Geographic arbitrage for early-ish retirement. Opinions?

[mkd]

We are at the point I'm happy getting 5% and not worrying about the market.

i've been holding a bunch of SWVXX but just realized if i would have been holding SNSXX it's pure treasuries is tax free at the state level (9% in Kali). Dang it!

[mkd]

I have also been considering whether to rollover my 401k into an IRA when I retire.

I know it all depends on everyone's individual situation and needs, but I would like to hear some thoughts from you guys about that...

401k normally has high fees, so there is no reason to keep it there unless you want to do a double murder like OJ. 401k was how he indemnified that asset from civil suit. If you roll it over, you can lose it in a suit, i guess.
 If you want need to switch to different holdings a become a stock picker then yeas IRA rollover. Self directed IRAs can invest in all sorts of things including a second home (not a great idea)

[mkd]

I would use the 5% rule as a rough approximation. Not perfect but a good reference point. So a 1 million dollar net worth (I wouldn't count real estate) means you 'could' live on $50,000 a year. Throw in SS and that amount per year could work (it adds up to ~ 75K a year)

We are at the point I'm happy getting 5% and not worrying about the market.
 

Bill Bengan's 1994 paper on the 4% rule was based on a 30 year retirement and a 50/50 stock bond allocation.
 Del, if you're risk adverse take a look at etf ticker RSP. it's an equal weight sp500 fund, so less effect of a tech crash.  37% i guess percent of the regular sp500 is just the top 7 companies.
2 cents

[Jim at Gentex]

401k normally has high fees, so there is no reason to keep it there unless you want to do a double murder like OJ. 401k was how he indemnified that asset from civil suit. If you roll it over, you can lose it in a suit, i guess.
 If you want need to switch to different holdings a become a stock picker then yeas IRA rollover. Self directed IRAs can invest in all sorts of things including a second home (not a great idea)

Yeah those are definitely two of the pros of rolling it over, lower fees and more investment options.

A friend of mine at church has been working for a local investment managing firm for the past 20 years or so, and I am going to schedule a meeting with her boss to see what they would recommend for me.  The firm has been in business for about 30 years, and are highly reputable, so my comfort level in dealing with them is high.

Another friend of mine just retired and he said they gave him great advice and assistance, so that's probably the route I am going to be taking. 

[mkd]

albania FTW?

[mkd]

Yeah those are definitely two of the pros of rolling it over, lower fees and more investment options.

A friend of mine at church has been working for a local investment managing firm for the past 20 years or so, and I am going to schedule a meeting with her boss to see what they would recommend for me.  The firm has been in business for about 30 years, and are highly reputable, so my comfort level in dealing with them is high.

Another friend of mine just retired and he said they gave him great advice and assistance, so that's probably the route I am going to be taking. 

Be wary of any outfit charging a percent AUM fee to manage you funds. 90% of managers underperform the sp500 and that is before they take 1% every year. VOO or VTI and faggetaboutit, before paying 1%

that 1% over decades can be hundreds of thousands of dollars

[Dan_AKA_ROY23]

I have also been considering whether to rollover my 401k into an IRA when I retire.

You could do that, but maybe wait awhile. Or just keep the 401K. With a 401K, you can contribute a larger amount each year. And that (401K) contribution does not count against any IRA contribution. I can do 8K a year now in IRA accounts plus whatever amount I want in my 401K (up to 23K a year now! Not bad..)

So, by keeping both the IRA (I have two) and 401K means I could potentially invest up to 31K total for both. If you rollover your 401K into an IRA - you are now limited to 8K total (for 2024).

mkd is spot on in that the fees are (much) higher and your choice of investment options are restricted versus an IRA account.

Do your due diligence, Jim. Would you want to rollover your 401K to a ROTH IRA? (you'd have to pay taxes at the time of conversion). A traditional IRA? (not taxed on the way in, but on the way out). IF you think you'll be in a higher tax bracket - consider that). There's also backdoor IRAs (research that, I'm not sure of all the details)

[Dan_AKA_ROY23]

90% of managers underperform the sp500

Very true, but in their defense - few financial advisors have their clients in 100% stocks (so it is very difficult to beat the benchmark S&P 500 without being 100% invested).

My largest holding is VTI. Owned it for years. Can't sell many shares as I'd get leveled in capital gains tax. So I just hold on. VTI has a whopping 0.03% fee! lol in other words, its practically free to own) 1 million costs $300 a year..As opposed to 10K a year (1% fee) That's 10K EACH year.

(So, I would consider mkd's advice, Jim. Regardless how they try to sugarcoat it, those fees do damage to your net worth over time).

VTI has slightly underperformed the S&P 500 over the last decade and a half. (small caps have lagged large caps). But since its weighted, the lag is minimal - and the kick ass fee structure makes up for it.

Will small caps outperform from here? I would have exposure to small caps, too.

So a simple but highly effective strategy would be to determine how much of a % in stocks you want to own. At least 60% (moderate) up to 80% (aggressive). Park the rest in a money market fund. With basically zero fees, any financial advisor would be hard pressed to outperform that.

What about bonds or bond funds? If and when the FED does cut interest rates (if inflation behaves..a big unknown!) bond yields 'should' go lower (and bond prices, in theory, should rise in value).

[Incogneeto]

Ohh!! Ohh!!

We could find our own little place all of us and call it.

"Venezuela"

And have our own lil' HoA.

No Guns, No Weed , No Toilet Paper.

If I was gonna go Nutz.

"Patagonia" look it up.

Breathtaking from top to Bottom.

[Incogneeto]

I need one o' those Cushy Climate change Jobs so I can sit down there and Monitor the effect of My Grill on the
 
atmospheric eventuality of Hookin' up wit some Village Girl.

Some Dem Girls Hot !!

Documentary I watched a guy got paid to track down wild Horses.

Soooo why can't I track down some Filly's?? 

[Jim at Gentex]

You could do that, but maybe wait awhile. Or just keep the 401K. With a 401K, you can contribute a larger amount each year. And that (401K) contribution does not count against any IRA contribution. I can do 8K a year now in IRA accounts plus whatever amount I want in my 401K (up to 23K a year now! Not bad..)

So, by keeping both the IRA (I have two) and 401K means I could potentially invest up to 31K total for both. If you rollover your 401K into an IRA - you are now limited to 8K total (for 2024).

mkd is spot on in that the fees are (much) higher and your choice of investment options are restricted versus an IRA account.

Do your due diligence, Jim. Would you want to rollover your 401K to a ROTH IRA? (you'd have to pay taxes at the time of conversion). A traditional IRA? (not taxed on the way in, but on the way out). IF you think you'll be in a higher tax bracket - consider that). There's also backdoor IRAs (research that, I'm not sure of all the details)

Thanks, Dan.

A traditional IRA is the most common 401k rollover, i.e., apples to apples.

Again, pros and cons.   

[mowens]

(up to 23K a year now! Not bad..)

As of 2024, if you are over 50, you can make an additional $7500 in "catch up" contributions.

[mkd]

As of 2024, if you are over 50, you can make an additional $7500 in "catch up" contributions.

yeah 401k is right around 30k max.
thing i'm not 100% sure of is how the other account types add in. 8000max for IRA AND/OR?? 8000 for a Roth?
 Not that i have that coin...just curious