Retirement... (i.e. what are you going to be after you've grown up)

Cutlery · 2025-08-13T09:37:48-0400

Haus said:
And here's another area of Retirement stuff I don't have near enough knowledge on. I need to learn how IRAs work as you're the third person to mention how self guidance through one is better, and I was unaware I could roll my 401k into one.

My 401k has a 9.5% rate of return this year.

SPLG is up 18.6% in the last year.

I was thinking about increasing my 401k contribution but it's fuckin pointless to contribute beyond the match to that horseshit plan that they've charged me $30 this year so far.

Every time a financial fuckwad at work emails me about talking about my 401k plan I ask them why the fuck they can't outperform a basic etf and charge me for the privilege. Conversation never continues past that for some reason.

Gravel · 2025-08-13T09:48:44-0400

Haus said:
And here's another area of Retirement stuff I don't have near enough knowledge on. I need to learn how IRAs work as you're the third person to mention how self guidance through one is better, and I was unaware I could roll my 401k into one.

Really just think of there being 3 paths.

Tax deferred - This is 401k's, TSP's, and Traditional IRA's. You're deferring the taxes on normal income (lowering your taxable income) and then pay tax on it when you withdraw in retirement.
Tax advantaged - This is the Roth option. Whether it's a Roth IRA or Roth 401k, you're paying the tax up front and then your gains at withdrawal are tax free.
Normal tax - This is taxable accounts. You buy stock with earned income you already have, and it's subject to normal capital gains rules.

Anything within a category is transferable (really this only applies to the traditional and Roth paths), because you're not changing the taxable rules on it. Buying individual stocks or a fund is irrelevant to how its taxed.

Furry · 2025-08-13T10:00:10-0400

You can roll 401k into a roth IRA. When I retire early, my plan is to live off my normal investments, and roll about 40k a year from my 401k->roth IRA.

It's a tax mitigation strategy that is very worthwhile if you have years where you are making very little on paper. Roth IRA is 10000% worth it. If you don't have one, even if you are poor open one up right now with 100$ to start the 5 year rule.

Deathwing · 2025-08-13T10:01:24-0400

Up until this point, I've just been taking advantage of employer match into a 401k or SEP IRA. We have no debt besides a mortgage and way too much in savings, so I think it's time to start contributing more. Is it correct that there are yearly contribution limits to tax deferred retirement accounts and that this limit is separate from the yearly contribution limit to tax advantaged retirement accounts?

moonarchia · 2025-08-13T10:06:46-0400

Deathwing said:
Up until this point, I've just been taking advantage of employer match into a 401k or SEP IRA. We have no debt besides a mortgage and way too much in savings, so I think it's time to start contributing more. Is it correct that there are yearly contribution limits to tax deferred retirement accounts and that this limit is separate from the yearly contribution limit to tax advantaged retirement accounts?

Yes, there are limits to how much you can put in directly from your paycheck pretaxed. And the employer matching. Individual is 23500, self and employer is 62500 according to google.

Khane · 2025-08-13T10:09:28-0400

Gravel said:
This is what I love about investing. People think the returns are crazy when really they're average.

CAGR of the market for 150+ years is about 10%. This period isn't special.

CAGR of the Stock Market: Annualized Returns of the S&P 500

Well, yes but for instance I did not start heavily investing until the 2015/2016 time frame because I was in college during the dotcom bust and can remember it and then I was very early in my career during the housing crisis. I did NOT trust Wall Street at all as a late 20s/early 30s "yuppie". So in my adult life we had 2000-2012 which was one of the worst stretches for the S&P ever and then we had 2013 until now which is the first experience a lot of us have had as adults with investments in the actual market.

And before 2015 it wouldn't have mattered what anyone told me about the history of the S&P and its returns I was having fucking none of it (for good reason based on what had happened during my adult life)

Deathwing · 2025-08-13T10:15:48-0400

I still don't trust Wall Street. Not nearly enough people were punished for 2008.

It's hard to wrap your head around the "value" Wall Street provides even though we're kinda sorta discussing the very thing in this thread.

Gravel · 2025-08-13T10:25:46-0400

Furry said:
You can roll 401k into a roth IRA. When I retire early, my plan is to live off my normal investments, and roll about 40k a year from my 401k->roth IRA.

It's a tax mitigation strategy that is very worthwhile if you have years where you are making very little on paper. Roth IRA is 10000% worth it. If you don't have one, even if you are poor open one up right now with 100$ to start the 5 year rule.

This is true, but you have to pay taxes on it as if it were earned income.

You can get around this if you're someone like me who minimizes their annual spend. You can do a rollover of the standard deduction from tIRA to Roth IRA and pay $0 on it. After 5 years it's considered principle and you can then withdraw the rollover amount tax free (the gains on it are still subject to the age restrictions though, so can't touch them until retirement age). This is where I've mentioned a few times over the years fucking up my calculation and getting hit with a big tax bill. Next year will be the first year we can withdraw from our conversions.

The whole thing is called a Roth conversion ladder in the FIRE community.

Gravel · 2025-08-13T10:28:15-0400

Deathwing said:
I still don't trust Wall Street. Not nearly enough people were punished for 2008.

It's hard to wrap your head around the "value" Wall Street provides even though we're kinda sorta discussing the very thing in this thread.

You mistrust an institution, but fail to understand what a stock is.

All you're doing is buying ownership in a company. Do you think the concept of buying ownership in a company is bad? Then sure, don't buy stocks.

Ignoring the trading aspect of a stock, the reason stocks go up is because the companies are theoretically passing on the earnings of the company to the owners. As long as businesses are in the business of making money, stocks go up.

Furry · 2025-08-13T10:31:43-0400

Gravel said:
This is true, but you have to pay taxes on it as if it were earned income.

You can get around this if you're someone like me who minimizes their annual spend. You can do a rollover of the standard deduction from tIRA to Roth IRA and pay $0 on it. After 5 years it's considered principle and you can then withdraw the rollover amount tax free (the gains on it are still subject to the age restrictions though, so can't touch them until retirement age). This is where I've mentioned a few times over the years fucking up my calculation and getting hit with a big tax bill. Next year will be the first year we can withdraw from our conversions.

The whole thing is called a Roth conversion ladder in the FIRE community.

I've got so much in my 401k I'd probably eat all the way up to 12% bracket +standard for a couple years. I'd have to sit and do the math on various scenarios before committing. Sure I'd pay 5000$ in taxes, but long term the benefits are worth it IMO.

Rolling over the standard is a no brainer. You're basically just stealing money from the gov at that point.

Deathwing · 2025-08-13T10:44:01-0400

Gravel said:
You mistrust an institution, but fail to understand what a stock is.

All you're doing is buying ownership in a company. Do you think the concept of buying ownership in a company is bad? Then sure, don't buy stocks.

Ignoring the trading aspect of a stock, the reason stocks go up is because the companies are theoretically passing on the earnings of the company to the owners. As long as businesses are in the business of making money, stocks go up.

My distrust and disdain does not come from a failure to understand the concept of a stock, but the disproportionate effect of what is essentially gambling has on our economy.

There's probably a misunderstanding somewhere else, but I'm fine with the idea of stock. With the idea of fractional ownership in a company so that it can raise capital. It does not feel like most people trading stocks, especially Wall Street, are operating from that mindset.

Gravel · 2025-08-13T10:46:06-0400

Furry said:
I've got so much in my 401k I'd probably eat all the way up to 12% bracket +standard for a couple years. I'd have to sit and do the math on various scenarios before committing. Sure I'd pay 5000$ in taxes, but long term the benefits are worth it IMO.

Rolling over the standard is a no brainer. You're basically just stealing money from the gov at that point.

It's too complicated to give advice on, in my opinion.

One, you risk having too much in Roth and start getting hit with RMD, which sucks big time. My mother-in-law got hit with them last year.

But two, the big one is it just depends so much on how much income you have, and how much savings you have. I've decided we'll almost certainly end up withdrawing early on some accounts and get hit with a 10% early withdrawal fee. For decades I've read about how you absolutely don't want to do this by literally every financial advice person and article there is. But the reality is, how is it any different from getting a 10% income tax? I mean, sure, I'd rather not pay it, but it's not the end of the world.

That said, my advice for anyone retiring before 59.5, is put money into a taxable account. That way it can bridge you until you either do hit 59.5, or figure out a rollover strategy or something else to get you there with minimal tax hits. We're still drawing on our taxable account almost 4 years into it. But that was always the plan.

Furry · 2025-08-13T11:00:03-0400

Gravel said:
It's too complicated to give advice on, in my opinion.

One, you risk having too much in Roth and start getting hit with RMD, which sucks big time. My mother-in-law got hit with them last year.

But two, the big one is it just depends so much on how much income you have, and how much savings you have. I've decided we'll almost certainly end up withdrawing early on some accounts and get hit with a 10% early withdrawal fee. For decades I've read about how you absolutely don't want to do this by literally every financial advice person and article there is. But the reality is, how is it any different from getting a 10% income tax? I mean, sure, I'd rather not pay it, but it's not the end of the world.

That said, my advice for anyone retiring before 59.5, is put money into a taxable account. That way it can bridge you until you either do hit 59.5, or figure out a rollover strategy or something else to get you there with minimal tax hits. We're still drawing on our taxable account almost 4 years into it. But that was always the plan.

Roth IRAs have no RMD if you are the original owner and are alive. For your TSP, if you are worried about RMDs or want some money early, I'd consider SEPPing it. That lets you start taking money at any age, and you wont have RMDs. You can't change it until 60 though, so best be sure you are comitted.

Rollover is best from a tax standpoint, but its also a hard path to pull off correctly, as you need a nice chunk of money in taxable accounts to live off of exclusively while converting. If you have 5 years and dilligently convert, your Roth should be able to take over, as your contributions number is going to be massive, and those can be withdrawn at any age without tax. (I'm pretty sure rollovers into Roth IRA get considered contributions after 5 years, and are withdrawable?)

If not, you can SEPP a roth IRA too.

BrutulTM · 2025-08-13T11:10:41-0400

Cutlery said:
Really?

I fully plan on taking all 401ks I ever have from now on and rolling them into the IRA I control. The return I get on just having everything in SPLG is completely incomparable to the "managed" plan I pay for the privilege of having at my employer.

Yeah, all that "management" is overrated and the fees don't seem that bad when you're paying them but when you consider what they would add up to compounded over 20 or 30 years it will really piss you off.

Seananigans said:
It might be worth noting “net worth” isn’t a great metric for evaluating your retirement success rate. There’s a not-insignificant portion of net worth that isn’t relevant to retirement, and in some cases is a negative.

This is definitely the case for me. I own half of a cattle ranch that is probably worth somewhere in the vicinity of $10M but it doesn't generate a lot of revenue. I could easily make more money by just selling it and investing the money but giving up 5 generations of my family legacy is not something I'm going to do unless I'm sure it won't be passed on to the next generation. Agriculture is full of broke millionaires for this reason. I will never be destitute owning the place because even if I don't want to run it anymore, it can be easily leased out for probably $150K a year and I could still live in my house. I'm still saving though, because if my nephew or one of my girlfriend's kids is interested in taking over and continuing the ranch, I don't want to be a burden to the business in my old age.

Gravel said:
You mistrust an institution, but fail to understand what a stock is.

All you're doing is buying ownership in a company. Do you think the concept of buying ownership in a company is bad? Then sure, don't buy stocks.

Ignoring the trading aspect of a stock, the reason stocks go up is because the companies are theoretically passing on the earnings of the company to the owners. As long as businesses are in the business of making money, stocks go up.

While this is technically true, stocks these days can get drastically divorced from the actual value produced by the company. Tesla having a market cap that's 4x Toyota while producing 1/10th as many cars for example. There's definitely a casino aspect to the stock market that's not just what the company is worth. That said, as long as you're diversified, it's still easily the best way to invest over the last 100 years or so and losing money in the long term has never really happened to the whole market. There's been 2 major crashes in my investing life, the tech bubble in 2000 (I didn't have enough invested to care about that one) and the housing bubble in 2008. Maybe covid counts as a third. The smart move through all of them has been to look at it as an opportunity to buy at a discount.

The crashes are also a good way to find out who is an idiot investor. During the tech bubble one of my coworkers was freaking out because his retirement was 100% in stock in the company we worked for. What an idiot. I was in my early 20's at the time and even I knew you don't do that. On the other hand, even with that terrible strategy, he would have been fine if he rode it out for a couple years. I don't know if he did. My uncle was a financial advisor and during the crashes he spent all day on the phone begging people not to cash out at the bottom because that's what a lot of them wanted to do.

Gravel · 2025-08-13T11:23:26-0400

Furry said:
Roth IRAs have no RMD if you are the original owner and are alive. For your TSP, if you are worried about RMDs or want some money early, I'd consider SEPPing it. That lets you start taking money at any age, and you wont have RMDs. You can't change it until 60 though, so best be sure you are comitted.

Rollover is best from a tax standpoint, but its also a hard path to pull off correctly, as you need a nice chunk of money in taxable accounts to live off of exclusively while converting. If you have 5 years and dilligently convert, your Roth should be able to take over, as your contributions number is going to be massive, and those can be withdrawn at any age without tax. (I'm pretty sure rollovers into Roth IRA get considered contributions after 5 years, and are withdrawable?)

If not, you can SEPP a roth IRA too.

Well shit, I could've sworn Roth's had an RMD, but you're right.

I've converted my entire tIRA balance to Roth already, and started working on my wife's last year. Within the next year or two I need to transfer either my TSP or wife's 401k to Vanguard to start working their balances down. Those will take significantly longer.

Khane · 2025-08-13T11:29:40-0400

I wonder what the true cost to invest in something like the S&P was prior to like... 2010. Online brokerages were not a thing until the late 90s and they had pretty high fees associated with transacting and I believe even transferring to.

SPY didn't even exist until 1993, VFIAX was 2000 and FXAIX was 2011 (though apparently there was some weird private version of this fund available in the 80s?)

I would imagine, especially since information was much less readily available, that brokerage firms and advisors would push heavily into trying to coerce you into investing in their own commission based funds and if they did have an S&P fund it probably had a much higher fee than anything does nowadays.

I can't even begin to imagine trying to accomplish what

Gravel is doing now through a traditional brokerage in the 90s or even 2000s.

Borzak · 2025-08-13T13:47:09-0400

It's not uncommon in my line of work for someone to pick up a little work from time to time while retired. It's a lot different than going to work for someone every day. My dad is 83 and still picks up a small job from time to time. Might work a week a year in total across multiple jobs. Kept his office at the house when he retired. He charges a big premium for shit nobody else has any experience with. Sometimes it's not even drawing stuff but checking what someone else drew.

Borzak · 2025-08-13T13:52:26-0400

Khane said:
I wonder what the true cost to invest in something like the S&P was prior to like... 2010. Online brokerages were not a thing until the late 90s and they had pretty high fees associated with transacting and I believe even transferring to.

SPY didn't even exist until 1993, VFIAX was 2000 and FXAIX was 2011 (though apparently there was some weird private version of this fund available in the 80s?)

I would imagine, especially since information was much less readily available, that brokerage firms and advisors would push heavily into trying to coerce you into investing in their own commission based funds and if they did have an S&P fund it probably had a much higher fee than anything does nowadays.

I can't even begin to imagine trying to accomplish what Gravel is doing now through a traditional brokerage in the 90s or even 2000s.

I was not a big investor. It was like you would think it was. Had to have an account and had to call and pay someone to do anything and everything. Then at some later time you would get a call (maybe) that your order went through and for how much, or wait for a snail mail. Everything had a fee attached to it. I mean Fidelity is pretty new in the grand sheme of things on how little they charge low volume investors. Most mutual funds had a minimum amount to invest, an oddly enough the better they did the higher the rate.

I know my uncle lost $1 million in the 1987 crash and it was a giant cluster you know what. Brokers weren't answering phones regardless. You were on your own so to speak. He made it all back and then some by 1992. I think after they got the issues straighted out it came back pretty fast.

I used to have a morningstar book from about 1990 I kept just for kicks. You couldn't look up mutual funds online so you either bought or subscribed to morningstar and it was probably 4" thick and then you got updates over time and you put your updates into the book and took out the old ones. Of course it was all subject to checking with your broker. I had a compuserve account in the eary 80s. Back then you paid by the minute to connect and the faster the connection the more you paid. But anyway a lot of people used it to get stock prices through the day and then call their broker. Of course the daily paper had a lot of closing prices on the market from the previous day which would be opening price. You almost had to have a magnifying glass to read it. The local news had the local fortune 500 company stock prices daily (XON, now XOM) and other related companies.

As you can imagine things moved a lot slower. I'm sure it moved much faster for professionals or semi profressionals. But as Joe Blow you opened an account, called your broker, then at some point in the future you would be notified by a call or mail if the order went through and at how much. The broker had to call their office in New York who notified their buyers/runners or whatever they were called and then back the other direction.

Haus · 2025-08-13T15:13:06-0400

Borzak said:
I was not a big investor. It was like you would think it was. Had to have an account and had to call and pay someone to do anything and everything. Then at some later time you would get a call (maybe) that your order went through and for how much, or wait for a snail mail. Everything had a fee attached to it. I mean Fidelity is pretty new in the grand sheme of things on how little they charge low volume investors. Most mutual funds had a minimum amount to invest, an oddly enough the better they did the higher the rate.

I know my uncle lost $1 million in the 1987 crash and it was a giant cluster you know what. Brokers weren't answering phones regardless. You were on your own so to speak. He made it all back and then some by 1992. I think after they got the issues straighted out it came back pretty fast.

I used to have a morningstar book from about 1990 I kept just for kicks. You couldn't look up mutual funds online so you either bought or subscribed to morningstar and it was probably 4" thick and then you got updates over time and you put your updates into the book and took out the old ones. Of course it was all subject to checking with your broker. I had a compuserve account in the eary 80s. Back then you paid by the minute to connect and the faster the connection the more you paid. But anyway a lot of people used it to get stock prices through the day and then call their broker. Of course the daily paper had a lot of closing prices on the market from the previous day which would be opening price. You almost had to have a magnifying glass to read it. The local news had the local fortune 500 company stock prices daily (XON, now XOM) and other related companies.

As you can imagine things moved a lot slower. I'm sure it moved much faster for professionals or semi profressionals. But as Joe Blow you opened an account, called your broker, then at some point in the future you would be notified by a call or mail if the order went through and at how much. The broker had to call their office in New York who notified their buyers/runners or whatever they were called and then back the other direction.

I remember this world. This was my grandfather's era of dealing with stocks. Then I remember around 1990 when I was working one of my first IT jobs for a reseller and installing network cards and we had a client who had the top of the line information device for monitoring stock and commodity markets.... a Bloomberg Terminal. And we helped them be one of the first around town who could share that terminal between all the computers in their office via the miracle of a coax cable ethernet.

Burren · 2025-08-13T17:57:08-0400

Haus said:
And here's another area of Retirement stuff I don't have near enough knowledge on. I need to learn how IRAs work as you're the third person to mention how self guidance through one is better, and I was unaware I could roll my 401k into one.

You make money in it, tax-deferred, then when its a bigger pile of money and you access it, the government takes their cut.

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Retirement... (i.e. what are you going to be after you've grown up)

Cutlery

Kill All the White People

Gravel

Mr. Poopybutthole

Furry

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Deathwing

moonarchia

The Scientific Shitlord

Khane

Got something right about marriage

Deathwing

Gravel

Mr. Poopybutthole

Gravel

Mr. Poopybutthole

Furry

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Deathwing

Gravel

Mr. Poopybutthole

Furry

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BrutulTM

Good, bad, I'm the guy with the gun.

Gravel

Mr. Poopybutthole

Khane

Got something right about marriage

Borzak

Silver Baron of the Realm

Borzak

Silver Baron of the Realm

Haus

I am Big Balls!

Burren

Bronze Baronet of the Realm