[ucodegen]

Coronita, I am going to repeat what you wrote;

So long as you have any IRA account including a rollover IRA, you won’t be able to do a backdoor Roth IRA. And you want to do this before the government decides to take away the ability to do Backdoor Roth IRA

My primary point is; Nothing in the Pro-Rata rule prevents you from doing a Backdoor Roth IRA if you already have an IRA. What the Pro-Rata rule affects is the taxation if you are rolling over an IRA or 401k and have mixed pre-tax,post-tax monies in the account. It makes the transfer more complicated (potentially much more). I am going to need to check some claims that an aggregation approach is on all accounts simultaneously is used because that runs afoul of rules for reporting pre-tax and post-tax contribs within IRAs and taxing of such distributions (went through IRS rules, and what I have stated agrees with their statements – screw any CFP that says otherwise)..

My understanding is the aggregation rule applies within the account, not across multiple accounts – which would match how post vs pre-tax contribs are handled within an IRA as well as how distributions are taxed. If an account comprises pre-tax and post-tax monies, it is treated as an aggregate – just like in taking a distribution from that IRA. It is not possible to take a distribution from taxible or pre-tax monies selectively from within an IRA. NOTE: If you have post-tax money in an IRA, you have to do the form 8606, every year… (or should be reporting them). Pre-tax portion of an IRA is withdrawn tax free – but the total IRA is considered an aggregate, so tax is calc’d as a percentage of total funds that have not been taxed. Any growth is considered non-taxed within an IRA even though initial contributions may have been post-tax. (Exception being a Roth).

NOT: https://www08.wellsfargomedia.com/assets/pdf/personal/investing/retirement/taxes-and-retirement/pro-rata-rule.pdf

NOTE: The people claiming the funds of all IRA funds are considered as an aggregate may be mixing up a rule instituted 1/1/2015 that stated for doing rollovers, all the funds are considered as one for the sake of counting the frequency of rollovers – ie: you can rollover from any IRA/401k once in 12 month period, but you can’t rollover from IRA#1 and IRA#2 within a 12 month period, but could rollover IRA#1 and 12 months later rollover from IRA#2.

https://www.irs.gov/irb/2014-16_IRB#ANN-2014-15
https://www.irs.gov/irb/2014-48_IRB#ANN-2014-32

BTW; ran across Roth IRA contrib rules… something brutal for married filing separately.
https://www.irs.gov/retirement-plans/amount-of-roth-ira-contributions-that-you-can-make-for-2023

[ucodegen]

[quote=Coronita]
So long as you have any IRA account including a rollover IRA, you won’t be able to do a backdoor Roth IRA. And you want to do this before the government decides to take away the ability to do Backdoor Roth IRA
[/quote]
That is not my understanding. Checked around, and it looks like you can do the Backdoor Roth when you already have IRAs and Rollover IRAs. You can also do a backdoor Roth in steps. There is no limit on the number of backdoor conversions you do, however there must be a 12 month period between any Backdoor rollover. The tax rules are the same whether you do a Backdoor Roth from IRA accounts or 401k accounts, form 8606 applies. Taxes are required to be paid on any Backdoor Roth conversion because you are converting pre-tax to after-tax dollars. There is an interesting ‘Backdoor Roth’ option, if your employer offers it. If they allow post tax contributions to the 401k, you can put up to $40,500 of post tax dollars in 2022 into the 401k and then roll it over into a Roth. From what I can see, it gets around the contributions income limit on Roth IRA/401k contributions. Its being called a ‘Mega Backdoor Roth’.

As for the original question as to where to put the $12k, I would not put it in the hands of ‘advisors’. Several years back, Warren Buffet put out a challenge to hedge fund money managers that he could beat their returns using just index funds using a buy and hold strategy. While some of the money managers were initially ahead, the end result in about 8 years was that Warren Buffet had convincingly won.
https://www.investopedia.com/articles/investing/030916/buffetts-bet-hedge-funds-year-eight-brka-brkb.asp

[ucodegen]

On an earlier post

[quote=Coronita]https://www.redfin.com/CA/San-Diego/7785-Norcanyon-Way-92126/home/4557024?utm_source=android_share&utm_medium=share&utm_nooverride=1&utm_content=link&2010988919=variant&813945303=variant

G…OOAL…..

1.65m in Mira Mesa. lolol[/quote]
Something is really hinky on this one. Looked at sale history-including pattern of price changes, who owns, tax record.. and records of people involved… Not posting names – but if you know where to look. Names are unusual enough for uniqueness.

[ucodegen]

[quote=Coronita]
Oh, I wish I was kidding. I’m pretty sure that $700 MRI wasn’t the MRI that I need to get…

And I was wrong. $15,000 was what it was maybe a few years ago…
[/quote]
The MRI spec looks the same, the location I visited was different. I had mine in early 2008. Late 2008 was when UCSDs MRI supposedly came on line. Sharp had already had theirs for a while (cost might have been run off). I also think that Sharp was doing MRIs for different Hospitals at the time. Their machine was nearly booked up.

My MRI took a while, they were looking for an obstruction in the biliary tree. There was a sequence of several images using different spin decays and freq. They also used a very large amount of contrast (almost all the machine could hold). Somewhere around in this mess I call an office space, there is a copy of the MRI on CD/DVD. I had asked for the ‘take home package’. ;-P

On my billing, the Physician Services was not done at Sharp, but the actual MRI was.

There is not much difference in type of MRIs. One of the big differences is the physician work on analyzing the image. From a Physics point of view, MRIs are simple.. but the sensing mechanism on them is tricky. Very simply, the MRI pulls all the dipole atoms in the body into alignment, then a perpendicular electro-magnet fires effectively pulling the dipole atoms and causing them to precess within the primary magnetic field (I like to consider it ‘plucking’ the diapoles). The MRI listens to the cacophony of precessing dipoles and figures out where each signal comes from. The pulling magnet is the grid or structure they put over your chest, abdomen, head – or wherever they are sensing (some MRIs have these ‘integrated’ into the MRI). The amount of energy required to pull/tip is why that part of the MRI gets warm during the MRI. The big, main magnet is the doughnut shaped device you are inserted into. It is also the part that makes it dangerous to have metal on you. The coils inside are bathed in liquid nitrogen to get the wiring of the magnet to be a near superconductor. The main magnet is never turned off during the time the MRI is installed. It take a long time to power up (very high inductance).

I do know that what the insurance actually pays, and what the actual cost is varies greatly from what a person’s bill shows. So much for transparency and consistency in medical billing. Current google lookup shows amounts between $680 to $1750 for abdominal MRI.

[quote=Coronita]They generally knock you out so you don’t even remember it, unless you are like me, when you insist you only want to do a light sedation because you want to stay awake while they are doing the lower one because you think it’s cool and interesting…[/quote]
I tend to want to be conscious during a procedure… partially because of curiosity.. and partially because I refuse to surrender my consciousness…

In terms of qualities of doctors/surgeons.. etc I wholeheartedly agree.

[ucodegen]

[quote=Coronita]
MRI is around $15k if not covered by insurance
[/quote]

Seriously??? geesh… welcome to the inflation of health costs!! I had an abdominal MRI done 2007, with contrast. I did ask if I got a discount for cash pay on the spot.. which they said that there was.. and it ending up being just under $700 at Sharp Hospital.

[quote=Coronita]You will not get that much for social security if you retire early. And unless they fix the medicare fund, that might be depleted in 15 years.[/quote]
Last projection for depletion of the SS fund that I saw was 2034. https://www.ssa.gov/oact/trsum/ search on 2034.

[ucodegen]

[quote=Coronita]
I appreciate you sharing this. Quick question. Given how in demand tech workers are these days, have you considered re-entering the workforce as a contractor? Seems like the barrier to entry is pretty low and the numbers are looking really good. If all else on your own terms. Or do you hate bureaucracy that much ? :)[/quote]

I have periodically entertained the idea of re-entering.. but at the same time I do enjoy the current independence. I can get up when I want, go to bed likewise. Pre-COVID, if I wanted to hike a mountain.. I could do it, mid-week if I wanted. The extra free time has allowed me to do a better job on my retirement investments (and allowed me to learn more). My CAGR(Compound Annual Growth Rate) is around 16% for the past 10 years and approx 19% for the past 6 years, at the same time I have been living off the funds. I have also managed to keep the tax exposure low(most assets have been held at least 3 – 4 years), and much of the funds are not in FAANG though I do have some.

I guess you could say my ‘re-evaluation’ of my life’s plans came a few years after being laid off near when I turned 50 (I’m over 60 now). The company I worked for laid off a large group of people including many senior engineers that were core engineers that created much of the company’s IP and products (new CEO). It made me wonder about why sacrifice so much of my life doing work for which the return was not proportionate to the effort. I understood the products and potential future products much better than management but management was pulling in the benefits off of the senior engineers work.. only to ‘dismiss’ the engineers when they wanted to make the ‘financial numbers’ look better.

I initially came back as a consultant. My first work was at my former employer. I also did some consulting at other locations. The pay was ok, but the work was sporadic. This was before the large jump in salaries that occurred more recently. The current market is largely around cell phones, which I find interesting.. but I can’t see myself enjoying doing apps. I find cell phones useful, but they are almost like crack to some people. After working on one of the worlds largest multiprocessor and distributed ‘laser tag’/war games (training system for the US military), doing a game or app for a phone just doesn’t ‘ring my bell’.. neither does working for a social media company(I know how much they can track and how much info they can extract from their clients.. gives me the creeps.)

On you last question

If all else on your own terms. Or do you hate bureaucracy that much ? 🙂

I don’t think its the bureaucracy as much as the type of people that are attracted to it and work in it, particularly at the upper levels. Sometimes I felt like I was dealing with Captain Queeg. I have also come across some of the newer engineers thinking the older people are completely outdated – and ignoring the possibility that the older engineer may have worked on or created the very thing these newer engineers are using on their job or are modifying and that some older engineers might now why something is done a certain way.

I guess the answer came out a bit longer than the quick question. I don’t know if the answer to something like the decision to retire is quick. It was more a weighing of options, looking at how I want to spend my remaining years and deciding to keep my sanity.

[ucodegen]

[quote=Coronita]I am looking at one of my Vanguard accounts I had since 2002. I think it’s the oldest one out of the 26 accounts and it is consistently invested on index funds. Average return has been 7.1%…But there were years that it looked awful, like a deep downturn.
[/quote]
I ran a series on S&P 500 returns from 2000 (because that was a group of 3 really bad years 2000-2002) with data from https://www.macrotrends.net/2526/sp-500-historical-annual-returns and got 5.25% annual – not including dividends received from index during that time. If I eliminate the 3 bad years and go from 2003 to 2021 I get 9.00%
[quote=Coronita]
Personally, that’s what I’m trying to avoid. Those deep downturns don’t matter if you have another 10-15 years to wait it out. But it would suck if you are drawing from it right after a downturn.
[/quote]
Looking at the recent data, recovery from 2000-2002 occurred in 2007, but there was a bad downturn in 2008.. but again recovered in early 2013. This does not take into effect dividends from S&P 500 companies.
[quote=Coronita]
I’ve been talking a lot more with people who are seriously considering early retirement. just thinking….

I guess it’s part of the ongoing The Great Resignation….lol…[/quote]
Resignation to ones fate?? Anyway, I was laid off in 2008, found I was getting seriously low-balled on job offers and then family issues came up. I ended up living off of investment proceeds. When family issues eased, I found that I was making more on my investments than any wage being offered… so I guess I could say I officially Retired with Resignation.. I liked the work, but management tends to drive me nuts. I think I have experienced too many pointy haired bosses (one of them even looked the part)

[ucodegen]

[quote=gzz]ucodegen, using long term US stock market returns has serious survivorship bias issues.

How did Russian stocks do from 1871? Farmland in Poland? Confederate and Third Reich bonds?
[/quote]
It looks like you didn’t read what I referenced in the FIRE group simulation using historical data. You set a choice of investment selection categories and run a historical regression on how those choices would pan out over time.

[quote=gzz]To put it another way, any asset class we have long term historical data on is cherry-picked and better than average, simply because so many asset classes had drastically negative, -100% returns.
[/quote]
Incorrect, only cherry picked asset classes have had -100% returns. Index funds are using large groups that are averaged together. Again, on the ref I had for FIRE and the sim, take a look at what type of asset classes. You can also change inputs and run against multiple simultaneous scenarios.

[quote=gzz]
What number to use then?

In my view, it is mistaken and often hubris to assume one’s investments will do better than treasuries. So about 2%.[/quote]
You should have lead with this. That said, realize that one of the more conservative and yet successful investors is still primarily in stock, less than 15% bonds. The way I look at it is that I am buying part of a business with stock. With bonds – you are buying someone’s debt. You need to make sure that they have means to pay off debt from earnings and not inflate it away(in the case of governments). In the case of corporate debt, it gets paid back from revenue generated by the business and I prefer having the business. The only advantage in having corp bonds would be if the business goes T-U. In that case you have ‘almost’ first order of picking over the bones of that business.

[ucodegen]

[quote=gzz][quote=scaredyclassic]Inflation adjusted?[/quote]

No. But expected inflation is very low too.[/quote]
Here is a historical graph.
https://www.macrotrends.net/countries/USA/united-states/inflation-rate-cpi

Plot the 2% line through the graph.

[ucodegen]

Many points here:
I wouldn’t rely on 4% yield annually. Long term average for inflation is around 3%. Recently it spiked to 5%. From the aspects of the FIRE group (Financial Independence and Retire Early), they use the 4% not as the desired rate of return. It is the rate of draw-down on assets (between 3% and 4% of total value). There are several things that are having to happen in Retirement. You still have taxes (except in the case of Roth withdraws). Withdraws from standard IRAs and 401Ks are taxed as income. Any stock sales you have on your personal account are taxed up to 20% Fed tax and up to 12.3% California state tax(Cap gain is considered income and California). A Retiree still has inflation making things more expensive as you go through the rest of your life (I estimate it as eating away 3% yearly on my purchasing power – note: Normally wage increases offset inflation cost increases.. but now you are Retired…).

Right now, Gov bonds suck on their return, as well as state Muni’s. One of the un-talked about issues of bonds is that bonds can be more volatile than many other investments including stocks unless held until their end date. If market interest rate go up relative to the interest rate on the bond when purchased, the actual value of the bond has to be discounted relative to the yield vs prevailing interest rate raised to an exponent of the number of years left on the bond. This can severely cut into a bonds value if it has to be sold early with a long period left on the bond. This page has an example of the math: https://www.investopedia.com/terms/b/bond-discount.asp

If you want some ‘reasonable’ interest bearing bond-like investments, you might look towards REITs as well as setting up corporate bond ‘ladders’. A ‘bond ladder’ is breaking up the initial investment into segments and then staggering their duration and maturity. This can also reduce the risk caused by increasing interest rates. A simple example would be to build a bond ladder with a 90 day period and 30 day intervals using $90K. This will mean one of the bond groups will mature on each 30 day interval, providing you with access to cash every 30 days. We can consider it as breaking the $90K into three ‘strings’ (I have seen other terms used) of $30K each. Then invest each ‘string’ in the following sequence of durations:

String 1:90day, 90day, 90day, 90day, 90day…

String 2:30day, 90day, 90day, 90day, 90day…

String 3:60day, 90day, 90day, 90day, 90day…

The ‘stutter step’ at the beginning causes maturation of one of the ‘strings’ every 30 days, at which point funds would be available before the balance is reinvested. To ‘rebalance’ just hold over the imbalance from the other ‘strings’ and add it to the balance on the ‘string’ that has a deficit. It is also possible to do the same with 1 year corporate bonds and using 12 ‘strings’. You can go with something like ‘Vanguard Short-Term Investment-Grade Fund(VFSTX)/VFSUX/VSCSX, or a short term bond ETF. NOTE: While Muni’s are state tax free, their yields are currently below 1%. (https://www.municipalbonds.com/bonds/state_yield_averages/) Current Yields on Corporate Bonds are more than 30% higher than that (NOTE:I use the rough percentage of 30 to be able to ‘eyeball’ a comparison between Muni’s and Corp bonds) https://ycharts.com/indicators/moodys_seasoned_aaa_corporate_bond_yield

I did an Excel spreadsheet a while back to calculate (approximately) what an average monthly income someone would have when retiring at a certain age, with a certain amount of retirement investments yielding a certain return and factoring in inflation(some of this part may need work) to show the projected spending power at retirement relative to current spending power. I don’t know if anyone would be interested. I don’t think the Piggington website can have me attach Excel sheets. I would also have to ‘sanitize’ it because I built it to help someone. It uses a bunch of Amortization and ‘Payment’ calcs. As usual, GIGO would also apply. I didn’t put many garbage input checkers.

Here is a retirement ‘estimator’ that uses previous market results going back to 1871 for some data, and 1927 for other under different scenarios. Warning, there are more data entry point than it looks at first. https://www.firecalc.com/index.php?FIRECalcVersion=3.0&

[ucodegen]

[quote=Coronita]Stealing this post from you, AN…

But I agree… $4000/month for a 1400sqft in Mira Mesa is insane..

https://www.zillow.com/homedetails/7368-New-Salem-St-San-Diego-CA-92126/2068740702_zpid/%5B/quote%5D
The inside is nice, and having what looks like a canyon view is also nice.. but 1400sqft for $4000/mo is a little steep right now. I think they may have to come down a bit.

I have seen 2100sqft upgraded houses(interior redone) rent at $4000/month. That is 50% more space for the same price.

Now, in a year – who will know which way it goes. At this point I think the whole economy etc. is turning into a crap-shoot.

[ucodegen]

[quote=XBoxBoy]Had the plumber out, expecting to replace the water heater. He took one look at it, and said that some of these heaters have balls in them right where the water comes in and where it goes out. That he would remove the balls and that it would be fine. And sure enough in an hour we had hot water flowing out of the hot taps as fast as cold water will flow.

I’m not really sure what he meant by balls in the water heater, I’m thinking he meant filter screens on the intake and outtake. Or possibly one way flow valve. Either way, removing these balls freed up the flow.[/quote]

Couldn’t resist – https://www.youtube.com/watch?v=1ptiDjFNaXQ

Anyway, here is info on the balls:

Water Heater Heat Traps – Do They Work?

They are probably heat traps that prevent convective flow of hot water out of the water heater. They usually don’t cause flow problems, and do prevent loss of heat from the water heater. I think the one in my water heater are actually teflon reed valves, not balls. The heat traps in your water heater may have been damaged over time, possibly calcium buildup.. I didn’t see them, so I can not answer this. Did your plumber bend the flex pipe into a ‘gooseneck’ shape? Kind of like an upside-down ‘P’ trap? That shape also helps prevent loss of heat through convective flow within the pipes connected to the water heater.

[ucodegen]

Right off the bat, the problem is not the pressure release. This only vents pressure should the pressure get too high or temp gets too high. It does not affect outflow to the hot water lines from the hot water heater (not attached to the out-flow line) see: http://theplumbinginfo.com/water-heaters/

If it was the water heater, it would be a constant slow flow, and possibly lower capacity in terms of hot water (ie: a 60gal hot water heater acting like a 40 gal hot water heater). It would also be slow heating of water within the water heater.

This sounds like something constricting as it heats up… after cooling it flows normally till it heats up again.

What type of pipes are in the house? I am almost suspecting old galvanized steel pipes. Copper pipe tends not to get calcium buildup as it ages, I am not certain of PEX, but I do know that old fashioned galvanized pipe does clog up with calcium deposits and most San Diego water can be ‘bounced off the floor’ because of the hardness (calcium and minerals within the water). The flow drops because the deposits expand as they warm up… closing any tight opening. Another possible is the valve itself.. Have you tried the hotwater from any other outlets? Do they have the same response (reduction to a dribble as the water at the tap gets hot)?

[ucodegen]

[quote=gzz]The photos made me dizzy. Why is the front door tiny and open to a long thin corridor?[/quote]
Those are normal corridors (fire/building code mandates it). I have noticed that realtors are really pushing the rectilinear wide angle lens boundaries to the ‘max’. This distorts the center field making it look deeper but the side effect is objects in front might also look narrower/smaller.

In other words, the use of the wide angle made the hallway look longer than it really is, but also makes it look narrower. Those floorboard are probably around 8″ wide, I count 7 (almost 8) across at the narrowest. That makes the opening at the narrow portion 56″ to 64″. If the boards are 6″, the opening is 42″ to 48″(which would be a little narrow – but not as narrows as one’s impression looking at the photo). The door is 6.5 boards wide; at 8″ makes doorway 52″, 6″ wide boards make it 39″(min entry door size by code is 36″). The cropping also doesn’t help.. opening up the photo to full size looks better.

From the outside, the photo of the front door is odd – it is offset from the arch in front of it. (feng shui? to prevent evil energy from entering?? dunno)

That semi room at the side (dining room?) with the chandelier is a little odd. You can see how from one view, it looks really long and narrow, but the photo that is about 30 degrees oblique, it does not look so deep.

On the outside(back yard) on edge photos, you can see how the building looks like it might be 50 to 70 feet on the edge.. but may actually be about 30 (see straight on photo).

The down the edge photo of the kitchen (2nd photo) really shows it.. and you see that the far wall looks like it is over in their neighbors back yard..

I have a 12-24mm lens that creates this type of effect. Good for some landscape, but you have to be careful of side effects for interior.

BTW: the 3D home views are even more distorted..

[ucodegen]

[quote=Snick]Financial news may be a tool to induce churn. The more sales, regardless of the reason, results in more commissions. Similar to real estate.[/quote]
I don’t know if the actual intent is to induce churn, though the results are often churn. There are multiple forces at work. There are purma-bulls and purma-bears each wanting to voice their opinion/get their name in the paper. There are hedge fund managers trying to move the market (down so they can buy in, higher so they can sell out) by ‘leaking’ misleading info to reporters who really don’t do any research. The result though of all of this and people with poor long term memory – is churn. These days, there are not many commissions on stock transactions and what commissions there are, are very small. The bid/ask spreads are also much smaller. In the early ’80s, to sell $100K of stock would mean commissions of around $1,000 (1%). Bid/Ask spreads were 1/4 to 1/8 a point at best – more often 1/2 a point ($0.25 to $0.125 a share, more often $0.50/share). As a result, there is not too much profit in ‘churn’ itself. There is more profit in short term manipulation.

I do check daily, but only very quickly. I have a file ( *.txt or *.docx.. etc) that I have notes for everything I currently hold and currently am watching and what my plans are for that issue(stock/mutual fund/etc), as well as what to look out for. I review the prices, news, etc with that note file open and cross-checking notes. I avoid most news that are not releases from the company I have invested in. Max time is about 1 hour, average about 10 min or less. Then I log out and close the file … and fuggetaboutit. No point in getting stressed out on anything I can’t do anything about.

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