This was an interesting letter to columnist ‘Eric’ about 70 YO parents moving to FL - and this son spelling out constraints. I think he was being totally honest, maybe a bit ‘brutal’ - perhaps because of expectations by the parents in the past and anticipated in the future.
DH and my parents lived 100 miles apart in small-town WI. Their expectation (especially from my mother) that we would spend holidays/vacations etc. in WI and stopping by some with them – essentially all of our ‘time off’ traveling to and visiting WI, initially from living in TX, and later living in N AL. As a result, DH and I rarely had true vacations. In some ways it was for family peace, and other ways we didn’t have children until being married 15 years, so could acquiesce. Once they all retired, our expectation was that they would travel to us. My parents did so some, in part because we were on the driving route to FL. All four of them came for Thanksgiving when I was pregnant with our first (well after all of them were retired) because we made it clear we were not traveling over the holidays with our baby due in February. They then came after the babies were born, but we had the children baptized in WI for all family to be present.
Some on this thread (and other CC threads) have paid for family vacations as a group. My sister does so in a nearby lodge/cabin arrangement on a lake for her sons/families not far from them in IA.
We never put expectations on our kids to come to us - we want them to use their leave time as they wish.
SS pays benefits like clockwork. Any delay from Wednesday pay date is an issue for your credit union and/or their intermediary bank. (Credit Unions are not money center banks so their electronic financial processes go thru an Intermediary bank first.)
It would have been nice if we would have gotten more into Roths. As it stands our portfolio is 52% pre-tax and 48% post tax. I am not overly worried about RMDs down the road. My spouse and I are at our highest earnings ever so we are looking at ways to reduce tax now and worry about other taxes later.
My H’s parents moved a 13.5 hour car ride away when he graduated from college. Gosh, how rude of them - where would he live? (Don’t worry - he had a place. ) I want to smack that “child” in the linked column upside the head. I don’t know if they are that way because of their parents or in spite of their parents, but wow.
My sibling held a 30 year grudge that my parents moved away from her and her family. I kid you not.
My sibling moved 2 hours away from my parents, she wanted my parents to retire and move to her town so they could help her.
For 30 years she complained that my parents moved south. To a place that wasn’t easy for her to get to. It was her mission to get mom to move near her. It was all about control.
I was happy my parents moved somewhere that made them happy and where they made tons of friends.
Agree. I would have thought kids would be happy to have a warm weather place to visit during the cold NE winters.
I’d bet that the 'rents didn’t raise them to be so selfish:
“I should note that this sort of thinking is very much in line with the type of thinking they raised me with: individual responsibility and living with the consequences of one’s actions.”
We moved to Florida the year our ds was a senior in college. I don’t think he was super happy about it, but he most certainly didn’t say anything. He wasn’t coming back to Arkansas after graduation anyway - he stayed in California.
We moved back 6.5 years later, and I know he’s happy because now when he comes home for holidays he gets to see his high school friends who either still live here or who are also in town visiting their parents. He didn’t know anyone but us in Florida. Plus, his grandmother and aunt still lived in Arkansas. It did complicate his holiday travel since we weren’t all in the same state.
We hosted a Christmas party for his high school friends his last two years of high school and their first three years of college. When we moved back two years ago, we re-instituted it. It’s super fun, but it’s become more complicated as those with children bring them and now some are no longer infants but mobile toddlers!
Don’t be so sure. We’ve been retired for seven years, and our income—both earned and unearned—has never been higher. Our investments have grown significantly and are now generating substantial income for us. Therefore we have not found a good time for Roth conversion.
Edit to add: My RMDs will start this year and my husband, next year.
I’m anti Roth but I’m planning for my bracket to be very low - munis. Big cash flow. Income not taxable.
So I’ve purposely avoided Roth. I prefer deferment today. I’ll pay tax on rmds of course but that will comprise of most my taxable income. And I saved paying today so I had more money growing.
I’m not sure Roths are better for most. I think it’s another product to be sold.
We are doing Roth conversations. Taxes will have to be paid at some point, and we have the resources to pay them now. I know, I know…it’s a lot, but we want some of our retirement money in Roth accounts for easy access, and in case there is any money left that will go to our kids.
The MFJ tax brackets are double the width of the single brackets at the lower levels (to the top of the 32% bracket, or $512K AGI for MFJ vs $256K for single).
Once the first spouse dies, the survivor often does not see a huge reduction in income, but his tax brackets almost double. Obviously MANY variables here, including if both spouses had pensions w/o survivorship, if both spouses had similar earnings histories and therefore SS payments, etc. But if you have a scenario w/o a pension, and with one spouse with lower SS payment, total AGI will only decline by the amount of the smaller SS payment. RMD for surviving spouse will be the same as the combined RMD for both spouses, adjusting for age difference of the divisor on the Uniform Lifetime table.
Also, heirs’ tax brackets at inheritance vs your tax bracket at Roth conversion. I do worry about the gov’t eventually taxing Roths, or doing something.
Hopefully I have a good 25 or 30 years when I retire - to continue to grow income.
I honestly haven’t looked at what an RMD cost but if an RMD and SS are 100K, the bracket I’d be in isn’t that high. And don’t forget being in a bracket isn’t paying taxes at that rate through the entirety.
I’ll be over $100K in bond income that will be tax free - but I do believe it may impact the medicare extra fee.
I’m in my 50s but these are things I’ll need to learn about as I get closer.
Yes I would not suggest Roth conversions while one is working, although Mega Backdoor Roth, if offered, is a great tool for those earning more than they are spending.
As to RMD, it sounds like you may have 20 years before you have to take an RMD, so you will continue to add to the IRA while working and it will (hopefully!) continue to grow.
Every million in your IRA will require a $40K distribution at age 75, so a $3 million IRA balance = $120K distribution.
And yes, I understand that being in a bracket does not mean that you are paying the marginal rate for your entire earnings, but my point stands for married couples as the brackets halve in addition to the Std deduction once the first spouse passes.
I assume that Muni interest will trigger IRMAA, but I have not looked at that.
I wonder every day if I’ll still be employed. When you hit a certain age, they find a way to eliminate you. But yes, I’d like to keep working.
Gotcha on the RMD - but if it’s 75, then yeah, I have 3 more years than I thought And yeah, if it’s $120K, plus social security, and some dividends - well maybe I’ll make more than I realize
My dad is mostly munis - and he’s always talking about the extra medicare thing…
Well, I guess even if I have to pay taxes, it’s a good problem to have.
Good info.
I’m thinking, based on this, maybe in the time when I stop working til I take social security - that’s a window to Roth some?? I don’t really know but I don’t even know if my company offers a Roth and given my incomes - which isn’t obscenely high, but I think i’m in the 22% today so adding some type of conversion wouldn’t be cheap.
Yes, RMD age is now 75 for those born after 1960, I think? So you have three more years of compounded growth before you have to withdraw from your IRA.
Yes, the window to convert to Roth is usually between retirement age and RMD age, keeping an eye on the impacts to IRMAA, and of course SS income. If you are married, that is another consideration because of the married versus single tax brackets.
Roth 401(k) plans do not have income limits. Roth IRAs do, but if you do not have an existing IRA balance (outside of work 401(k) plan), you can do a back door Roth each year.
The Secure Act 2.0 added a new rule for catch-up 401(k) contributions. You are not yet at age where you are eligible to make catch-up contributions, and the law could change again between now and then, but at the moment if you earn more than $150,000 a year, your catch-up 401(k) contribution must be directed to your Roth 401(k).
I would need to go back and read all of the threads, but I think you mentioned the 22% bracket and if that is the case, you would be better served contributing to a Roth IRA account instead of buying Munis with your additional cash flow. Any future growth in the Roth IRA account will never be taxed, and you can invest in anything you want. See Peter Thiel for a really extreme example!
) I want to smack that “child” in the linked column upside the head. I don’t know if they are that way because of their parents or in spite of their parents, but wow.
And yeah, if it’s $120K, plus social security, and some dividends - well maybe I’ll make more than I realize