My Retirement Checklist

[WinniWoman]

If in taking a disbursement, you pay tax, then have to claim it at the end of the yr. both total amount and taxes pd. Taking money from one to another, except in a roll over, you still pay tax. Even though the sum was first established by you(to be used later in life) it is still earned income at distribution. It's all in the details and terminology, it's your money, you put it away, paid tax when you put it away, but the Feds still get there cut as earned income in the end, that's what makes it NEW MONEY...........
If you bought your house for 50K 20yrs. ago, sold it today for 100K. The 50K over what you pd. originally is considered "NEW MONEY". Did you work for it(well sorta) no......but you still show it as earned income whether you spend it or put it in a IRA.

Wow! Interesting? So you are saying when you take an RMD, for example. out of an IRA, that you can actually put it back into the IRA?

As for the house example- are you kidding? You can also do the same with that?

This is legit? Is it in writing anywhere? I honestly never heard of this. See- I keep telling people- there are things about managing money that I do not get.

 

[x3 skier]

If in taking a disbursement, you pay tax, then have to claim it at the end of the yr. both total amount and taxes pd. Taking money from one to another, except in a roll over, you still pay tax. Even though the sum was first established by you(to be used later in life) it is still earned income at distribution. It's all in the details and terminology, it's your money, you put it away, paid tax when you put it away, but the Feds still get there cut as earned income in the end, that's what makes it NEW MONEY...........
If you bought your house for 50K 20yrs. ago, sold it today for 100K. The 50K over what you pd. originally is considered "NEW MONEY". Did you work for it(well sorta) no......but you still show it as earned income whether you spend it or put it in a IRA.

I would definitely consult a tax specialist about this. "It depends". For example, I had earned income money that I paid tax on that I put in an IRA. The only taxes I paid on the withdrawal was the increase in value, not the original amount. Later when the rule changed, I paid no taxes on earned income that I put in an IRA and all withdrawals were taxable. A Roth IRA is different still.

As far as taxes on the growth in value of a house, it can be either regular taxable income, a capital gain or nothing at all if invested in another house.

If you want to die a slow and agonizing death, read the tax code

Cheers

 

[sts1732]

I would definitely consult a tax specialist about this. "It depends". For example, I had earned income money that I paid tax on that I put in an IRA. The only taxes I paid on the withdrawal was the increase in value, not the original amount. Later when the rule changed, I paid no taxes on earned income that I put in an IRA and all withdrawals were taxable. A Roth IRA is different still.

As far as taxes on the growth in value of a house, it can be either regular taxable income, a capital gain or nothing at all if invested in another house.

If you want to die a slow and agonizing death, read the tax code

Cheers

I only used the house example as capital gains to show you only pd. on what you EARNED, that amount would be taxed as earned income. NOTHING MORE, I don't believe I said anything about "DEPENDS"(your words). Sadly to say I do know the difference between Roth, different IRA's, annuities, and the disbursement there of. Along with the reinvestment of house to house. I was trying to show in my poor description of "EARNED INCOME" TO THE ORIGINAL OP in that I was left with the impression that in her question of "don't you have to be working to have earned income". Maybe by terminology isn't on the same level as yours or the original OP, and for that I am truly sorry.
"If you want to die a slow and agonizing death, read the tax code"(your quote). It would seem I'm having that experience now.

 

[sts1732]

Wow! Interesting? So you are saying when you take an RMD, for example. out of an IRA, that you can actually put it back into the IRA?

As for the house example- are you kidding? You can also do the same with that?

This is legit? Is it in writing anywhere? I honestly never heard of this. See- I keep telling people- there are things about managing money that I do not get.

I'm only trying to understand your definition of earned income, my understanding, and I seem to missing the point plus mudding the waters with my examples, that you seem to love to take issue with. HAVE A NICE DAY......

 

[isisdave]

Earned income, generally, is what you get from working, either wages or self-employment.

Investment income, including capital gains from property, is NOT earned income, and thus does not qualify for contributing to an IRA.

https://www.irs.gov/credits-deductions/individuals/earned-income-tax-credit/earned-income

Also, you are not permitted "roll over" a traditional IRA, or an RMD from one, into another tax-advantaged account such as a Roth IRA. To "contribute" to any kind of an IRA, it has to be earned income (income from working that year). But this doesn't mean that you have to use money from any specific account; it just means that you have to have the earned income. So you could take money from the IRA to your bank account and then send it on to the Roth, as long as you had that much earned income (this would permit you to do the transfer early in the year, perhaps before you had actually received the earned income).

It's not usual to have annuities inside an IRA but it is allowed. Annuities don't have RMDs; it's the IRA that has the RMD. It's still not quite clear to me what kind of annuity sts1732 has (deferred, immediate, etc.)

Apropos of nothing, 1732 is one of my favorite numbers: engineers know that it's the birth year of George Washington, and the square root of 3 (times 1000).

 

[rapmarks]

I am confused, I have to take rmd but I don't have to pull anything from my annuities except for an inherited annuity. I also thought that earned income is not considered interest, dividends, capital gains, or anything reported on a 1099.


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[x3 skier]

I am confused, I have to take rmd but I don't have to pull anything from my annuities except for an inherited annuity. I also thought that earned income is not considered interest, dividends, capital gains, or anything reported on a 1099.


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All of my self employment income from consulting is reported on a 1099 (1099-MISC)

Cheers

 

[rapmarks]

Yes I should have said 1099R. At least when we retired we were told we couldn't put any money in an ira because we had no earned income. I was self employed for a few years and could have put that sum in an ira. If I could put our RMD in a Roth, or any of our investment income, it would be fantastic.


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[pedro47]

I have been ret'd now for 17 years.
Please review all insurance policies.
Please review and update beneficiary on insurance policies and all IRA & Roth accounts
Please do not stop saving for a rainy day.
Please review you will and make sure you have a living will in place.
Please do not sit around the house and do nothing (eat right and exercise).
This is my major suggestion. Please enjoy your retirement.

 

[WinniWoman]

I'm only trying to understand your definition of earned income, my understanding, and I seem to missing the point plus mudding the waters with my examples, that you seem to love to take issue with. HAVE A NICE DAY......

Really- I was only honestly trying to understand what you were saying. It is sometimes hard on a forum to express what you mean in writing. Not trying to discredit you in any way. Sorry if I came across that way.

 

[WinniWoman]

Earned income, generally, is what you get from working, either wages or self-employment.

Investment income, including capital gains from property, is NOT earned income, and thus does not qualify for contributing to an IRA.

https://www.irs.gov/credits-deductions/individuals/earned-income-tax-credit/earned-income

Also, you are not permitted "roll over" a traditional IRA, or an RMD from one, into another tax-advantaged account such as a Roth IRA. To "contribute" to any kind of an IRA, it has to be earned income (income from working that year). But this doesn't mean that you have to use money from any specific account; it just means that you have to have the earned income. So you could take money from the IRA to your bank account and then send it on to the Roth, as long as you had that much earned income (this would permit you to do the transfer early in the year, perhaps before you had actually received the earned income).

It's not usual to have annuities inside an IRA but it is allowed. Annuities don't have RMDs; it's the IRA that has the RMD. It's still not quite clear to me what kind of annuity sts1732 has (deferred, immediate, etc.)

Apropos of nothing, 1732 is one of my favorite numbers: engineers know that it's the birth year of George Washington, and the square root of 3 (times 1000).

Thank you. This is what I was trying to get across.

 

[WinniWoman]

I have been ret'd now for 17 years.
Please review all insurance policies.
Please review and update beneficiary on insurance policies and all IRA & Roth accounts
Please do not stop saving for a rainy day.
Please review you will and make sure you have a living will in place.
Please do not sit around the house and do nothing (eat right and exercise).
This is my major suggestion. Please enjoy your retirement.

Good suggestions.

Our term life insurance policies all stop at age 65. Also- how do you save additional money when retired when you don't have a salary any more?

 

[rapmarks]

Good suggestions.

Our term life insurance policies all stop at age 65. Also- how do you save additional money when retired when you don't have a salary any more?

Somehow my mother and aunts were able to save money after retirement and they lived on social security!
It is good advice to review everything every couple of years. When I had to take over my aunts finances, Bank of America would not recognize power of attorney over two years old.


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[sts1732]

Thank you. This is what I was trying to get across.

Pointe taken...................In quoting the late Will Rodgers............."if you find yourself in a hole.............stop digging" No offence on my part. HAVE A NICE DAY

 

[PamMo]

...Also- how do you save additional money when retired when you don't have a salary any more?

Just like some people spend more money than they earn during their working years, some retirees have unsustainable budgets that will quickly deplete their savings. Budget for a cushion between what money is coming in and what money is going out.

 

[Talent312]

Budget for a cushion between what money is coming in and what money is going out.

Our retirement budget includes a regular transfer of cash to an online savings account.
This account serves three primary purposes:
(1) A sinking fund for annual expenses such as MF's and property taxes & insurance;
(2) A slush fund for fun-stuff like travel and other projects; and
(3) A rainy-day reserve for unplanned expenses (the minimum balance).
A cash-savings account gives you easy access to $$ and avoids tapping into retirement accounts.

.

 

[Born2Travel]

Our retirement budget also includes a regular transfer of cash to savings account(s) - we probably have 7-8 or more. I haven't counted, but everything goes into a different "bucket" - MF's in one, taxes in another, insurance in another, etc. It's just easier for me to keep them separate and it works for us. When it's time to pay, I just take it from the proper bucket. (account)

 

[geekette]

Also- how do you save additional money when retired when you don't have a salary any more?

Dividends from more than 80 companies will be paying me more than I need without selling shares. My plan is to retire when the 80+ cos pay me more than the one (and mortgage is paid off, which will happen before I hit that mark). With div raises annually, and continuing to reinvest divs in as many companies as possible, once I hit the right annual haul it should get better every year (no guarantees of course).

I will also be ditching expenses that associate to work vs full time vacation (fuel, clothes, lunch out...). And eventually take SS which will presumably be the cherry on top. I also will be able to do more handyman stuff myself vs hiring someone else, because I will have time and not have to have everything shut down and cleaned up by Sun evening to delay until the next weekend. I will also be cooking a lot more of my meals and eating at home more for exactly that reason - time to make what I actually like!! Less convenience foods.

 

[WinniWoman]

Our retirement budget also includes a regular transfer of cash to savings account(s) - we probably have 7-8 or more. I haven't counted, but everything goes into a different "bucket" - MF's in one, taxes in another, insurance in another, etc. It's just easier for me to keep them separate and it works for us. When it's time to pay, I just take it from the proper bucket. (account)

I do that now with our wages.

 

[WinniWoman]

Our retirement budget includes a regular transfer of cash to an online savings account.
This account serves three primary purposes:
(1) A sinking fund for annual expenses such as MF's and property taxes & insurance;
(2) A slush fund for fun-stuff like travel and other projects; and
(3) A rainy-day reserve for unplanned expenses (the minimum balance).
A cash-savings account gives you easy access to $$ and avoids tapping into retirement accounts.

.

Yes. We do this.

 

[geekette]

See- I keep telling people- there are things about managing money that I do not get.

Don't sell yourself short. I don't think it's reasonable to have a grasp on every detail and loophole. You know the main normal stuff, and plenty of depth in those.

Taking advantage of obscure sections in tax code is not managing money. Not sure how to define it, other than... opportunistic digging ? best I can do at the moment, but you likely won't find a chapter about mining the tax code for opportunities in any money management book.

So here you are on a public forum and come to find out about something you didn't know. That just shows you are open to new info and out there seeking it. For me it's the best part of the internet -- finding out stuff I would never have thought to look for.

I had same experience here at work this morning - uncovered a giant cache of data, perfect to fit requirements of something I had to deliver in early Feb... but didn't know who to ask the right questions of so no one pointed me to it. Then it falls in my lap. Too late to help, but, now I know for Next Time.

You don't know what you don't know, none of us do, but you have a firm grasp on quite more than the basics. Frankly, you wouldn't be talking about retirement if you had no money skills. You're just quibbling now over how when to do what with each stash of savings, take SS, etc. You are farther ahead than you think.

 

[VacationForever]

I think if you compartmentalize each bucket, you will find retirement funding / planning manageable. For example, for SS, drawing at 62 will breakeven at 80. If you need the money then draw sooner, unless you have other buckets of money to spend from. Family history of longevity comes into play, just as consideration of age of spouse. The higher SS payout and older spouse, should draw on SS later, as that amount affects the survival benefit amount. In my case, my spouse is older than me, he will draw at 70 and I at 62. My amount does not affect his survival benefit but his amount affects mine. I hope this helps, if you are not already thinking along this line.

 

[WinniWoman]

I think if you compartmentalize each bucket, you will find retirement funding / planning manageable. For example, for SS, drawing at 62 will breakeven at 80. If you need the money then draw sooner, unless you have other buckets of money to spend from. Family history of longevity comes into play, just as consideration of age of spouse. The higher SS payout and older spouse, should draw on SS later, as that amount affects the survival benefit amount. In my case, my spouse is older than me, he will draw at 70 and I at 62. My amount does not affect his survival benefit but his amount affects mine. I hope this helps, if you are not already thinking along this line.

Thanks. I guess for me it is that if my husband delays his SS, can we/should we then live off our savings? Because my full retirement age is 66 and he is 2 years older. That is the kind of thing I have to figure out and not sure how. I can't stop working until age 65 because I need Medicare. Hopefully- although I hate it- I will still be working and have access to health insurance, though I do not know how I will last working until then. I would love to stop working at 62, believe me. I really can't ask my husband to work longer- he wants to retire and he deserves it also. 66 is long enough. Oye! Of course, who knows what will even happen to our jobs and then, if we lose them prematurely, we will be in a lurch.

 

[WinniWoman]

Don't sell yourself short. I don't think it's reasonable to have a grasp on every detail and loophole. You know the main normal stuff, and plenty of depth in those.

Taking advantage of obscure sections in tax code is not managing money. Not sure how to define it, other than... opportunistic digging ? best I can do at the moment, but you likely won't find a chapter about mining the tax code for opportunities in any money management book.

So here you are on a public forum and come to find out about something you didn't know. That just shows you are open to new info and out there seeking it. For me it's the best part of the internet -- finding out stuff I would never have thought to look for.

I had same experience here at work this morning - uncovered a giant cache of data, perfect to fit requirements of something I had to deliver in early Feb... but didn't know who to ask the right questions of so no one pointed me to it. Then it falls in my lap. Too late to help, but, now I know for Next Time.

You don't know what you don't know, none of us do, but you have a firm grasp on quite more than the basics. Frankly, you wouldn't be talking about retirement if you had no money skills. You're just quibbling now over how when to do what with each stash of savings, take SS, etc. You are farther ahead than you think.

Yes. Right. And I am an over thinker/analyzer for sure! The mental gymnastics my brain goes through- omg! Way overactive. No wonder I barely sleep! LOL!

 

[VacationForever]

Thanks. I guess for me it is that if my husband delays his SS, can we/should we then live off our savings? Because my full retirement age is 66 and he is 2 years older. That is the kind of thing I have to figure out and not sure how. I can't stop working until age 65 because I need Medicare. Hopefully- although I hate it- I will still be working and have access to health insurance, though I do not know how I will last working until then. I would love to stop working at 62, believe me. I really can't ask my husband to work longer- he wants to retire and he deserves it also. 66 is long enough. Oye! Of course, who knows what will even happen to our jobs and then, if we lose them prematurely, we will be in a lurch.

2 things for you to consider... SS grows at 8 percent per year when delayed and you have to weigh that against depleting your savings. If your husband stops at 66...and you also stop working... under Obamacare - who knows if and when the rules will be changed, you can get premium subsidy and cost sharing subsidy as long as your household income is low. There is no consideration for assets, that is how Obamacare is written. So if he does not start SS and you do not work, guess what, your health insurance becomes very cheap. You can PM me if you want to know more. Alot of wanna be retirees ended up retiring early because of Obamacare.