Uh. Hm. Do you not even pay simple income tax on inheritance?
Sounds like we’re in the clear for now, and maybe I’m misunderstanding the estate situations.
Nope, gifts are not income, you never need to pay a cent for gifts or inheritance received. Only the givers or estate ever files or (rarely) pays anything.
Yes, the inheritors pay nothing on money (and cash-like assets) received from an estate. The estate itself has to file a return if it is over ~$11M, and it then only pays taxes on amounts over that (just like income tax).
If you receive stocks or other appreciable assets (real estate, mainly) as part of the estate, you have to pay capital-gains taxes on any appreciation that occurs after you inherit them.
Even the previous estate tax was a total non-issue for the vast majority of Americans. The new one only effects something like 1500 estates per year.
It's a common recommendation from CPAs. Depending on the individual, planned gifting can reduce your tax basis right before the end of the year.
I know that my wife's late Grandmother would give regular holiday money gifts so that her Grandmother could essentially have a $0 tax bill (this was one of the strategies, anyway)
Her husband worked for the Dept of Energy so they were not amazingly rich.
Uh. Hm. Do you not even pay simple income tax on inheritance?
Sounds like we’re in the clear for now, and maybe I’m misunderstanding the estate situations.
It's almost as if certain people who might be impacted by this want everyone to think that they might be impacted by it, so that everyone will fight against it.
It's a common recommendation from CPAs. Depending on the individual, planned gifting can reduce your tax basis right before the end of the year.
I know that my wife's late Grandmother would give regular holiday money gifts so that her Grandmother could essentially have a $0 tax bill (this was one of the strategies, anyway)
Her husband worked for the Dept of Energy so they were not amazingly rich.
What country? Because in America gifts can't lower your taxes and it also don't effect basis. In fact, if you receive stock as a gift you need to ask what it was bought for because the basis did not change.
I'm assuming he's misattributing gifts with charitable donations. Though the thought of a grandma accidentally committing minor tax-fraud for writing off charitable donations she gifted to her grandkids, is kinda funny.
Also, I guess a PSA: I glanced at some stuff recently and noticed that 15-year mortgage interest rates are getting damn low, including into the 2s if you buy some points. Might be worth a look for folks trying to refinance.
Like, I think we might be able to go from a 30 year to a 15 year with only a smidge higher monthly payment right now. It's something I'm planning on going and getting a quote on.
Also, I guess a PSA: I glanced at some stuff recently and noticed that 15-year mortgage interest rates are getting damn low, including into the 2s if you buy some points. Might be worth a look for folks trying to refinance.
Like, I think we might be able to go from a 30 year to a 15 year with only a smidge higher monthly payment right now. It's something I'm planning on going and getting a quote on.
Make sure you factor in all the costs involved in refinancing the loan (appraisal, etc). When I looked into it recently I saw that the costs would wipe out the benefits for me.
Also, I guess a PSA: I glanced at some stuff recently and noticed that 15-year mortgage interest rates are getting damn low, including into the 2s if you buy some points. Might be worth a look for folks trying to refinance.
Like, I think we might be able to go from a 30 year to a 15 year with only a smidge higher monthly payment right now. It's something I'm planning on going and getting a quote on.
Make sure you factor in all the costs involved in refinancing the loan (appraisal, etc). When I looked into it recently I saw that the costs would wipe out the benefits for me.
Yeah, I'm guessing that's going to be the end result for me, too. Still worth looking into, though.
Going down to a 15 relatively early on in my 30-year loan is going to save me something like $125k in interest over the life of the loan. The lower rate (4.375->2.875) helps, but the shorter term does a ton of work there.
If you have a sub-4 rate on a 30-year, you can also find a calculator to figure out what extra payment you can make to get the term down to 15 or 20 years if you don't want to pay the refi costs.
Going down to a 15 relatively early on in my 30-year loan is going to save me something like $125k in interest over the life of the loan. The lower rate (4.375->2.875) helps, but the shorter term does a ton of work there.
If you have a sub-4 rate on a 30-year, you can also find a calculator to figure out what extra payment you can make to get the term down to 15 or 20 years if you don't want to pay the refi costs.
Yeah, we're paying an extra $100/mo and that basically lops off 5 years and $24k from 'normal'. We'll up it some more next year after figuring raises and things to get even more savings. (We'll only have been living here 3 years come May)
It's actually part of why I wanted a 30 year instead of a 15 year. Because while the interest rate is higher, we can opt to pay the mortgage off in 15 years if everything goes well, but if something happens to one of us/our jobs over the next 10-20 years we can always stop paying 'extra' and not get foreclosed on when shit happens.
I'm finally going to catch up on all my unused contribution room and max out my TFSA this year. Then I'm gonna use whatever else I can to max out my RRSP or close to it.
Uh... so what do I do after that? My goal is FIRE so I'm basically trying to accumulate a dragon hoard. I don't own a home but have no plans to buy because anything within the parameters that I need is too expensive.
My emergency fund is well taken care of and I have no debt. I'm assuming the next step is some sort of non-tax free investment account but I don't want to get killed on taxes and I'm not looking for anything that requires a lot of micromanaging. The bulk of my investments in my TFSA are with a robo advisor right now.
thatassemblyguyJanitor of Technical Debt.Registered Userregular
That's a great question. I'm a non-Canadia, so take this with a grain of salt, but after you're done maxing your RRSP and then TFSA (hooray for meeting those goals!), personally I'd open a Vanguard account (still best in the industry for overall fees and performance).
However, since I'm not a licensed financial advisor, the truly best way to get an understanding of what to do next is to find a fee-only Canadian financial advisor and tax expert that specializes in your province - they can help you understand what is a good option for your taxed account.
He can't, US resident only AFAIK. I have a vanguard account from my brief foray into the US and it's basically a read-only view of my 401k now and my schwab account exists only to wire RSU sale proceeds to canada. I actually have $30 stuck in the normal account side forever that would cost me $35 to send here because I'm no longer allowed to send it to my still extant US bank account
I am not a financial advisor either but I have done this before in Canada and have largely the same goals
I have a self-directed RRSP, TFSA & non-registered (+margin, short) investment account with TD which basically gives me full north american market access on all accounts (I even have a $US TFSA though it's empty). All the other big banks should be able to do the same setup in some fashion. Personally I have my investment banking done on a completely separate bank from my day-to-day stuff as a kind of security/firewall thing and also as a money black hole where money goes in and has yet to come out but that's just me
You'll want to talk to the brokerage side (TD waterhouse, RBC direct investing, etc) of your chosen bank to get these accounts, the investment options available from the banking side are typically limited, you can usually do this in the bigger branches, or sometimes they can just fill out the forms in a smaller branch and then send them off to the main branch for processing. Bring ID, etc as the investment side may not be able to use the existing data. There are also non-big-bank brokerages that can give you similar accounts but I'm not familiar with them
The banks have "financial advisors" available more than happy to sell the bank's products, and some of them aren't terrible, but I just tell them to set up the account, go away and pick my own stuff to buy. I have a lot of TD e-series mutual funds and ishares ETFs which have some of the lower fees for canadian funds. The ultra-low fee US ETFs are available, but you need a US dollar account and go through the hassle of changing money (look up the norbert gambit for serious sums of money) and you will be eventually subject to extra tax reporting requirements
As for taxes, you'll want to learn the dark magic of the adjusted cost base, I use https://www.adjustedcostbase.ca/ to do the math for me. There are essentially 3 types of income - capital gains, dividends and "other," with different funds/stocks producing different kinds. Capital gains is typically the result of selling things later on, dividends come from stocks and some funds and most everything else falls into the "other income" category.
Half of capital gains is tax free, the other half is taxable income. Losses and gains can offset each other, including retroactively going back a few years to smooth the bumps out
Dividends are taxed specially, with a discount for eligible dividends of canadian funds/stocks. I haven't looked up the math here, just plug the provided numbers in the provided boxes in your return
Other income is taxed at full rate
This then leads into strategies of what to keep in what account. TFSA is straight tax free, RRSP is tax-deferred and non-registered is taxed right away. If you are going full dragon's hoard, down the line be aware that at 71 you are required to start withdrawing 10% of your RRSP every year which can be a nasty surprise bumping your income up a couple brackets
So, this might be a good place for this question: I took out a loan on my 401k in order to pay some money I owe to the IRS, but I'm looking to leave my current job. My understanding is that I have to repay it in full immediately or else having it taken out as a distribution and fined/taxed and all that nastiness, but there's also a potential option to roll-over into a new 401k plan if I do it within 60-days? Is it actually that easy, or is this wishful thinking on my part?
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thatassemblyguyJanitor of Technical Debt.Registered Userregular
So, this might be a good place for this question: I took out a loan on my 401k in order to pay some money I owe to the IRS, but I'm looking to leave my current job. My understanding is that I have to repay it in full immediately or else having it taken out as a distribution and fined/taxed and all that nastiness, but there's also a potential option to roll-over into a new 401k plan if I do it within 60-days? Is it actually that easy, or is this wishful thinking on my part?
This is one of those things that you'd really be better off talking to a financial or tax advisor about. Alternatively, you can call up the 401k servicer (they won't report anything to your employer that you're looking to leave), and ask about it as it relates to the specific 401k plan from your employer.
+7
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firewaterwordSatchitanandaPais Vasco to San FranciscoRegistered Userregular
New year, new opportunity to shovel money into individual retirement accounts!
As usual, having trouble deciding to go full traditional, full Roth, or a 50/50 split like last year.
New year, new opportunity to shovel money into individual retirement accounts!
As usual, having trouble deciding to go full traditional, full Roth, or a 50/50 split like last year.
Do you anticipate drawing a higher income passively in retirement than you are currently making now? If that's the case, then got Roth. Otherwise, if like 95%+ of everyone else out there, you're better of going full traditional and taking the tax deferral now, since your income tax bracket is almost certainly higher employed than it will be in retirement.
New year, new opportunity to shovel money into individual retirement accounts!
As usual, having trouble deciding to go full traditional, full Roth, or a 50/50 split like last year.
Do you anticipate drawing a higher income passively in retirement than you are currently making now? If that's the case, then got Roth. Otherwise, if like 95%+ of everyone else out there, you're better of going full traditional and taking the tax deferral now, since your income tax bracket is almost certainly higher employed than it will be in retirement.
This is another one of those things where we americans have accepted that having options is good, when actually there are good options and bad ones, and thus having a choice is bad.
I thought one of the benefits for a Roth was that you can withdraw early without a penalty, it just counts as income for tax purposes. So, for instance, if your car dies, your roof caves in, and you break a leg pulling from a Roth would work almost like a normal investment fund while a traditional IRA would charge you extra for accessing it early?
I thought one of the benefits for a Roth was that you can withdraw early without a penalty, it just counts as income for tax purposes. So, for instance, if your car dies, your roof caves in, and you break a leg pulling from a Roth would work almost like a normal investment fund while a traditional IRA would charge you extra for accessing it early?
You can withdraw the principal early for any reason with 0 penalty. If you start withdrawing the gains early, it counts as taxable income AND you have to pay an extra 10% penalty on the withdrawal unless you meet certain conditions.
New year, new opportunity to shovel money into individual retirement accounts!
As usual, having trouble deciding to go full traditional, full Roth, or a 50/50 split like last year.
Do you anticipate drawing a higher income passively in retirement than you are currently making now? If that's the case, then got Roth. Otherwise, if like 95%+ of everyone else out there, you're better of going full traditional and taking the tax deferral now, since your income tax bracket is almost certainly higher employed than it will be in retirement.
You could also play the game of, "do I think income/capital gains taxes will be significantly different when I retire versus now." I'm sure that won't end in tears.
"The world is a mess, and I just need to rule it" - Dr Horrible
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firewaterwordSatchitanandaPais Vasco to San FranciscoRegistered Userregular
edited January 2020
Yeah one of the Roth benefits is definitely being able to withdraw principle. I'm still on the fence about doing it, but I may be looking to make a down payment on a home this year and having access to the last 10 years of Roth contributions is pretty nice (though will try to avoid dipping into that if possible as I'd rather keep turning it into more money).
As far as the tax retirement situation, who knows...
I'm jealous I'm nowhere near maxing out yearly contributions.
On the other hand I know the average savings people in their mid 30's have and feel better.
This is then filled with horror when I realize how many of my friends and family members are going to be impoverished in old age.
I finally started maxing out my contributions last year and good golly it feels good to be finally making a real dent in my retirement. Between working a dead-end job and going to school again, I'm way behind.
Yeah one of the Roth benefits is definitely being able to withdraw principle. I'm still on the fence about doing it, but I may be looking to make a down payment on a home this year and having access to the last 10 years of Roth contributions is pretty nice (though will try to avoid dipping into that if possible as I'd rather keep turning it into more money).
As far as the tax retirement situation, who knows...
If you're looking at a for sure withdrawal of that money in the short term (within the year), you're probably just better off putting it into a high-yield savings account like the CIT Savings Builder (1.8% APY) or the like. It's a guaranteed ROI, and much easier and faster to withdraw/transfer than the Roth, plus no tax reporting issues for the withdrawal. In the Roth, you could make more, but you could also break even, or even lose money in the short-term (3-6 months) depending on market fluctuations. Chasing an extra a theoretical extra .5-1% return for that short time just doesn't seem worth the hassle to me.
I'm jealous I'm nowhere near maxing out yearly contributions.
On the other hand I know the average savings people in their mid 30's have and feel better.
This is then filled with horror when I realize how many of my friends and family members are going to be impoverished in old age.
~40% of people can't readily cover a $400 emergency with savings.
It's probably improved some, since that Fed study a few years back, with the improving economy. Still a terrifying statistic. Whenever I look through the SCF or other things like that it both makes me feel confident in my savings and horrible at the state of the world at the same time. I'm practically affluent, statistically. And I really shouldn't be.
I'm happy I've been able to max my TSP for the past ~6 years now. It definitely took some work to get there, though.
I've got a mix of both Roth and Traditional, so I have more options in the future. Since there's no predicting future tax environments, I'm leaning on staying flexible.
I'm also staying aggressive; as I'm mimicking one of the life cycle funds (2040 I think?) but spreading the "bond-like" portion back out to the other funds.
2019 ended up being a wash overall, but the late gains were a nice uptick to end the year.
+1
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firewaterwordSatchitanandaPais Vasco to San FranciscoRegistered Userregular
Yeah one of the Roth benefits is definitely being able to withdraw principle. I'm still on the fence about doing it, but I may be looking to make a down payment on a home this year and having access to the last 10 years of Roth contributions is pretty nice (though will try to avoid dipping into that if possible as I'd rather keep turning it into more money).
As far as the tax retirement situation, who knows...
If you're looking at a for sure withdrawal of that money in the short term (within the year), you're probably just better off putting it into a high-yield savings account like the CIT Savings Builder (1.8% APY) or the like. It's a guaranteed ROI, and much easier and faster to withdraw/transfer than the Roth, plus no tax reporting issues for the withdrawal. In the Roth, you could make more, but you could also break even, or even lose money in the short-term (3-6 months) depending on market fluctuations. Chasing an extra a theoretical extra .5-1% return for that short time just doesn't seem worth the hassle to me.
Good advice - already have that going (a bit salty right now since I moved $$$ from CIT into Citi Accelerate, only to have Citi drop the APY to match CIT a few days later, and so far Citi is way more of a pain to deal with, but I digress).
It's more of a back pocket thing I guess, and will potentially let me extend my ability to make a fuck off huge (relative to me, anyway) down payment without going cash poor.
Anyway, this seeking alpha article on optimizing Roth accounts just popped up in my feed if anyone cares to take a gander. Reminded me that another advantage is the lack of required minimum disbursements.
I'm jealous I'm nowhere near maxing out yearly contributions.
On the other hand I know the average savings people in their mid 30's have and feel better.
This is then filled with horror when I realize how many of my friends and family members are going to be impoverished in old age.
I finally started maxing out my contributions last year and good golly it feels good to be finally making a real dent in my retirement. Between working a dead-end job and going to school again, I'm way behind.
Yeah I try to make funding personal retirement accounts a very high priority in the beginning of the year - give that money as much time as possible to work for me and all that.
I'm jealous I'm nowhere near maxing out yearly contributions.
On the other hand I know the average savings people in their mid 30's have and feel better.
This is then filled with horror when I realize how many of my friends and family members are going to be impoverished in old age.
I finally started maxing out my contributions last year and good golly it feels good to be finally making a real dent in my retirement. Between working a dead-end job and going to school again, I'm way behind.
I've been reliably saving since 19 which assuages some of my anxiety. I'll probably never have a million liquid but between virtually no outstanding debt, assets, and a pension I think I'm well on my way to that much in total net worth by the time I'm in my 60's.
Oh, for those of you who don't know, the Secure Act adjusted the age for RMDs from Roths. Previous was 70.5; it's now 72 yrs.
The same Act also changed the policy for inherited IRAs; where anyone not inheriting from immediate family must withdraw the full value of the IRA within 10 years.
I'm doing a bad job of summarizing, so do some Googling if you think this applies to you.
I'm jealous I'm nowhere near maxing out yearly contributions.
On the other hand I know the average savings people in their mid 30's have and feel better.
This is then filled with horror when I realize how many of my friends and family members are going to be impoverished in old age.
~40% of people can't readily cover a $400 emergency with savings.
It's probably improved some, since that Fed study a few years back, with the improving economy. Still a terrifying statistic. Whenever I look through the SCF or other things like that it both makes me feel confident in my savings and horrible at the state of the world at the same time. I'm practically affluent, statistically. And I really shouldn't be.
Yeah. A $400 hit isn't even that large when you consider a car problem, or god forbid, a medical problem. I've got pretty good insurance, and my deductable is IIRC $1500. That would wipe out someone who can't cover $400, and they're undoubtedly going to have worse insurance.
Oh, for those of you who don't know, the Secure Act adjusted the age for RMDs from Roths. Previous was 70.5; it's now 72 yrs.
The same Act also changed the policy for inherited IRAs; where anyone not inheriting from immediate family must withdraw the full value of the IRA within 10 years.
I'm doing a bad job of summarizing, so do some Googling if you think this applies to you.
Not just Roth, retirement accounts generally. Which, also, good. Anything that involves figuring out when your half birthday is doesn't understand how people work.
Posts
Nope, gifts are not income, you never need to pay a cent for gifts or inheritance received. Only the givers or estate ever files or (rarely) pays anything.
If you receive stocks or other appreciable assets (real estate, mainly) as part of the estate, you have to pay capital-gains taxes on any appreciation that occurs after you inherit them.
Even the previous estate tax was a total non-issue for the vast majority of Americans. The new one only effects something like 1500 estates per year.
Either way it’s very nice!
I know that my wife's late Grandmother would give regular holiday money gifts so that her Grandmother could essentially have a $0 tax bill (this was one of the strategies, anyway)
Her husband worked for the Dept of Energy so they were not amazingly rich.
It's almost as if certain people who might be impacted by this want everyone to think that they might be impacted by it, so that everyone will fight against it.
But who would be so deceptive?
What country? Because in America gifts can't lower your taxes and it also don't effect basis. In fact, if you receive stock as a gift you need to ask what it was bought for because the basis did not change.
For disclosure, I am a USA CPA.
Like, I think we might be able to go from a 30 year to a 15 year with only a smidge higher monthly payment right now. It's something I'm planning on going and getting a quote on.
Make sure you factor in all the costs involved in refinancing the loan (appraisal, etc). When I looked into it recently I saw that the costs would wipe out the benefits for me.
Yeah, I'm guessing that's going to be the end result for me, too. Still worth looking into, though.
If you have a sub-4 rate on a 30-year, you can also find a calculator to figure out what extra payment you can make to get the term down to 15 or 20 years if you don't want to pay the refi costs.
Yeah, we're paying an extra $100/mo and that basically lops off 5 years and $24k from 'normal'. We'll up it some more next year after figuring raises and things to get even more savings. (We'll only have been living here 3 years come May)
It's actually part of why I wanted a 30 year instead of a 15 year. Because while the interest rate is higher, we can opt to pay the mortgage off in 15 years if everything goes well, but if something happens to one of us/our jobs over the next 10-20 years we can always stop paying 'extra' and not get foreclosed on when shit happens.
I'm finally going to catch up on all my unused contribution room and max out my TFSA this year. Then I'm gonna use whatever else I can to max out my RRSP or close to it.
Uh... so what do I do after that? My goal is FIRE so I'm basically trying to accumulate a dragon hoard. I don't own a home but have no plans to buy because anything within the parameters that I need is too expensive.
My emergency fund is well taken care of and I have no debt. I'm assuming the next step is some sort of non-tax free investment account but I don't want to get killed on taxes and I'm not looking for anything that requires a lot of micromanaging. The bulk of my investments in my TFSA are with a robo advisor right now.
Do... Re... Mi... So... Fa.... Do... Re.... Do...
Forget it...
However, since I'm not a licensed financial advisor, the truly best way to get an understanding of what to do next is to find a fee-only Canadian financial advisor and tax expert that specializes in your province - they can help you understand what is a good option for your taxed account.
I am not a financial advisor either but I have done this before in Canada and have largely the same goals
I have a self-directed RRSP, TFSA & non-registered (+margin, short) investment account with TD which basically gives me full north american market access on all accounts (I even have a $US TFSA though it's empty). All the other big banks should be able to do the same setup in some fashion. Personally I have my investment banking done on a completely separate bank from my day-to-day stuff as a kind of security/firewall thing and also as a money black hole where money goes in and has yet to come out but that's just me
You'll want to talk to the brokerage side (TD waterhouse, RBC direct investing, etc) of your chosen bank to get these accounts, the investment options available from the banking side are typically limited, you can usually do this in the bigger branches, or sometimes they can just fill out the forms in a smaller branch and then send them off to the main branch for processing. Bring ID, etc as the investment side may not be able to use the existing data. There are also non-big-bank brokerages that can give you similar accounts but I'm not familiar with them
The banks have "financial advisors" available more than happy to sell the bank's products, and some of them aren't terrible, but I just tell them to set up the account, go away and pick my own stuff to buy. I have a lot of TD e-series mutual funds and ishares ETFs which have some of the lower fees for canadian funds. The ultra-low fee US ETFs are available, but you need a US dollar account and go through the hassle of changing money (look up the norbert gambit for serious sums of money) and you will be eventually subject to extra tax reporting requirements
As for taxes, you'll want to learn the dark magic of the adjusted cost base, I use https://www.adjustedcostbase.ca/ to do the math for me. There are essentially 3 types of income - capital gains, dividends and "other," with different funds/stocks producing different kinds. Capital gains is typically the result of selling things later on, dividends come from stocks and some funds and most everything else falls into the "other income" category.
Half of capital gains is tax free, the other half is taxable income. Losses and gains can offset each other, including retroactively going back a few years to smooth the bumps out
Dividends are taxed specially, with a discount for eligible dividends of canadian funds/stocks. I haven't looked up the math here, just plug the provided numbers in the provided boxes in your return
Other income is taxed at full rate
This then leads into strategies of what to keep in what account. TFSA is straight tax free, RRSP is tax-deferred and non-registered is taxed right away. If you are going full dragon's hoard, down the line be aware that at 71 you are required to start withdrawing 10% of your RRSP every year which can be a nasty surprise bumping your income up a couple brackets
I’ll note that with regards to ETFs, some banks have ETFs with no commission fees. You still of course have the MER.
This is one of those things that you'd really be better off talking to a financial or tax advisor about. Alternatively, you can call up the 401k servicer (they won't report anything to your employer that you're looking to leave), and ask about it as it relates to the specific 401k plan from your employer.
As usual, having trouble deciding to go full traditional, full Roth, or a 50/50 split like last year.
Do you anticipate drawing a higher income passively in retirement than you are currently making now? If that's the case, then got Roth. Otherwise, if like 95%+ of everyone else out there, you're better of going full traditional and taking the tax deferral now, since your income tax bracket is almost certainly higher employed than it will be in retirement.
This is another one of those things where we americans have accepted that having options is good, when actually there are good options and bad ones, and thus having a choice is bad.
You can withdraw the principal early for any reason with 0 penalty. If you start withdrawing the gains early, it counts as taxable income AND you have to pay an extra 10% penalty on the withdrawal unless you meet certain conditions.
You could also play the game of, "do I think income/capital gains taxes will be significantly different when I retire versus now." I'm sure that won't end in tears.
As far as the tax retirement situation, who knows...
On the other hand I know the average savings people in their mid 30's have and feel better.
This is then filled with horror when I realize how many of my friends and family members are going to be impoverished in old age.
I finally started maxing out my contributions last year and good golly it feels good to be finally making a real dent in my retirement. Between working a dead-end job and going to school again, I'm way behind.
If you're looking at a for sure withdrawal of that money in the short term (within the year), you're probably just better off putting it into a high-yield savings account like the CIT Savings Builder (1.8% APY) or the like. It's a guaranteed ROI, and much easier and faster to withdraw/transfer than the Roth, plus no tax reporting issues for the withdrawal. In the Roth, you could make more, but you could also break even, or even lose money in the short-term (3-6 months) depending on market fluctuations. Chasing an extra a theoretical extra .5-1% return for that short time just doesn't seem worth the hassle to me.
~40% of people can't readily cover a $400 emergency with savings.
It's probably improved some, since that Fed study a few years back, with the improving economy. Still a terrifying statistic. Whenever I look through the SCF or other things like that it both makes me feel confident in my savings and horrible at the state of the world at the same time. I'm practically affluent, statistically. And I really shouldn't be.
I've got a mix of both Roth and Traditional, so I have more options in the future. Since there's no predicting future tax environments, I'm leaning on staying flexible.
I'm also staying aggressive; as I'm mimicking one of the life cycle funds (2040 I think?) but spreading the "bond-like" portion back out to the other funds.
2019 ended up being a wash overall, but the late gains were a nice uptick to end the year.
Good advice - already have that going (a bit salty right now since I moved $$$ from CIT into Citi Accelerate, only to have Citi drop the APY to match CIT a few days later, and so far Citi is way more of a pain to deal with, but I digress).
It's more of a back pocket thing I guess, and will potentially let me extend my ability to make a fuck off huge (relative to me, anyway) down payment without going cash poor.
Anyway, this seeking alpha article on optimizing Roth accounts just popped up in my feed if anyone cares to take a gander. Reminded me that another advantage is the lack of required minimum disbursements.
Yeah I try to make funding personal retirement accounts a very high priority in the beginning of the year - give that money as much time as possible to work for me and all that.
I've been reliably saving since 19 which assuages some of my anxiety. I'll probably never have a million liquid but between virtually no outstanding debt, assets, and a pension I think I'm well on my way to that much in total net worth by the time I'm in my 60's.
Still terrified.
Employer account - 27.78% returns for 2019
401k: 25.24% returns for 2019
IRA: 28.99% returns, if I did my math right.
So a bit behind s&p across the board, but still.
The same Act also changed the policy for inherited IRAs; where anyone not inheriting from immediate family must withdraw the full value of the IRA within 10 years.
I'm doing a bad job of summarizing, so do some Googling if you think this applies to you.
Assuming I'm doing my rough math right, my overall account has 21.08% returns for the year (still waiting on the annual statement)
Yeah. A $400 hit isn't even that large when you consider a car problem, or god forbid, a medical problem. I've got pretty good insurance, and my deductable is IIRC $1500. That would wipe out someone who can't cover $400, and they're undoubtedly going to have worse insurance.
Our system is fucked.
Not just Roth, retirement accounts generally. Which, also, good. Anything that involves figuring out when your half birthday is doesn't understand how people work.