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Re: "Early Retirement Packages"... any takers? [Re: HoosierTA] #2715453
11/13/19 02:32 PM
11/13/19 02:32 PM
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13 Months til retirement................
Re: "Early Retirement Packages"... any takers? [Re: HoosierTA] #2715470
11/13/19 03:43 PM
11/13/19 03:43 PM
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Originally Posted by HoosierTA
Originally Posted by CMcAllister
I quit working for other people almost 30 years ago. I've had a few bouts of "grass has to be greener on the other side" and tried to go back to working a job that provided a paycheck and a W-2 in January. That usually ended unceremoniously once I discovered it was actually crabgrass and thistles.

I don't expect I'll ever stop working. Nothing I'd rather be doing or I'd be doing it already.

I will be signing up for SS the minute I'm eligible. Even if I don't spend it, I think I can do a better job with it than the clowns who have it now.



I agree with your thinking CMcAllister. While there is the "you earn 8%" concept for every year one waits, you factor in taking the money and investing, a like amount- the 8% is halved at least.

When I retire in three years, I plan to draw immediately. The extra revenue means I won't need to touch other investments, which would mean less base to earn from. I figure if I wait until the max age, there is $70,000 I could have in my bank. Looking at articles on SS income; when a male reaches 80, the same dollars are received regardless of when a person opted to begin. I will just have them send me my money right away, thank you. I really don't buy into the 8% earning that is presented by the government. They are hoping you die before you draw.


I'm doing it more to not give a third of my SS back in taxes the 8% is a bonus. I wouldn't have the 70 grand in the bank it would only be $47,600. In a few years I will have my extra income shifted to a roth and not have to worry. My parents lived to be 95 and 97 so my choice is clear.

Everyone's case is different.

Re: "Early Retirement Packages"... any takers? [Re: second 70] #2715483
11/13/19 05:42 PM
11/13/19 05:42 PM
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Fulton County, PA
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I've done the arithmetic on SS. I would have to live until I was like 86 to reach the break even point of collecting at 62 vs. 65 or 67, I forget which. Regardless, if I collect at 62, invest it right and don't spend a dime for 6 or 7 years, I will be way ahead of what Uncle Sam is offering if he hangs onto that money until then.


If the results don't match the theory, change the theory.
Re: "Early Retirement Packages"... any takers? [Re: CMcAllister] #2715497
11/13/19 06:23 PM
11/13/19 06:23 PM
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Here's a chart from Schwab. Basically if you think you or your spouse will live past 76 wait if not take it as soon as possible. Also it's good to remember that if you made more than your spouse when one dies the survivor receives the higher of the 2 for life.

Taking it early might also raise your income where you're not eligible for ACA. If you can have the lower paid spouse take their's first and wait on the higher wage earners to grow it'll help. That way the survivor will have a better chance to get by with the higher check when the income goes down to one check. There's a lot to look at and can be the difference of over $100,000 in a lifetime.

That's if you can afford to get by without the extra money @ 62. If you need the money take it and don't look back.

IMG_2095.JPG
Last edited by second 70; 11/13/19 10:43 PM.
Re: "Early Retirement Packages"... any takers? [Re: second 70] #2715612
11/14/19 01:08 AM
11/14/19 01:08 AM
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Oregon
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One other thing about the ACA health care process is that it is linked to the IRS so you have to be prepared for lots of paperwork. And they totally invade your privacy in the process of giving you healthcare. They want to know everything about everything. That is one big downside with government run healthcare. They force you to divulge all of your personal information. And of course the information is all stored away somewhere so it can be used against you if need be. So you do have that to deal with.

Re: "Early Retirement Packages"... any takers? [Re: BSB67] #2715614
11/14/19 01:26 AM
11/14/19 01:26 AM
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Oregon
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Originally Posted by BSB67


A Roth will grow tax free, but you pay going in. I honestly believe my tax situation will be worse in retirement. Not because I'll have so much, I just think the government will be looking more places to feed their endless thirst for other people's money.

Using the past market performance is a bit unrealistic for your future projections. I'll be retiring, with any luck, in 5 years. My HSA will not be where I want it to be at max contributions and reasonable market growth.


I used to assume that my tax rate would be higher when retired since that is what financial planners told me. But after I retired I found out that my tax rate went way down. I think I could achieve a zero tax rate on the Fed side if I worked at it a bit. State tax rate in OR is a flat tax so it is what it is. But the Feds have so many different credits, exemptions and deductions that working it down to zero should be possible. In fact, I think it is possible to achieve a negative Federal tax rate. That is, you get money back that you didn't pay in.

Engineering a low tax rate wasn't possible when I was working full time since that kind of income is just automatically zapped. But investment income and self employment income and stuff like that are pretty flexible. So now I'm changing my tune a little bit. Now that I'm living it first hand I see a solid possibility that a person could live a comfortable retirement while paying very little in taxes and receiving very low cost health care. I don't know of any websites that focus on this topic but I do have a couple of buddies who have figured some of this stuff out and we swap info back and forth.

Re: "Early Retirement Packages"... any takers? [Re: AndyF] #2715626
11/14/19 06:40 AM
11/14/19 06:40 AM
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Prospect, PA
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Originally Posted by AndyF
Originally Posted by BSB67


A Roth will grow tax free, but you pay going in. I honestly believe my tax situation will be worse in retirement. Not because I'll have so much, I just think the government will be looking more places to feed their endless thirst for other people's money.

Using the past market performance is a bit unrealistic for your future projections. I'll be retiring, with any luck, in 5 years. My HSA will not be where I want it to be at max contributions and reasonable market growth.


I used to assume that my tax rate would be higher when retired since that is what financial planners told me. But after I retired I found out that my tax rate went way down. I think I could achieve a zero tax rate on the Fed side if I worked at it a bit. State tax rate in OR is a flat tax so it is what it is. But the Feds have so many different credits, exemptions and deductions that working it down to zero should be possible. In fact, I think it is possible to achieve a negative Federal tax rate. That is, you get money back that you didn't pay in.

Engineering a low tax rate wasn't possible when I was working full time since that kind of income is just automatically zapped. But investment income and self employment income and stuff like that are pretty flexible. So now I'm changing my tune a little bit. Now that I'm living it first hand I see a solid possibility that a person could live a comfortable retirement while paying very little in taxes and receiving very low cost health care. I don't know of any websites that focus on this topic but I do have a couple of buddies who have figured some of this stuff out and we swap info back and forth.


But what you can do or cannot do today is not what I'm worried about. There has always been opportunities on the self employment side, and suspect there will be in the future as well. But at this point I'm not seeing self employment as a like scenario for myself in retirement other than maybe some nickel and dime stuff.

But you might be right, given that it is the government, those that are savvy enough will always find opportunities. Just not sure I'm that guy.

Re: "Early Retirement Packages"... any takers? [Re: BradH] #2715627
11/14/19 06:44 AM
11/14/19 06:44 AM
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Prospect, PA
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Originally Posted by BradH
Originally Posted by AndyF

Health insurance is free for a family of four if your income is less than $100K.

confused

Also, the program details arrived in the mail today... scope


The suspense is killin me. Share the details?

Re: "Early Retirement Packages"... any takers? [Re: BSB67] #2715640
11/14/19 09:02 AM
11/14/19 09:02 AM
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Originally Posted by BSB67
Originally Posted by BradH
Originally Posted by AndyF

Health insurance is free for a family of four if your income is less than $100K.

confused

Also, the program details arrived in the mail today... scope


The suspense is killin me. Share the details?

All can say is it's "highly unlikely" that I won't take it. (Sorry 'bout the double negative.)

Lots of things in play here right now. runaway


An unskilled person with a "cool idea", a bunch of porting tools, and a set of cylinder heads is a sure recipe for disaster.
I AM that person!
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Re: "Early Retirement Packages"... any takers? [Re: BradH] #2715665
11/14/19 10:42 AM
11/14/19 10:42 AM
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Fragged State of Skuldruggery
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Yes. Enjoying our time.
Offered 2 extra years to retire early upon return from medical leave. Was the right thing as the small municipality would have to provide some accommodation after my medical leave. Wife was offered same as I couldn't really be on my own immediately after medical release. Between us we had 6 sources of retirement income and decided to do it. 11 years in now we've done much and wouldn't change our retirement. It's a little disheartening that the increases don't really keep up with inflation, even though we are able to save as expenses are far less than when we worked.

Re: "Early Retirement Packages"... any takers? [Re: AndyF] #2715668
11/14/19 10:44 AM
11/14/19 10:44 AM
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central il.
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Originally Posted by AndyF
Originally Posted by BSB67


A Roth will grow tax free, but you pay going in. I honestly believe my tax situation will be worse in retirement. Not because I'll have so much, I just think the government will be looking more places to feed their endless thirst for other people's money.

Using the past market performance is a bit unrealistic for your future projections. I'll be retiring, with any luck, in 5 years. My HSA will not be where I want it to be at max contributions and reasonable market growth.


I used to assume that my tax rate would be higher when retired since that is what financial planners told me. But after I retired I found out that my tax rate went way down. I think I could achieve a zero tax rate on the Fed side if I worked at it a bit. State tax rate in OR is a flat tax so it is what it is. But the Feds have so many different credits, exemptions and deductions that working it down to zero should be possible. In fact, I think it is possible to achieve a negative Federal tax rate. That is, you get money back that you didn't pay in.

Engineering a low tax rate wasn't possible when I was working full time since that kind of income is just automatically zapped. But investment income and self employment income and stuff like that are pretty flexible. So now I'm changing my tune a little bit. Now that I'm living it first hand I see a solid possibility that a person could live a comfortable retirement while paying very little in taxes and receiving very low cost health care. I don't know of any websites that focus on this topic but I do have a couple of buddies who have figured some of this stuff out and we swap info back and forth.


Andy, Anyone that gets a decent pension reported on a 1099R is going to have a hard time avoiding taxes. It's just like a normal paycheck week to week and you can't manipulate the income you receive like you can with a self retirement account. My situation is what BSB 67 describes without the Roth I would be in a higher tax bracket. It was a win win the Roth helped me lower my taxes when I was working and is now helping it stay lower in retirement. It not only lowed federal taxes but since Il. doesn't tax retirement accounts I saved 5% on every dollar going in and out.. You can only hide your 401K money for so long @ 70.5 they'll eventually start to get you.

Re: "Early Retirement Packages"... any takers? [Re: second 70] #2715687
11/14/19 11:49 AM
11/14/19 11:49 AM
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North East USA
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Originally Posted by BSB67
You can only hide your 401K money for so long @ 70.5 they'll eventually start to get you.


Depending on who you are hiding it from. If you're in a extremely high, school property tax state ( think 4-10k + a year), that does not consider IRA distributions as income you may be able to avoid 90% + of school taxes. That savings may surpass any income tax savings in retirement.

My old man retired early at 53 when his company offered him an opportunity he couldn't refuse. Wasn't a ton of money but he was disciplined and didn't spend it. He's been riding the ups and downs in the market since 1993, he's sitting at least a 5x increase. Plenty of his coworkers spent the money by 1995. Again the key is do not spend your lump sum until you absolutely need it.

His deal included a lump sum he could leave at the company or role into an IRA, low cost healthcare and a bridge to social security! I am sure those deals are mostly unheard of these days but WDIK!

Red

Re: "Early Retirement Packages"... any takers? [Re: BIGGERED] #2715703
11/14/19 12:10 PM
11/14/19 12:10 PM
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central il.
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Originally Posted by BIGGERED
Originally Posted by BSB67
You can only hide your 401K money for so long @ 70.5 they'll eventually start to get you.


Depending on who you are hiding it from. If you're in a extremely high, school property tax state ( think 4-10k + a year), that does not consider IRA distributions as income you may be able to avoid 90% + of school taxes. That savings may surpass any income tax savings in retirement.

My old man retired early at 53 when his company offered him an opportunity he couldn't refuse. Wasn't a ton of money but he was disciplined and didn't spend it. He's been riding the ups and downs in the market since 1993, he's sitting at least a 5x increase. Plenty of his coworkers spent the money by 1995. Again the key is do not spend your lump sum until you absolutely need it.

His deal included a lump sum he could leave at the company or role into an IRA, low cost healthcare and a bridge to social security! I am sure those deals are mostly unheard of these days but WDIK!

Red


Illinois is a high property tax state and no matter what you income level you still pay the same property tax. Here school taxes are on property not income. Doesn't matter if you make a $1 or $100,000 you still pay the tax. Yes you can write off up to $10,000 under the new tax law but in a 24% tax bracket you only save $2400. Only way here not to pay school taxes is to not own any property.

Re: "Early Retirement Packages"... any takers? [Re: second 70] #2715742
11/14/19 01:28 PM
11/14/19 01:28 PM
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Oregon
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Originally Posted by second 70


Andy, Anyone that gets a decent pension reported on a 1099R is going to have a hard time avoiding taxes. It's just like a normal paycheck week to week and you can't manipulate the income you receive like you can with a self retirement account. My situation is what BSB 67 describes without the Roth I would be in a higher tax bracket. It was a win win the Roth helped me lower my taxes when I was working and is now helping it stay lower in retirement. It not only lowed federal taxes but since Il. doesn't tax retirement accounts I saved 5% on every dollar going in and out.. You can only hide your 401K money for so long @ 70.5 they'll eventually start to get you.


Maybe that used to be true but the new tax law changed the rules. A Fed tax rate in the low single digits (or less) is possible even while drawing a decent sized pension.

Re: "Early Retirement Packages"... any takers? [Re: second 70] #2715745
11/14/19 01:36 PM
11/14/19 01:36 PM
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North East USA
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That is unfortunate. NY has a STAR relief program, not sure what it stands for but in effect my folks pay 0$ in school tax. If they weren't old and the only recorded income is SS they would pay close to 4K. Their IRA distributions do not count as income. They have to go to the town hall and show there income tax yearly, though they have significant income they only count their SS. The town assessor always complains but that is how the law was written. If it was a pension they would receive the standard smack down.

My dad fell into it by chance, we try to educate others but people tend to be stubborn and no one listens.

Red

Re: "Early Retirement Packages"... any takers? [Re: BIGGERED] #2715757
11/14/19 02:22 PM
11/14/19 02:22 PM
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Originally Posted by BIGGERED
That is unfortunate. NY has a STAR relief program, not sure what it stands for but in effect my folks pay 0$ in school tax. If they weren't old and the only recorded income is SS they would pay close to 4K. Their IRA distributions do not count as income. They have to go to the town hall and show there income tax yearly, though they have significant income they only count their SS. The town assessor always complains but that is how the law was written. If it was a pension they would receive the standard smack down.

My dad fell into it by chance, we try to educate others but people tend to be stubborn and no one listens.

Red


Yep, there are lots of programs like that which are available. I've run into the same thing with people refusing to listen. Not sure why that is, seems like people would be interested to find out how to save some bucks. I guess it could be that they are afraid of finding out that they have been doing it wrong or wasting money or something. I had a conversation the other day with another dad at a school event. He was asking me how I could afford health care. I told him it was basically free for a family of four if he kept his retirement income under $100K. He didn't believe me. I think I might have finally convinced him but I'm not sure. He kept insisting that he couldn't retire because health care was too expensive. I guess it isn't my job to convince people. If they want to listen I'll tell them where to find more info. If they want to insist that I'm wrong then whatever.

Re: "Early Retirement Packages"... any takers? [Re: BIGGERED] #2715763
11/14/19 02:39 PM
11/14/19 02:39 PM
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North Pole,New York
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Originally Posted by BIGGERED
That is unfortunate. NY has a STAR relief program, not sure what it stands for but in effect my folks pay 0$ in school tax. If they weren't old and the only recorded income is SS they would pay close to 4K. Their IRA distributions do not count as income. They have to go to the town hall and show there income tax yearly, though they have significant income they only count their SS. The town assessor always complains but that is how the law was written. If it was a pension they would receive the standard smack down.

My dad fell into it by chance, we try to educate others but people tend to be stubborn and no one listens.

Red



That would be Enhanced Star with an income limit of 86300 in 2019. Next year the income limit 88500

Re: "Early Retirement Packages"... any takers? [Re: AndyF] #2715779
11/14/19 03:19 PM
11/14/19 03:19 PM
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central il.
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Originally Posted by AndyF
Originally Posted by second 70


Andy, Anyone that gets a decent pension reported on a 1099R is going to have a hard time avoiding taxes. It's just like a normal paycheck week to week and you can't manipulate the income you receive like you can with a self retirement account. My situation is what BSB 67 describes without the Roth I would be in a higher tax bracket. It was a win win the Roth helped me lower my taxes when I was working and is now helping it stay lower in retirement. It not only lowed federal taxes but since Il. doesn't tax retirement accounts I saved 5% on every dollar going in and out.. You can only hide your 401K money for so long @ 70.5 they'll eventually start to get you.


Maybe that used to be true but the new tax law changed the rules. A Fed tax rate in the low single digits (or less) is possible even while drawing a decent sized pension.


Well Andy in a good/bad kind of way my pension is too high for the new tax breaks. The other part people fail to remember is that all of a traditional Ira is treated as a distribution at death and is subject to regular income tax. It's not entitled to the inheritance tax exemption. It is after the tax has been paid. It is either paid by the estate or the beneficiary's. If none are listed it gets the whole amount taxed as regular income on the deceased taxes. It's best to list the people you want to share the money with so the income will be spread out and the tax burden won't be as bad.

My parents were able to have their property taxes frozen @ 65 because of their income until they died 30 years later. It allowed then to stay in their home. Only $700 a year.

Thanks to the latest vote to raise the school tax little Springfield has the highest taxed school district in Illinois. One way I could avoid the school tax is moving to an over 55 community. Since everyone has to be over 55 they don't have to have any schools. My friend just moved to one in AZ.

Re: "Early Retirement Packages"... any takers? [Re: BIGGERED] #2715804
11/14/19 04:03 PM
11/14/19 04:03 PM
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Originally Posted by BIGGERED
That is unfortunate. NY has a STAR relief program, not sure what it stands for but in effect my folks pay 0$ in school tax. If they weren't old and the only recorded income is SS they would pay close to 4K. Their IRA distributions do not count as income. They have to go to the town hall and show there income tax yearly, though they have significant income they only count their SS. The town assessor always complains but that is how the law was written. If it was a pension they would receive the standard smack down.

My dad fell into it by chance, we try to educate others but people tend to be stubborn and no one listens.

Red


Red I'm so glad for your folks. Also that you are trying to help others by sharing this info with them but I like you and Andy have out some people don't listen even thou we're trying to help. Told guys at work that were over 591/2 that they could put the retirement payout in cash in our deferred comp program and draw it out the next day if they wanted and they wouldn't have to pay the 5% state income tax. They didn't want to be bothered. Lol I guess that's why some of them are having to drive school buses now to get by.

Re: "Early Retirement Packages"... any takers? [Re: second 70] #2716000
11/15/19 06:10 AM
11/15/19 06:10 AM
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[quote=second 70

The other part people fail to remember is that all of a traditional Ira is treated as a distribution at death and is subject to regular income tax. It's not entitled to the inheritance tax exemption. It is after the tax has been paid. It is either paid by the estate or the beneficiary's. [quote]

First thing thing is I’m not an accountant or tax professional but I was under the impression that an IRA may be rolled into a IRA for the surviving beneficiaries?

Thank you

Red

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