The Intersection of FIRE and Disney

WVMomof3

DIS Veteran
Joined
Feb 21, 2005
Hey - glad to see we both are at $2MM. (sorry I use the 2 M's due working in finance, haha).

Do other folks have a number in mind or an age in mind or what is your goal/focus? I know there are people who chase FIRE with no goal (I'll get there when I get there) but then there are others who are intensely focused on a number of metrics(Savings Rate, $2MM, control expenses, ahhhh!), and of course some people in between those two extremes.

I think I started on the intense side and have since moved back towards the no goal side a bit more, lol.
Ours is more an age than a number, maybe a combination of both, I guess. DH will reach minimum retirement age at 57. I think we will be more than good to go at that time, even with us drastically cutting our 401k contributions this year (and for the next 7 years) while we pay for college. DH is not quite on board yet. He would like to get to 62. At 62 his pension would be 46.2% of his high 3 salary, at 57 it will only be 37% (actually 10% less than those for survivor benefit). So a significant difference, but I am thinking we won't need the extra. DH is even worried about ending at 62. He is worried about being bored. But the more I talk about it, the more he seems to be coming around to the idea. At this time, I have been "retired" for 16 years, but am thinking I will find some part time work soon and we will see if that changes any numbers. Maybe we will get used to having more money and will want more in retirement. I like to use the Firecalc and go backwards almost. I put in what we have currently and what DH pension will likely be and see how much we can spend per year. Right now the low number we can spend is about 30k more than we are currently spending, so I think we are good. That was with us living to 95 and the constant spend formula. If you put in the declining spend formula, which is probably more likely, we could start off with spending 60k more than we are now and gradually decrease that. Both of those I put zero in for SS, so will be even more than that. Of course anything with his pension can change with the stroke of a pen.

And I hate to say it, and certainly hope it doesn't happen to us, but a number of friends and family are recently getting a divorce they never foresaw coming, so that is also in back of my mind as never plan things to the T because things can and will change.
 

1st*toright

DIS Veteran
Joined
Mar 1, 2017
It's wild the things these parents will say - I had 2 of the moms from our soccer team ask how we can skip winter soccer and expect her to make the high school team, let alone play in college. (I'm thinking...I'm just hoping she plays in 5th grade...) And then of course another dad who said that we're letting the whole team down by not playing (they were tight on numbers)...and this was not necessarily said in a gentle/nice manner - it was confrontational.
This is so bizarre. It really should come down to what your daughter wants and if you guys can manage the time commitment imo. Who cares about HS or letting the team down. And really maybe give your daughter a budget for activities and let her pick within that budget.
I work with a guy who has a bunch of kids and coaches a whole bunch of sports teams. The stories I hear from him about parents are just insane. People are crazy - and do take all of this way too seriously, and expect everyone else to take it just as seriously. Working through the options and making decisions with the kids is part of the process, but that's a lot easier and more age appropriate for a teenager than for a young elementary schooler.

Ours is more an age than a number, maybe a combination of both, I guess. DH will reach minimum retirement age at 57. I think we will be more than good to go at that time, even with us drastically cutting our 401k contributions this year (and for the next 7 years) while we pay for college. DH is not quite on board yet. He would like to get to 62. At 62 his pension would be 46.2% of his high 3 salary, at 57 it will only be 37% (actually 10% less than those for survivor benefit). So a significant difference, but I am thinking we won't need the extra. DH is even worried about ending at 62. He is worried about being bored. But the more I talk about it, the more he seems to be coming around to the idea. At this time, I have been "retired" for 16 years, but am thinking I will find some part time work soon and we will see if that changes any numbers. Maybe we will get used to having more money and will want more in retirement. I like to use the Firecalc and go backwards almost. I put in what we have currently and what DH pension will likely be and see how much we can spend per year. Right now the low number we can spend is about 30k more than we are currently spending, so I think we are good. That was with us living to 95 and the constant spend formula. If you put in the declining spend formula, which is probably more likely, we could start off with spending 60k more than we are now and gradually decrease that. Both of those I put zero in for SS, so will be even more than that. Of course anything with his pension can change with the stroke of a pen.

And I hate to say it, and certainly hope it doesn't happen to us, but a number of friends and family are recently getting a divorce they never foresaw coming, so that is also in back of my mind as never plan things to the T because things can and will change.
Always interesting to hear from people that are closer to the actual numbers related to the decision. The $2M is the distant goal for me, but the retirement savings/long term investment strategy is kind of on autopilot - the contributions are automatic, and not part of my budget. I don't really even have a net-worth calc that I run regularly. I spend more energy thinking about the short-term spending side (easier to control than the income side), and socking "discretionary" money away for our next car and for college (which is coming up quick for my older kid). I could borrow from the long-term savings for either of those things, but am hoping to cash flow them over the next couple of years (already well started on the college thing). Once we get our first kid's college fully funded, I will start saving specifically for the second kid's college. Once that is funded, all of our "discretionary" savings will be able to go to retirement as well, and that's when I'll start thinking more about the "when" of FIRE. Our bias towards living frugally and maintaining financial flexibility has allowed us to change course a couple of times already, and I've been really grateful for that. Who knows what will actually happen over the next 10 years or so.
 

WVMomof3

DIS Veteran
Joined
Feb 21, 2005
I can't remember if we talked about this here, but the one thing I am most worried about is parents. People talk about getting an inheritance and I am worried about getting a "negative inheritance". My parents are OK, I think. They have some savings and are doing OK so far. DH's parents have nothing. NOTHING. My MIL lives on $800/month. She is barely getting by. We already give her things here and there. FIL also has nothing, but I think can go into a VA home if necessary, though not sure. They are both about 400 miles away from their closest kid so it makes it hard to help them out. I have a friend who recently depleted her retirement account paying for her dad's nursing home care and he is still alive. She ended up building an addition onto her house so that he can move in and she will just take care of him. It is scary.
 
  • alryan

    DIS Veteran
    Joined
    Dec 13, 2011
    To me, $1 million is still a lot of money, but not what it use to be. That number is very close to what our retirement number is. If DH is 62 I'd like 1.2M but if he works until 65 I would be comfortable around $900,000. But $1 million in retirement savings is still a goal of mine. I can totally see myself waiting to retire if we are sitting at $950,000, just to hit that $1 million mark. And for me, even though house value contributes to net worth, I really want to see retirement accounts at the million dollar mark.

    Lots of great discussion regarding kids' activities. I am so thankful that we are not in an area where it is all or nothing. It definitely is a fine line. We decided that we would not start travel baseball until age 10, two years after most kids start. Our coach said, "Well, he might get behind by then." No, not one bit. Sometimes even I have to remind myself that playing at the Varsity level in high school isn't the only goal. We like to evaluate each year, does the child still enjoy this, is it a good fit for the entire family, is it financially responsible, is the child learning and growing? As others have mentioned there is only so much time in a day, and I still like to give the kids free time. One thing I do like to keep in mind is trying not to judge how other people spend their money. For example a teammate of my DS11 pays good money to get hitting and pitching instruction. While it isn't something I would spend my money on at that age, his parents have explained that for them they are doing it because it helps their son improve at something he really enjoys doing. I'm thankful that our kids and most of our friends will be going to a small high school where there isn't as much pressure to concentrate on one sport. And I'm thankful that at least for now even our travel baseball is only a few hundred dollars per year for a four month season. I really can't imagine paying $1000 for a six week season.
     

    tzolkin

    DIS Veteran
    Joined
    Jan 3, 2008
    I can't remember if we talked about this here, but the one thing I am most worried about is parents. People talk about getting an inheritance and I am worried about getting a "negative inheritance". My parents are OK, I think. They have some savings and are doing OK so far. DH's parents have nothing. NOTHING. My MIL lives on $800/month. She is barely getting by. We already give her things here and there. FIL also has nothing, but I think can go into a VA home if necessary, though not sure. They are both about 400 miles away from their closest kid so it makes it hard to help them out. I have a friend who recently depleted her retirement account paying for her dad's nursing home care and he is still alive. She ended up building an addition onto her house so that he can move in and she will just take care of him. It is scary.
    This is something that has been well discussed in our home and does influence our financial decisions.

    My grandparents and several other relatives lived their lives “keeping up with the Joneses” and now must rely on my parents for financial support. My grandfather retired WAY too early with absolutely no money saved. They now both have severe dementia and live with my parents full time, but there were many years in between (he retired 30 years ago) where they were healthy but my parents were still responsible for their finances.

    My parents renovated their previous house to accommodate my grandparents and have now bought a new house specifically suited to their living arrangement. My dad will have to significantly postpone his retirement because he hasn't saved enough due to the family situation and my mom’s entire life is consumed by caring for her parents. She has been unable to work and has limited travelling to see children/grandchildren due to their situation. Her physical health has also suffered tremendously.

    Because of their exposure to this situation, my kids are of the mindset that my husband and I saving for retirement is for their benefit. They have commented numerous times that they would rather sacrifice or have to work harder to pay for their own things rather than have us neglect saving. They are grateful that we are actively working toward making sure they are never put in that position.

    My parents are making arrangements so that we do not find ourselves in their position when they are elderly. I'm not really sure what is going to happen with my mother-in-law. She is not very financially responsible so we do worry about having to care for her. DH is an only child and his mother has never been married, so he's the only one. That said, their relationship has been strained and she has not seen nor spoken to me or our children in nearly 6 years so making plans and financial decisions together with her is not really feasible at this point.

    I think very often parents spend money on things for their kids (brand new cars upon high school graduation, expensive private colleges for a kid who wants to major in Philosophy, etc.) because it makes the parent feel better--"hey, look what I can do for my child". What's best for the child may not even be a consideration. Too many people still keeping up with the neighbors.T
    I'm sure that I'm in the minority, but I just don't understand the mentality that you're a good parent if your kids are given every opportunity and want for nothing. It sounds good from the parents' perspective (that they are successful because they have been able to give their kids everything), but I simply don't believe that it's in the child's best interest overall.

    I think some struggle is character building. We want our kids to be independent, motivated, and financially savvy so we believe that it's important for them to work hard, problem solve, and overcome adversity. We have actually been more worried that our kids' lives are "too good" rather than worried about them missing out on anything.

    The "keeping up with the neighbors" aspect is huge. I think so many people just do things because they think that they "have to" or because that's what "everyone does". This is particularly relevant for moms. Nearly everyone I know thinks you must do these million things in order to be a "good mom" and they are making themselves (and their kids) crazy with the pressure. I can't tell you how many conversations I have had with other moms where me telling them something like, "you know you don't HAVE to drive your kids to school. They can ride the bus and will be perfectly fine" or "your kids can be healthy and still get into college without doing all those sports/activities that you hate so much" is some kind of revelation to them.
     
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    Starport Seven-Five

    Mouseketeer
    Joined
    Aug 16, 2019
    Hey - glad to see we both are at $2MM. (sorry I use the 2 M's due working in finance, haha).

    Do other folks have a number in mind or an age in mind or what is your goal/focus? I know there are people who chase FIRE with no goal (I'll get there when I get there) but then there are others who are intensely focused on a number of metrics(Savings Rate, $2MM, control expenses, ahhhh!), and of course some people in between those two extremes.

    I think I started on the intense side and have since moved back towards the no goal side a bit more, lol.
    Our initial goal is 1 million and we figure once we hit that we'll sit down and do some real number crunching on what we need/want. We may dial back on savings or double down and march towards a higher amount so we can retire early. Hard to say.

    I can't remember if we talked about this here, but the one thing I am most worried about is parents. People talk about getting an inheritance and I am worried about getting a "negative inheritance". My parents are OK, I think. They have some savings and are doing OK so far. DH's parents have nothing. NOTHING. My MIL lives on $800/month. She is barely getting by. We already give her things here and there. FIL also has nothing, but I think can go into a VA home if necessary, though not sure. They are both about 400 miles away from their closest kid so it makes it hard to help them out. I have a friend who recently depleted her retirement account paying for her dad's nursing home care and he is still alive. She ended up building an addition onto her house so that he can move in and she will just take care of him. It is scary.
    This is something that worries me a bit only because I'm not sure what is required legally. My parents are fine but the inlaws are a mess to the point that my wife has no relationship with them.
     

    elaine amj

    DIS Veteran
    Joined
    Jan 26, 2012
    I ended up choosing to FIRE at 39 with about 1M. It's not an extravagant FIRE. It's not a completely bulletproof FIRE either. I decided that completely bulletproofing my FIRE plans simply wasn't worth spending more years of my life at work. I have confidence that I am smart, capable, and have the ability to adapt to curveballs. Helps that I don't mind coming up with a variery of ways to make money and find our current minimalist lifestyle uber-luxurious already - we can easily cut back and spend way, way less.

    I don’t have kids, but I do not want to have them make sacrifices so I can FIRE earlier.
    This one is an interesting thought. I spent some years struggling with this. I didn't give my kids the fancy house they wanted. I didn't pay for a variety of expensive activities. They grew up wearing thrift store clothes and riding cheap used bikes.

    I'm sure that I'm in the minority, but I just don't understand the mentality that you're a good parent if your kids are given every opportunity and want for nothing. It sounds good from the parents' perspective (that they are successful because they have been able to give their kids everything), but I simply don't believe that it's in the child's best interest overall.
    Then again, they are 16 and 18 now and completely understand and appreciate our frugal lifestyle. They are learning that it isn't always financially smart to rely completely on cars as a convenient mode of transportation. They are starting to understand why I sometimes choose to be inconvenienced in order to achieve a goal I want. They are learning how to have an incredible life spending way less than their peers. And one of the best gifts I have given them is the skill of frugality which should pay huge dividends in their adult lives. It is too easy to get used to spending large sums - that's why it's a constant effort to avoid lifestyle inflation.

    On top of that, they have had the opportunity to have a mother readily available to them (sometimes too much haha!). I take them places, have the time to be fully interested in their activities, have the time to help them figure out education and career prospects, and have the time for endless conversations. Last year when DS was struggling in school and his ADHD, I was able to sit with him for 3-5 hours almost every single day for 4 months training him to manage his homework. Thankfully this year, he barely needed the extra help :) Not to say I didn't do all this when I was working - but I was able to manage quite a bit more when I FIREd.

    And frankly, they will be the first to tell you they are not deprived. FAR from it, really. They have a surplus of everything they need and most of what they want.
     
  • AmyAnne

    DIS Veteran
    Joined
    Sep 20, 2012
    I have a FI question for anyone keeping up with the federal income tax laws. IIRC the current rules are good only for this year and then they expire (and go back tot he old rules?). I'm wondering if I should make our double-property tax payment this year or wait until next year. I paid the property taxes in January and if I pay them before the end of the year, we would come out ahead by itemizing but not by much. Under the old rules, we would come out much more ahead because of the lower standard deductible. So I'm wondering if we should take the standard deductions this year, and pay the property taxes in January so we can double-count them next year.
     

    1st*toright

    DIS Veteran
    Joined
    Mar 1, 2017
    I have a FI question for anyone keeping up with the federal income tax laws. IIRC the current rules are good only for this year and then they expire (and go back tot he old rules?). I'm wondering if I should make our double-property tax payment this year or wait until next year. I paid the property taxes in January and if I pay them before the end of the year, we would come out ahead by itemizing but not by much. Under the old rules, we would come out much more ahead because of the lower standard deductible. So I'm wondering if we should take the standard deductions this year, and pay the property taxes in January so we can double-count them next year.
    The personal income tax changes (the taxpayer favorable ones) do go away, but not for several years - like 2025, so unless something happens in congress (unlikely) the increased standard deduction/current tax brackets will be around for a few more years. Your thought about bundling deductions into particular years is a good strategy, but I don't see a reason to do it in 2020 instead of 2019. Even if the northern states are successful in attacking the 10% SALT deduction limitation (not holding my breath), I'd be surprised if it were decided by the courts by the end of 2020. If you do chartiable contributions or anything else that is tied to the standard deduction, I'd do as much of that as possible in 2019, since you're already in for the property taxes once this year.
     

    AmyAnne

    DIS Veteran
    Joined
    Sep 20, 2012
    The personal income tax changes (the taxpayer favorable ones) do go away, but not for several years - like 2025, so unless something happens in congress (unlikely) the increased standard deduction/current tax brackets will be around for a few more years. Your thought about bundling deductions into particular years is a good strategy, but I don't see a reason to do it in 2020 instead of 2019. Even if the northern states are successful in attacking the 10% SALT deduction limitation (not holding my breath), I'd be surprised if it were decided by the courts by the end of 2020. If you do chartiable contributions or anything else that is tied to the standard deduction, I'd do as much of that as possible in 2019, since you're already in for the property taxes once this year.
    Thanks -- for some reason I thought the increased personal dedication was set to expire during the election year. We'll load up our deductions this year and plan to do the same in 2021.

    Now I need to figure out about rolling over a 401(k) and possibly converting to a Roth IRA. I have a few thousand dollars in a very old 401(k) and for some reason the employer has decided that it needs to be converted to an IRA -- they have picked a company and will send it to them unless I instruct them otherwise. All of my kids have Roths but my + DH's income makes us ineligible to fund a Roth outright. I know there are "backdoor" ways to create a Roth but I've never sat down and worked out the math to see if it makes sense. I have tended to assume that it does not since DH and I don't plan to retire any time soon so I don't anticipate that our tax bracket will be lower by the time we need to make mandatory withdrawals.

    If anyone has done this -- convert a traditional 401(k) to a Roth IRA -- feel free to share why you decided to it. (Either way I will be rolling over to something at Vanguard, I'm just not sure what kind of account I should roll it over into.)
     

    bernina

    DIS Veteran
    Joined
    Jan 25, 2014
    Thanks -- for some reason I thought the increased personal dedication was set to expire during the election year. We'll load up our deductions this year and plan to do the same in 2021.

    Now I need to figure out about rolling over a 401(k) and possibly converting to a Roth IRA. I have a few thousand dollars in a very old 401(k) and for some reason the employer has decided that it needs to be converted to an IRA -- they have picked a company and will send it to them unless I instruct them otherwise. All of my kids have Roths but my + DH's income makes us ineligible to fund a Roth outright. I know there are "backdoor" ways to create a Roth but I've never sat down and worked out the math to see if it makes sense. I have tended to assume that it does not since DH and I don't plan to retire any time soon so I don't anticipate that our tax bracket will be lower by the time we need to make mandatory withdrawals.

    If anyone has done this -- convert a traditional 401(k) to a Roth IRA -- feel free to share why you decided to it. (Either way I will be rolling over to something at Vanguard, I'm just not sure what kind of account I should roll it over into.)
    I’ve not rolled a 401k to a Roth but we do utilize the backdoor Roth IRA (vanguard) if you have any questions. It definitely makes sense for us along with maxing out and investing (but not spending) HSA.
     
  • BridgetBordeaux

    DIS Veteran
    Joined
    Jun 27, 2008
    If anyone has done this -- convert a traditional 401(k) to a Roth IRA -- feel free to share why you decided to it. (Either way I will be rolling over to something at Vanguard, I'm just not sure what kind of account I should roll it over into.)
    We did it about 15 years ago for my old employer's 401k balance. We decided to convert it and pay the taxes on the "small" amount then, rather than on the "big amount" in the future. I am just about old enough to tap in to it if needed, but our intention is to let it grow.

    Our present Roth has no fees and we can chose a wide variety of low fee mutual funds. The old account had a small fee each qtr and the funds were not the best.
     

    georgina

    DIS Veteran
    Joined
    Apr 21, 2003
    If anyone has done this -- convert a traditional 401(k) to a Roth IRA -- feel free to share why you decided to it. (Either way I will be rolling over to something at Vanguard, I'm just not sure what kind of account I should roll it over into.)
    We rolled everything out of DH’s 401 k when he retired. All the pre-tax contributions went into a traditional IRA, he had some Roth 401k contributions that went directly into a Roth IRA. He worked there for 37 years, so the amounts were large. I am converting part of the traditional IRA each year to Roth. It will then grow tax free forever with no required withdrawals, if our kids inherit it they won’t have to pay tax on withdrawals as they would with a traditional one. I am converting now as tax rates are low and who knows what they will be in 10 years.

    I don’t think you can roll 401k directly into a Roth, but not 100% sure on that. You would have to pay ordinary income taxes on the full amount.
     

    georgina

    DIS Veteran
    Joined
    Apr 21, 2003
    I’ve been busy for a month and just read back a few pages. Random thoughts - ever since my first job out of college in 1985, I have been reading up on investing. My dad was an accountant and never bought anything riskier than T bills. I read The Millionaire Next door and money magazines. DH and I both had parents who lived through the depression so frugality was natural. We live in an affluent area with many new homes being built that are worth 3X what ours is. Only my youngest seemed to feel a bit embarrassed to invite friends over.

    Sports - older DD got into softball a bit late (4th grade). She was not super coordinated and could have used some extra help. She tried out unsuccessfully for the school team in 7th, 8th, and 9th grades. I felt badly for her. Then the school started a new sport - field hockey - and accepted everyone. Yay. In college she discovered Ultimate Frisbee which became her passion.
    My DS played soccer and swam until about 3rd grade, when the craziness of the other parents (yelling on the sidelines) turned him off and he quit completely.
    Younger DD was tall and athletic, tried many things, found lacrosse in 7th grade. She did travel lacrosse for 5 years, because she loved it and wanted to improve. We were not doing it for college scholarships, she was also a national merit finalist, but she played 2 years at a DIII school until it became too much with a comp sci major/math minor.

    I had to pay my own way through college and did not want the same for my kids. We were fortunate that my in-laws helped a great deal with college for all their grandchildren. I hope to do the same for mine when I have them. I would find that very gratifying.
     

    runwad

    Dis Veteran
    Joined
    Jan 18, 2006
    On the topic of converting money into a Roth from a tax deferred account, does anyone here feel hesitant to do this besides me?

    I guess I look at our countries debt, and I'm not so sure that roths in the future won't be taxed should our country need the money. I think back to the Greece collapse 😢, and I'm hesitant to start rolling money over.

    I have started just contributing 100% to my Roth 401k instead of the traditional. But actually rolling funds over to a Roth, I'm hesitant.

    My Dh works for a county govt and has a 457 acct that I could roll, but my gut seems to be telling me to sit tight.

    I know we make the best decisions with the information we have available at the current time. No one has a crystal ball to see in the future, but I don't think I'm gonna worry about converting anything.

    Anyone else have any thoughts on this?
     

    MickeyMouseCD524

    DIS Veteran
    Joined
    Jan 26, 2010
    Curious question, since many of us keep a close eye on our money. How does everyone track their finances and their financial goals. I keep spread sheets and started keeping a money bullet journal, it makes things more colorful and interesting. Just curious to know what others do as it might spark some inspiration for some of us.
     

    coast2coastmickey

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    Apr 13, 2018
    Curious question, since many of us keep a close eye on our money. How does everyone track their finances and their financial goals. I keep spread sheets and started keeping a money bullet journal, it makes things more colorful and interesting. Just curious to know what others do as it might spark some inspiration for some of us.
    Spreadsheet with various functions:
    1) Cash flow (so I can see what I expect to see in checking/savings a year or two out based on expected expenses and due dates.
    2) Budget (so I can roughly see how much the bills work out to versus required expenses versus expected savings. That said, I don't actually enforce it, if we spend more in clothes than planned, I just try to consciously spend less the next month, for example, and this has worked for us.
    3) Retirement planning: various equations and functions to guesstimate retirement age based on current amount saved as well as yearly amount saved.

    I used to spend HOURS fiddling, updating, and obsessing over EVERYTHING on my spreadshet, and over time I've relaxed. I figure as long as we aren't living a crazy inflated lifestyle, who cares if i'm a little imprecise. I didn't want financial planning to get in the way of living real life.
     

    QueenIsabella

    DIS Veteran
    Joined
    Jan 17, 2016
    On the topic of converting money into a Roth from a tax deferred account, does anyone here feel hesitant to do this besides me?

    I guess I look at our countries debt, and I'm not so sure that roths in the future won't be taxed should our country need the money. I think back to the Greece collapse 😢, and I'm hesitant to start rolling money over.

    I have started just contributing 100% to my Roth 401k instead of the traditional. But actually rolling funds over to a Roth, I'm hesitant.

    My Dh works for a county govt and has a 457 acct that I could roll, but my gut seems to be telling me to sit tight.

    I know we make the best decisions with the information we have available at the current time. No one has a crystal ball to see in the future, but I don't think I'm gonna worry about converting anything.

    Anyone else have any thoughts on this?

    I feel as you do--you could save for decades in a Roth, thinking you're going to benefit from all that tax-free growth, and it could "poof" with the stroke of a president's pen.

    My financial guru suggested that, even if they did change the tax-favored treatment of the Roth, he seemed to think that, if anything, they'd tax only the gains (versus the previously-taxed initial investment). That doesn't make me feel a whole lot better. That said, we did do a Roth conversion in 2017, and the Roth is the last thing on our list to touch--ever.

    As for the rest of our retirement funds, they're all in 401ks or IRAs. Give me my tax break today. I don't trust you to give it to me tomorrow.
     

    Starport Seven-Five

    Mouseketeer
    Joined
    Aug 16, 2019
    Curious question, since many of us keep a close eye on our money. How does everyone track their finances and their financial goals. I keep spread sheets and started keeping a money bullet journal, it makes things more colorful and interesting. Just curious to know what others do as it might spark some inspiration for some of us.
    I have a spreadsheet to track bills and our checking account(s). I check it twice a month and schedule payments/transfers for anything that isn't already on autopay.

    Same spreadsheet has a separate tab for calculating net worth. We calculate that quarterly and log the numbers in a separate tab. I have some projections in there as well but it's so dependent on market returns that it's not worth spending that much time worrying about.

    We kept much closer tabs on it earlier but now that we understand our lifestyle/budget there is no need. We might be able to save an extra couple dollars by micromanaging but it's not worth the time/stress.
     

    AmyAnne

    DIS Veteran
    Joined
    Sep 20, 2012
    I’ve not rolled a 401k to a Roth but we do utilize the backdoor Roth IRA (vanguard) if you have any questions. It definitely makes sense for us along with maxing out and investing (but not spending) HSA.
    This is what I decided to do; since it's such a small amount I decided it is a low-risk way to see how this process works. So far I have opened the Vanguard account and requested a check from the current IRA company made payable to Vanguard. Just waiting to receive that so I can send it in.

    We did it about 15 years ago for my old employer's 401k balance. We decided to convert it and pay the taxes on the "small" amount then, rather than on the "big amount" in the future. I am just about old enough to tap in to it if needed, but our intention is to let it grow.

    Our present Roth has no fees and we can chose a wide variety of low fee mutual funds. The old account had a small fee each qtr and the funds were not the best.
    The available funds at Vanguard was a factor.

    We rolled everything out of DH’s 401 k when he retired. All the pre-tax contributions went into a traditional IRA, he had some Roth 401k contributions that went directly into a Roth IRA. He worked there for 37 years, so the amounts were large. I am converting part of the traditional IRA each year to Roth. It will then grow tax free forever with no required withdrawals, if our kids inherit it they won’t have to pay tax on withdrawals as they would with a traditional one. I am converting now as tax rates are low and who knows what they will be in 10 years.

    I don’t think you can roll 401k directly into a Roth, but not 100% sure on that. You would have to pay ordinary income taxes on the full amount.
    I'm hoping Vanguard handles this converting thing--when I opened the account, I clicked that I was rolling over a traditional IRA into a Roth. Once I can send them the funds, I'll message someone to make sure I am doing what I think I am doing.

    On the topic of converting money into a Roth from a tax deferred account, does anyone here feel hesitant to do this besides me?

    I guess I look at our countries debt, and I'm not so sure that roths in the future won't be taxed should our country need the money. I think back to the Greece collapse 😢, and I'm hesitant to start rolling money over.

    I have started just contributing 100% to my Roth 401k instead of the traditional. But actually rolling funds over to a Roth, I'm hesitant.

    My Dh works for a county govt and has a 457 acct that I could roll, but my gut seems to be telling me to sit tight.

    I know we make the best decisions with the information we have available at the current time. No one has a crystal ball to see in the future, but I don't think I'm gonna worry about converting anything.

    Anyone else have any thoughts on this?
    For me, the big uncertainty is that both DH and I plan to work well into our 60s and older if we are lucky. We both have jobs are rewarding (financially but also intellectually). I'm just not sure when we will be in a lower tax bracket.

    I feel as you do--you could save for decades in a Roth, thinking you're going to benefit from all that tax-free growth, and it could "poof" with the stroke of a president's pen.

    My financial guru suggested that, even if they did change the tax-favored treatment of the Roth, he seemed to think that, if anything, they'd tax only the gains (versus the previously-taxed initial investment). That doesn't make me feel a whole lot better. That said, we did do a Roth conversion in 2017, and the Roth is the last thing on our list to touch--ever.

    As for the rest of our retirement funds, they're all in 401ks or IRAs. Give me my tax break today. I don't trust you to give it to me tomorrow.
    This articulated some of what I like about the traditional IRAs--that I know what the benefit is, and it's in today's dollars. I'm not so much worried about changes to the tax code (although maybe I should be); my concern is that the Roth seems to be advantageous only when/if (or mostly when/if) we are in a lower tax bracket when we withdraw, and I don't know when/if that is going to happen. Starting a Roth for each of my kids in their teens was an easy decision. Paying taxes to convert our accounts to a Roth is not so clearly a winner.
     

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