401(k)s Will Be Gone Within a Decade

[sealybobo]

Most condos require homeowners insurance because if if you do damage to another unit or common elements such as hot water heater fails, tub overflows, kitchen fire or whatever the other owners and the Board will expect you or your insurance to pay for the damages.

Keep in mind special projects such as replacing roofs, paving, etc will often cause a special assessment. If I were buying a condo today I would find out how much the condo or coop has set aside in reserves. If there is little or no reserves, then owners will have special assessment for ever major maintenance projects.

I can almost guarantee you that your homeowner dues will increase because the cost of everything is increasing, particularly building maintenance.

Years ago I cancelled my homeowners insurance and long story short it wasn't until last year that I finally got homeowners. Probably went without for over 15 years. Got lucky.

 

[Harpy Eagle]

Years ago I cancelled my homeowners insurance and long story short it wasn't until last year that I finally got homeowners. Probably went without for over 15 years. Got lucky.

very lucky

 

[Flopper]

Years ago I cancelled my homeowners insurance and long story short it wasn't until last year that I finally got homeowners. Probably went without for over 15 years. Got lucky.

It is only worth gambling if you nothing to lose.

 

[sealybobo]

It is only worth gambling if you nothing to lose.

Well it may have never been worth doing, but it paid off. One day about a year ago I heard them doing construction upstairs in my condos and he warned me or asked me if anything was leaking. I've seen it happen to others. So I got insurance. I got it now. Yea, I gambled. I just happened to win. 15 years x how much is it a year? I saved that shit too!

 

[Dadoalex]

401(k)s Will Be Gone Within a Decade

The intellectual case for getting rid of tax-advantaged retirement plans is strong, and the political case is catching up.

www.wealthmanagement.com

Had this link in a retirement related email I get weekly. I found it pretty interesting ..

If you are among the 56% of US workers with a retirement plan, I have some bad news for you: Your 401(k) will be gone in 10 years, tops. Not the money, thank goodness — Americans have trillions of dollars in these accounts, and there is an entire industry built around them — but the plans themselves.

I have been seeing more and more about this lately...and it all comes down to the Govt and money....


There has been a brewing intellectual movement to get rid of the 401(k) for several years, with scholars on both the right and left questioning its value. And as the federal government gets increasingly desperate for new sources of revenue, the tax treatment of 401(k)s is a likely target. There are good policy reasons to end it, but the question remains: Will Americans still save for retirement?

The 401(k) is not tax-free but what is known as tax-advantaged. Contributions made while working are not taxed, but participants pay taxes when they withdraw the money during retirement. Whether there is a big tax savings depends on the tax rate in retirement — which is usually lower because retirees tend to have lower earnings. Savers also avoid capital gains taxes on returns.

All of this cost the government an estimated $185 billion in 2019, or 0.9% of GDP. That’s not nothing. And in theory it’s justifiable because it creates a powerful incentive to save for retirement. More retirement savings have a triple benefit: for the economy overall, since they fuel growth; for the government, since retirees with income are less likely to be a burden on the state; and, of course, for workers who might not save enough today and regret it later.

Then again, maybe not. The first rumblings that the benefits of the tax breaks may be overstated came in a 2014 study of Danish savers. Without tax-advantaged accounts, it found, people just put their money in another kind of account. People did save more in retirement accounts, but that’s mostly because of automatic paycheck deduction. Subsequent research in other countries found similar results. Not only did the tax incentive fail to encourage more saving; the biggest beneficiaries tended to be the wealthy.
One alternative...

Enter the employer-sponsored liquid account. Like a retirement account, it is funded by payroll deductions, but unlike a 401(k), it allows employees to withdraw money without a penalty when needed. As these accounts grow in popularity, they may displace the 401(k). More liquid accounts, similar to a Roth IRA, have been become popular in Canada, and Canadians are saving more in them than in the tax-advantaged retirement accounts.

Not going to happen.

Every dollar I put into my 401K is not taxed at 24%
The 5% match isn't taxed at all
When I retire I will annuitize that money and withdraw it at a 10% tax rate including all gains
There's about $7T in 401Ks accounting for a significant portion of middle class wealth.

Ain't gonna happen.

 

[Lisa558]

Years ago I cancelled my homeowners insurance and long story short it wasn't until last year that I finally got homeowners. Probably went without for over 15 years. Got lucky.

The HOA blanket insurance on my condo townhouse would cover the structure, but none of the contents. My jewelry and art are worth more than $50,000 alone. Add in furniture, electronics, clothes, etc., and it would be more than $100,000.

I don’t want to count on staying lucky.

 

[Lisa558]

Not going to happen.

Every dollar I put into my 401K is not taxed at 24%
The 5% match isn't taxed at all
When I retire I will annuitize that money and withdraw it at a 10% tax rate including all gains
There's about $7T in 401Ks accounting for a significant portion of middle class wealth.

Ain't gonna happen.

You might be limited in how much you can annuitize. Just saying.

 

[Dadoalex]

You might be limited in how much you can annuitize. Just saying.

I'm cool with rolling 100% into an IRA and managing it myself.

REITS and rolling bonds will do the trick for me.

 

[Lisa558]

I'm cool with rolling 100% into an IRA and managing it myself.

REITS and rolling bonds will do the trick for me.

Sounds good. That’s different than annuitizing.

When I retired, I rolled it all into my IRA and self-directed. I just recently took about 15% of it to buy a SPIA that will cover basic expenses (combined with my SS), and the remaining 85% of my portfolio is for growth.

 

[Dadoalex]

Sounds good. That’s different than annuitizing.

When I retired, I rolled it all into my IRA and self-directed. I just recently took about 15% of it to buy a SPIA that will cover basic expenses (combined with my SS), and the remaining 85% of my portfolio is for growth.

i'm lazy.
I'll take the guaranteed payout if it's right.
But if not? I still sleep well.

 

[sealybobo]

The HOA blanket insurance on my condo townhouse would cover the structure, but none of the contents. My jewelry and art are worth more than $50,000 alone. Add in furniture, electronics, clothes, etc., and it would be more than $100,000.

I don’t want to count on staying lucky.

Here's what's valuable in my house.

a. Baseball cards. Old
b. Guns
c. Nice guitar
d. TV
e. Bed
f. Some watches

There may be more. The point I wanted to make was I don't have that much I care about but now that I'm adding things up, maybe there is a lot of $ I'd lose if the place burned up. But I would not die if I lost all those things I listed above. So unlike you, I don't have $50K worth of jewelry in my home. If I did, I'd probably have stayed insured.

How do people build new homes? They buy the wood, drywall, all that shit. So I figured if the place burned to the ground, I would just have to pay to have it all new. But my place could use a makeover. To do EVERYTHING, gosh, $30K give or take? So I already need to give this place a $30K makeover. So I figured if it burned down, I guess I would give it the make over it needs. LOL. I know, STUPID!

I put in hard wood floors, new furnace/ac, water heater, but really probably EVERYTHING else should be replaced. Washer and dryer (still work but old) same for the dishwasher, oven, fridge. I paid $58K for this condo on a lake back in the 90's. Fix it up it's worth $200K. Don't and it's probably $150? I love it the president a couple years ago said "you won't get $125 for yours, back when that's what they were going for. I told her, "yes I will, eventually. Because the prices are going up". Today I'm right. Of course everything else is expensive so I'm not going anywhere.

An old neighbor moved back when it was $125. That's what they sold it to the current owners. They bought it back! For $200K. They said they were going to look for a better lake because we have a fucked up neighbor who sometimes ruins it for us but they realized there is no better lake for the price. I can't believe they paid $75K more for it. I love it! My nephews one day will each get $100K hopefully. Or $75 each. Plus the pontoon. I tell them to keep it. Rent out the condo and keep the boat on the lake. The rent should pay all the bills and the costs that go along with having a boat. Storage, insurance, annual boat club dues, gas, etc. Figure out what the boat costs and add that into the rent you charge.

Or if they are single, just move in here. It's the best! It's like only 700 square feet? Very small. Perfect for 1 or a couple. You single? LOL

 

[WorldWatcher]

Here's what's valuable in my house.

a. Baseball cards. Old
b. Guns
c. Nice guitar
d. TV
e. Bed
f. Some watches

There may be more. The point I wanted to make was I don't have that much I care about but now that I'm adding things up, maybe there is a lot of $ I'd lose if the place burned up. But I would not die if I lost all those things I listed above. So unlike you, I don't have $50K worth of jewelry in my home. If I did, I'd probably have stayed insured.

How do people build new homes? They buy the wood, drywall, all that shit. So I figured if the place burned to the ground, I would just have to pay to have it all new. But my place could use a makeover. To do EVERYTHING, gosh, $30K give or take? So I already need to give this place a $30K makeover. So I figured if it burned down, I guess I would give it the make over it needs. LOL. I know, STUPID!

I put in hard wood floors, new furnace/ac, water heater, but really probably EVERYTHING else should be replaced. Washer and dryer (still work but old) same for the dishwasher, oven, fridge. I paid $58K for this condo on a lake back in the 90's. Fix it up it's worth $200K. Don't and it's probably $150? I love it the president a couple years ago said "you won't get $125 for yours, back when that's what they were going for. I told her, "yes I will, eventually. Because the prices are going up". Today I'm right. Of course everything else is expensive so I'm not going anywhere.

An old neighbor moved back when it was $125. That's what they sold it to the current owners. They bought it back! For $200K. They said they were going to look for a better lake because we have a fucked up neighbor who sometimes ruins it for us but they realized there is no better lake for the price. I can't believe they paid $75K more for it. I love it! My nephews one day will each get $100K hopefully. Or $75 each. Plus the pontoon. I tell them to keep it. Rent out the condo and keep the boat on the lake. The rent should pay all the bills and the costs that go along with having a boat. Storage, insurance, annual boat club dues, gas, etc. Figure out what the boat costs and add that into the rent you charge.

Or if they are single, just move in here. It's the best! It's like only 700 square feet? Very small. Perfect for 1 or a couple. You single? LOL

Here is a strategy that was suggested by our insurance agent (we have home, auto, and an umbrella).

Do an initial "inventory" of the house:

• Make a note of any electronics (computers, TV, audio equipment, Kitchen Appliances, etc.) include make/model/serial number. Include date of purchase and cost if you have it.
• Make note of any other high value items. Include specific's where needed manufacturer, model, etc. Include date of purchase and cost if you have it.
• Then take a digital camera and do a "photoshoot" of the house. Room by room, section by section. Include closets, dressers drawers, kitchen, bedrooms, garage, book cases, etc. You want to use a good quality camera (and ya, modern cell phones are pretty good).

After you have the "data", put in in a Word Document or Excel Spreadsheet. Take the inventory list and the photos and keep a local copy - and here is the important part - keep a copy outside the home. It could be with parents, siblings, or even online storage. Someplace that if the house burns down you still have access to the files. This might take a day or two initially.

Once a year have some type of reminder event that keys your action. Could be policy renewal, when you do your taxes, your birthday, etc. Whatever works for you. Since you already have an initial list this will be much faster.

• Review your high value tracking item, delete items you no longer have, add items that may have appeared over the last year.
• Do another photo walk around.
• Create a new folder for the new electronic files (tracking document and photos), and keep the old ones don't delete them, then put the backups in place.

We live on the east coast to hurricanes are a thing. We keep a "go bag" of important papers. In the event of a major evacuation I have copies of the electronic files (a) on my desktop, (b) on a memory stick, (c) and with a family member that lives with the west coast. If the house burns down or gets blown down, my wife and I have access to an inventory with photos for insurance purposes.

And it really doesn't take that long. After creating the initial list (which took awhile), I can now do the walk around and update in a couple of hours. Remember the intent isn't a "Home and Gardens" modeling shoot, it's an inventory shoot. The photos don't have to be pretty, they just need to be of good quality so you can zoom in and see what is in the frame.

WW

 

[Lisa558]

i'm lazy.
I'll take the guaranteed payout if it's right.
But if not? I still sleep well.

Right now, the payout on the annuity (at my age) is 7.8% a year for the rest of my life. We haven’t had rates this high in 20 years. I jumped to lock it in.

The other advantage is that now that I know my basic expenses will be covered no matter what, I can take a bit more risk with my investments.

 

[WorldWatcher]

Right now, the payout on the annuity (at my age) is 7.8% a year for the rest of my life. We haven’t had rates this high in 20 years. I jumped to lock it in.

The other advantage is that now that I know my basic expenses will be covered no matter what, I can take a bit more risk with my investments.

And annuity at 7.8% is damn good. The rate for my wife's 401K and mine are both around 4.7%. However this is through the employer supervised 401K, that isn't us rolling the money out to a third party (such as Schwab or Morgan Stanley).

WW

 

[sealybobo]

Here is a strategy that was suggested by our insurance agent (we have home, auto, and an umbrella).

Do an initial "inventory" of the house:

• Make a note of any electronics (computers, TV, audio equipment, Kitchen Appliances, etc.) include make/model/serial number. Include date of purchase and cost if you have it.
• Make note of any other high value items. Include specific's where needed manufacturer, model, etc. Include date of purchase and cost if you have it.
• Then take a digital camera and do a "photoshoot" of the house. Room by room, section by section. Include closets, dressers drawers, kitchen, bedrooms, garage, book cases, etc. You want to use a good quality camera (and ya, modern cell phones are pretty good).

After you have the "data", put in in a Word Document or Excel Spreadsheet. Take the inventory list and the photos and keep a local copy - and here is the important part - keep a copy outside the home. It could be with parents, siblings, or even online storage. Someplace that if the house burns down you still have access to the files. This might take a day or two initially.

Once a year have some type of reminder event that keys your action. Could be policy renewal, when you do your taxes, your birthday, etc. Whatever works for you. Since you already have an initial list this will be much faster.

• Review your high value tracking item, delete items you no longer have, add items that may have appeared over the last year.
• Do another photo walk around.
• Create a new folder for the new electronic files (tracking document and photos), and keep the old ones don't delete them, then put the backups in place.

We live on the east coast to hurricanes are a thing. We keep a "go bag" of important papers. In the event of a major evacuation I have copies of the electronic files (a) on my desktop, (b) on a memory stick, (c) and with a family member that lives with the west coast. If the house burns down or gets blown down, my wife and I have access to an inventory with photos for insurance purposes.

And it really doesn't take that long. After creating the initial list (which took awhile), I can now do the walk around and update in a couple of hours. Remember the intent isn't a "Home and Gardens" modeling shoot, it's an inventory shoot. The photos don't have to be pretty, they just need to be of good quality so you can zoom in and see what is in the frame.

WW

I send anything I want to keep to my gmail account.

 

[WorldWatcher]

I send anything I want to keep to my gmail account.

By that do you mean you send yourself emails with attachments or are you using the Google Drive that comes with the Gmail account?

Personally I'd find it easier to use the Google Drive to place the files.

WW

 

[Lisa558]

And annuity at 7.8% is damn good. The rate for my wife's 401K and mine are both around 4.7%. However this is through the employer supervised 401K, that isn't us rolling the money out to a third party (such as Schwab or Morgan Stanley).

WW

You must be a lot younger, or you bought it years ago when the rates were much lower.

I’m retired, and funded it with IRA rollover money.

 

[WorldWatcher]

You must be a lot younger, or you bought it years ago when the rates were much lower.

I’m retired, and funded it with IRA rollover money.

Haven't bought it yet. We're currently planning transition.

Currently mid-60's looking to retire in the next year or two.

I don't know if that is much different than you, but I didn't consider that WHEN you took an annuity would impact %. Good point. I was assuming provider was the driving factor.

WW

 

[Lisa558]

Haven't bought it yet. We're currently planning transition.

Currently mid-60's looking to retire in the next year or two.

I don't know if that is much different than you, but I didn't consider that WHEN you took an annuity would impact %. Good point. I was assuming provider was the driving factor.

WW

Yes, when you take it matters since the older you are, the fewer years the insurance company has to pay out (theoretically).

I played with the numbers and saw if I waited, the payout would be even higher, but that was based on current interest rates. If Rates are lower by then, I’d end up with less.

P.S. I’m late 60s.

 

[WorldWatcher]

Yes, when you take it matters since the older you are, the fewer years the insurance company has to pay out (theoretically).

I played with the numbers and saw if I waited, the payout would be even higher, but that was based on current interest rates. If Rates are lower by then, I’d end up with less.

P.S. I’m late 60s.

Here is what is causing my wife and I angst as we research and plan out a transition from work to retirement.

Currently my wife and I will have 6 defined benefits revenue streams where we will pretty comfortable in retirement. Able to meet all bills with enough left over to fund a couple of pretty significant trips a year. My 3 streams will bring in about 2/3rds and her's about 1/3rd.

If something happens to her, all 3 of her revenue streams go away leaving me with the 2/3rds share. Which being single will be fine.

If something happens to me, then she ends up with pretty close to the 2/3rds mark herself. That results from:

• Her Social Security being raised to my level.
• I have an active Survivor Benefit option on my military retirement. So if I pass she will receive 55% of my military retirement for the rest of her life.

So either one of us alone will have roughly the same amounts. And honestly we would be fine either as a couple or as a widow(er). Which is really good.
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So then if we add our 401K's into the mix.

Taking an annuities adds,. this 2 more revenue streams (total of 8 now) since 401K's are an individual account, not joint. If we take annuities and opt for the survivor option, the monthly amount will be a little lower, but if something happens to the other then the surviving spouse has that income for the rest of their life.

The other option is to not take an annuity, roll it out of the employer sponsored 401K and into a qualifying IRA investment account. That gives us direct control of the funds and we can withdraw as needed. (If at all until we reach RMD age.)

So here is the cause for the angst:

• As we understand it, if we take the annuities, that is the safest income stream(s) for us. However once we pass, that's it. There is nothing to pass to the kids. If we pass in 10 years, it's gone. If we pass in 35 years it's gone. That's what an annuity is. The gambling is done by the annuity provider.
• On the other hand if we roll the money into an IRA investment, we can draw as needed. Even accounting for eventually having to take RMDs. Once we pass though, any remaining balance then becomes part of the estate and can pass to our children.

So the gamble is security for us for as long as we live, or if we were to pass being able to pass something to the kids.

WW