monthly in retirement
b. Calculate how much money I need to save to reach that goal
c. Put back enough each month to reach the amount saved goal when we retire
d. Spend the rest!

We’ve had someone come in once every 2 weeks to clean the house for 30 years, to mow the lawn for 20. We work hard during the week, I feel we deserve to use our weekends for enjoyment, not more labor.

As far as possessions go, we are pretty close to where we want to be. I can only think of one more big purchase we want to make, after that the only semi-major expense will be vacations. Some people buy vacation homes, I don’t give a sh!t about that…I like going to different places each vacation, not the same place. I would find that as boring as staying home, frankly.

I’ve seen too many friends and relatives save like mad and not spend anything, banking on retirement. Then they die before reaching retirement. I’m not going to be one of those people who didn’t get to enjoy life along the way. I decided that a long time ago.

It is getting close to the point where we’ll have excess cash each month, and that may be the time I need to evaluate whether going part-time may be a better option. We’ll see. Life throws us a curve ball every few months. I may never get to the point of going part time, and that’s fine. Roll with the punches.

[svelte]

Throwback: Now that I can’t go to the gym, I’ve been setting up a mini-gym out back. Last week I bought a six pack of Heineken to drink one a night as I exercise. When I get to the bottom of the Heineken, exercise is over. It’s a carrot to keep me exercising.

It’s also a throwback – when we were young and broke our one splurge was a six back of Heineken a week. Didn’t cost a whole lot, but it made us feel like we were worth something. The brain is a mysterious thing.

Yesterday I went to the fridge to get my Heineken for the night – there should have been 2 left. But there were none. ?

My wife, who drinks wine exclusively now, drank them. I guess she was feeling nostalgic also.

[scaredyclassic]

yeah, we should have a housekeeper. this is too much.

however, as to a., b., c., and d. that you describe above, I dispute that there is any way to know what those numbers are.

[Coronita]

[quote=scaredyclassic]yeah, we should have a housekeeper. this is too much.

however, as to a., b., c., and d. that you describe above, I dispute that there is any way to know what those numbers are.[/quote]

Look at it this way. There’s a lot of people out of work these days. When you hire a housekeeper, a gardener, or buy some takeout food, you’re either creating a job for someone or helping someone keep theirs.

[scaredyclassic]

[quote=Coronita][quote=scaredyclassic]yeah, we should have a housekeeper. this is too much.

however, as to a., b., c., and d. that you describe above, I dispute that there is any way to know what those numbers are.[/quote]

Look at it this way. There’s a lot of people out of work these days. When you hire a housekeeper, a gardener, or buy some takeout food, you’re either creating a job for someone or helping someone keep theirs.[/quote]

that kind fo thinking doesn’t help me part with money. I also rarely feel I get the value in kind for what ive paid. in fact, very very few things seem worth the money.

oats are worth it.

my washing machine.

my house.

fresh fruit.

that’s about it.

[ucodegen]

[quote=Coronita]
Why is it this complicated, I have no idea… But again, yes another first world problem.

Morale of the story. If you want to do a backdoor Roth IRA, don’t ever rollover a previous employer’s 401k account into a IRA… Either keep the 401k or roll it into your existing employer’s 401k plan.[/quote]
It is still possible. What you are referring to is called the pro-rata rule. It is not too bad if you ONLY put pre-tax money into IRAs. It gets messy when you have both pre-tax and after tax IRAs. — basically it is an attempt to screw those that put money into after tax IRAs… and prevent people from rolling the after tax contributions only into a Roth.

See pro-rata rule:
https://www.nerdwallet.com/blog/investing/backdoor-roth-ira-high-income-how-to-guide/

[sdrealtor]

Svelte
Thx for the well wishes. Some great stories and I agree that at this point life is about sharing great experiences rather than accumulating more possessions ad infinitum. Last night I disposed of several great bottles of wine with some friends in the driveway at my weekly Wine Wednesday happy hour

[plm]

[quote=ucodegen][quote=Coronita]
Why is it this complicated, I have no idea… But again, yes another first world problem.

Morale of the story. If you want to do a backdoor Roth IRA, don’t ever rollover a previous employer’s 401k account into a IRA… Either keep the 401k or roll it into your existing employer’s 401k plan.[/quote]
It is still possible. What you are referring to is called the pro-rata rule. It is not too bad if you ONLY put pre-tax money into IRAs. It gets messy when you have both pre-tax and after tax IRAs. — basically it is an attempt to screw those that put money into after tax IRAs… and prevent people from rolling the after tax contributions only into a Roth.

See pro-rata rule:
https://www.nerdwallet.com/blog/investing/backdoor-roth-ira-high-income-how-to-guide/%5B/quote%5D

Are you sure this is right, I read the link and it seems to me that the problem is if you have an IRA of pretax money (like converting from a standard 401k) It’s just too complicated.

[svelte]

[quote=scaredyclassic][quote=Coronita][quote=scaredyclassic]yeah, we should have a housekeeper. this is too much.

however, as to a., b., c., and d. that you describe above, I dispute that there is any way to know what those numbers are.[/quote]

Look at it this way. There’s a lot of people out of work these days. When you hire a housekeeper, a gardener, or buy some takeout food, you’re either creating a job for someone or helping someone keep theirs.[/quote]

that kind fo thinking doesn’t help me part with money. I also rarely feel I get the value in kind for what ive paid. in fact, very very few things seem worth the money.

oats are worth it.

my washing machine.

my house.

fresh fruit.

that’s about it.[/quote]

If having money makes you happier than spending it, then by all means hold onto money! Its not about doing what I, flu, your financial advisor or anyone else says – it is about doing what makes you happiest.

Only you can know what that is.

Agree that there is no way to definitively know what the proper figures are for a, b, c, and d. Life is a gamble! Figure out a best and worst case! Determine what worst case you could live with if it should happen and make sure you’re north of there! Over estimate how much you’ll need!

Or just sit on a big stash of money if that makes you happier. But as you’ve already expressed, that also causes you worry as to the best way to hold onto it.

Ya gotta place your bets somewhere! In the meantime, life is what happens while you’re busy making plans.

[scaredyclassic]

yep.

my wife already told me she’s going to spend money like crazy if i die, so i might as well spend it now, she says.

could be she’s just saying that to screw with my head. i can hardly believe she’ll be blowing money. but maybe she will. buying up real estate. getting a donkey. travelling.

id prefer my wife and kids spend the money than me, esp. if i were dead, since dead men spend no cash. it wouldnt be my problem at that point. seems so relaxing, not to have to think about such things. death means never having to worry about late fees. your investment horizon is zero or eternity, same difference

[svelte]

It’s almost like you watched this video before creating this thread.

[ucodegen]

[quote=plm][quote=ucodegen]
See pro-rata rule:
https://www.nerdwallet.com/blog/investing/backdoor-roth-ira-high-income-how-to-guide/%5B/quote%5D

Are you sure this is right, I read the link and it seems to me that the problem is if you have an IRA of pretax money (like converting from a standard 401k) It’s just too complicated.[/quote]
Yes, I am quite sure it is correct. You can have an IRA funded with pretax and post tax income (not a good idea to mix, but you would be responsible for tracking the amounts – IRS form 8606). Coronita is right that the withdraw from IRA portion of the Roth rollover is treated as a distribution. The tax basis has to be calculated. If the money was placed into the IRA post tax, the basis/initial funds are not taxed on withdraw.
See also: https://rodgers-associates.com/newsletters/how-to-avoid-being-double-taxed-on-your-after-tax-ira-contributions/

[plm]

I think I understand now. It is possible to do the backdoor Roth IRA but its most likely a bad idea because you have to pay taxes on a portion of any pretax IRA so it is no longer free of taxes doing the backdoor roth.

This is what I found from https://www.kitces.com/blog/how-to-do-a-backdoor-roth-ira-contribution-while-avoiding-the-ira-aggregation-rule-and-the-step-transaction-doctrine/

The IRA Aggregation Rule Under IRC Section 408(d)(2)
The first caveat to the backdoor Roth contribution strategy is what’s called the “IRA aggregation rule” under IRC Section 408(d)(2).

The IRA aggregate rule stipulates that when an individual has multiple IRAs, they will all be treated as one account when determining the tax consequences of any distributions (including a distribution out of the account for a Roth conversion).

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