Talking Finances / Retirement Planning
Edit: this post may be revised from time to time, but was originally posted December 2023.
Thought I’d take a few minutes to post about finances, in particular retirement planning, since that’s weirdly felt like a priority of mine these days (I’m thinking in part because of worry what the future holds as well as boredom as a number of my hobbies and outlets seem… less accessible these days). I’d recently turned 46 so with less than twenty years, give or take, until my retirement it seems like a topic worth covering even if it being on livejournal means might never actually be read by others…
The majority of my retirement funds have been contributed to a couple traditional 401k accounts I’ve had access to through my employers during my working career. I know there’s the recommendation to rollover your previous 401k into whatever current one you have with an employer but honestly my first one I’d only contributed to for about five years so it wasn’t large, and sorta on a whim I decided to leave it alone. So it’s earning separately.
Late last year I started taking advantage of splitting my 401k contributions between traditional and Roth, hedging my bets on this because no idea what taxes will be like (almost certainly higher but when you’re not working there’s a chance your requirements will put you in a lower tax bracket).
For majority of my contributions over the years I’d been kinda haphazard in how I split the money. It’s essentially been going a bit to almost every category: Stable, Large Cap, Small/Mid cap, Bonds, International, etc. though when I started splitting some of my contributions towards Roth 401k I started putting 100% towards Target Funds for both the traditional and Roth side. A mixture of YouTube advice and talking to a coworker on how she contributes her own retirement.
Earlier this year I’d also opened a Roth IRA, I have another one of these accounts I’d contributed to for a few years but this new one has ties to my bank and can add some benefits from owning (it adds to the 3-month balance calculation which affects things like interest on savings). So going forward if I make any contributions to an IRA it’s going to be this one.
So far this current IRA is split between purchases towards: SCHD, QQQM, and VOO… I’ve been debating whether I should continue that for next year, unless I see any better suggestions. But all three have come recommended from channels I enjoy, they have dividend income as well as being diversified.
So the 401k and IRA are my planned sources of income for retirement, I also have a small cash pension which I try to leave out of my calculations. It’s estimating currently to bring in around $1k a month when I retire at 65 but with so much time until then, and the pension relying on interest rates, I don’t know if I completely trust those estimates as they were different even just five years ago.
Beginning in 2024, largely due to advice from a co-worker, I switched to a high deductible medical insurance plan so that I could begin contributing to an HSA (Health Savings Account). This account will allow me to put away money before taxes that I can use at any point for medical expenses. The big selling point for me is that after a certain threshold is met you can begin investing the money, allowing it to grow. So it essentially can be like a 401k account that is focused on paying medical expenses… and even the limitations on what it can be used for vanish after you reach a certain age. Just one more area to squirrel away money until retirement, I don’t plan on using any of this money saved while I’m still working (or until an emergency emerges that I can’t pay off with savings).
Brokerage account: I had made a very small stock purchase over a decade ago, and then let that account linger until 2020 when I started making some additional purchases, and some more every year since.
My account is starting to feel like it’s getting to a decent size even though my purchases honestly have no focus. I own roughly 49 different stocks, some have gone up in value and some dropped like a rock. I think my plan going forward is to trim down the list even if it means taking a hit on some - I just don’t like looking at a massive spreadsheet of what I own and owning just a few shares of each stock doesn’t seem worthwhile.
A beginning of a strategy began last year with focusing on high dividend earners and let everything reinvest… with enough time you might have a decent stream of income from just dividends. It’s a nice dream, which I’m trying to commit to though adding resources to buy more shares isn’t as easy - I’m mostly just letting things reinvest on their own and buying some shares a few times a year. My biggest issue is focusing, I keep adding new stocks rather than adding shares to already purchased stocks.
Some of the biggest dividend producers I have are QYLD and RYLD. Based on the advice of one of the podcasts I follow I’ve started adding NNN and O. A co-worker also highly recommended RIO so I may look into that and add it if it looks good.
I’m a bit worried for next year as there have been signs of a reverse stock market crash, or how I see it… a bubble. Prices may, and currently are, rising on the hopes the Fed will be cutting rates soon. This won’t do anything to help inflation or drive prices down, but my concern for this post is… do I still add to my brokerage account while it’s going up if I don’t feel these increases are really real? Maybe small purchases over the year is the way to go?
On a last no, does anyone track their Social Security estimate? Not that I think the estimate given today is going to be accurate, nor even believing the program will still exist when I retire but… I find it interesting. A few years back I created my profile on the website, they track your taxed income as far back as it was reported and gives you the ability to estimate your benefits when you retire.
Along with everything else mentioned in this post I keep a net worth spreadsheet that tracks my current net worth and what’s the monthly total of everything tallied up.
I should mention that at a minimum this spreadsheet is very useful for tracking how you’re doing. I started mine several years ago when I realized that I really didn’t know how I was doing financially. It’s one thing to know you’ve got savings and can pay your bills on time, it’s another to know how much of that is in spite of poor money management. It felt like my accounts had no memory of what happened before until I started consciously tracking it.
It has helped me point out areas where I can do better, cut out wasteful spending, gauge what I can afford and prepare for emergencies, manage for the future, etc.
My spreadsheet breaks out each category along with a current state of everything as well as a monthly status going back. 2018 was when I got serious about updating this file, before that I would mostly jot down information only when I remembered to. Trying to go back in time to find the status of accounts can be a pain so even though my file goes back more than twenty years, it’s got a lot of blank spots until recently.
I welcome any suggestions or anecdotes on your own experiences. Doesn’t feel like I get to discuss these things too often. On a nostalgic note I remember having a discussion on retirement with JBadger about ten years back. He told me his current net worth at the time and where he wanted it to be for his own retirement… I don’t feel like I’ve got that kind of goal but it is a conversation I think back on sometimes when reviewing my own financial situation.
Edit: Beginning in 2024 I started moving cash money out of low interest earning bank accounts and into additional certificates and high interest yield bank accounts (per one podcast I listened to I added some to Laurel Road). It’s something I should have done sooner, especially these days with high inflation. Why keep more than the bare minimum in an account making a fraction of a percent when it can be earning 5%?
A couple other items I forgot to mention earlier, I do have some money invested in iBonds - it may be worthwhile to check out as the fixed rate has gone up in the past year, it had been sitting at zero for roughly a decade. A couple of my bonds will be maturing over the next decade, a couple more are still in their infancy. I had thought about investing in them every year until my figure but I’ve rethought that since there’s a limited amount of money but so many other options that’d offer better liquidity.
Another investment item i
Thought I’d take a few minutes to post about finances, in particular retirement planning, since that’s weirdly felt like a priority of mine these days (I’m thinking in part because of worry what the future holds as well as boredom as a number of my hobbies and outlets seem… less accessible these days). I’d recently turned 46 so with less than twenty years, give or take, until my retirement it seems like a topic worth covering even if it being on livejournal means might never actually be read by others…
The majority of my retirement funds have been contributed to a couple traditional 401k accounts I’ve had access to through my employers during my working career. I know there’s the recommendation to rollover your previous 401k into whatever current one you have with an employer but honestly my first one I’d only contributed to for about five years so it wasn’t large, and sorta on a whim I decided to leave it alone. So it’s earning separately.
Late last year I started taking advantage of splitting my 401k contributions between traditional and Roth, hedging my bets on this because no idea what taxes will be like (almost certainly higher but when you’re not working there’s a chance your requirements will put you in a lower tax bracket).
For majority of my contributions over the years I’d been kinda haphazard in how I split the money. It’s essentially been going a bit to almost every category: Stable, Large Cap, Small/Mid cap, Bonds, International, etc. though when I started splitting some of my contributions towards Roth 401k I started putting 100% towards Target Funds for both the traditional and Roth side. A mixture of YouTube advice and talking to a coworker on how she contributes her own retirement.
Earlier this year I’d also opened a Roth IRA, I have another one of these accounts I’d contributed to for a few years but this new one has ties to my bank and can add some benefits from owning (it adds to the 3-month balance calculation which affects things like interest on savings). So going forward if I make any contributions to an IRA it’s going to be this one.
So far this current IRA is split between purchases towards: SCHD, QQQM, and VOO… I’ve been debating whether I should continue that for next year, unless I see any better suggestions. But all three have come recommended from channels I enjoy, they have dividend income as well as being diversified.
So the 401k and IRA are my planned sources of income for retirement, I also have a small cash pension which I try to leave out of my calculations. It’s estimating currently to bring in around $1k a month when I retire at 65 but with so much time until then, and the pension relying on interest rates, I don’t know if I completely trust those estimates as they were different even just five years ago.
Beginning in 2024, largely due to advice from a co-worker, I switched to a high deductible medical insurance plan so that I could begin contributing to an HSA (Health Savings Account). This account will allow me to put away money before taxes that I can use at any point for medical expenses. The big selling point for me is that after a certain threshold is met you can begin investing the money, allowing it to grow. So it essentially can be like a 401k account that is focused on paying medical expenses… and even the limitations on what it can be used for vanish after you reach a certain age. Just one more area to squirrel away money until retirement, I don’t plan on using any of this money saved while I’m still working (or until an emergency emerges that I can’t pay off with savings).
Brokerage account: I had made a very small stock purchase over a decade ago, and then let that account linger until 2020 when I started making some additional purchases, and some more every year since.
My account is starting to feel like it’s getting to a decent size even though my purchases honestly have no focus. I own roughly 49 different stocks, some have gone up in value and some dropped like a rock. I think my plan going forward is to trim down the list even if it means taking a hit on some - I just don’t like looking at a massive spreadsheet of what I own and owning just a few shares of each stock doesn’t seem worthwhile.
A beginning of a strategy began last year with focusing on high dividend earners and let everything reinvest… with enough time you might have a decent stream of income from just dividends. It’s a nice dream, which I’m trying to commit to though adding resources to buy more shares isn’t as easy - I’m mostly just letting things reinvest on their own and buying some shares a few times a year. My biggest issue is focusing, I keep adding new stocks rather than adding shares to already purchased stocks.
Some of the biggest dividend producers I have are QYLD and RYLD. Based on the advice of one of the podcasts I follow I’ve started adding NNN and O. A co-worker also highly recommended RIO so I may look into that and add it if it looks good.
I’m a bit worried for next year as there have been signs of a reverse stock market crash, or how I see it… a bubble. Prices may, and currently are, rising on the hopes the Fed will be cutting rates soon. This won’t do anything to help inflation or drive prices down, but my concern for this post is… do I still add to my brokerage account while it’s going up if I don’t feel these increases are really real? Maybe small purchases over the year is the way to go?
On a last no, does anyone track their Social Security estimate? Not that I think the estimate given today is going to be accurate, nor even believing the program will still exist when I retire but… I find it interesting. A few years back I created my profile on the website, they track your taxed income as far back as it was reported and gives you the ability to estimate your benefits when you retire.
Along with everything else mentioned in this post I keep a net worth spreadsheet that tracks my current net worth and what’s the monthly total of everything tallied up.
I should mention that at a minimum this spreadsheet is very useful for tracking how you’re doing. I started mine several years ago when I realized that I really didn’t know how I was doing financially. It’s one thing to know you’ve got savings and can pay your bills on time, it’s another to know how much of that is in spite of poor money management. It felt like my accounts had no memory of what happened before until I started consciously tracking it.
It has helped me point out areas where I can do better, cut out wasteful spending, gauge what I can afford and prepare for emergencies, manage for the future, etc.
My spreadsheet breaks out each category along with a current state of everything as well as a monthly status going back. 2018 was when I got serious about updating this file, before that I would mostly jot down information only when I remembered to. Trying to go back in time to find the status of accounts can be a pain so even though my file goes back more than twenty years, it’s got a lot of blank spots until recently.
I welcome any suggestions or anecdotes on your own experiences. Doesn’t feel like I get to discuss these things too often. On a nostalgic note I remember having a discussion on retirement with JBadger about ten years back. He told me his current net worth at the time and where he wanted it to be for his own retirement… I don’t feel like I’ve got that kind of goal but it is a conversation I think back on sometimes when reviewing my own financial situation.
Edit: Beginning in 2024 I started moving cash money out of low interest earning bank accounts and into additional certificates and high interest yield bank accounts (per one podcast I listened to I added some to Laurel Road). It’s something I should have done sooner, especially these days with high inflation. Why keep more than the bare minimum in an account making a fraction of a percent when it can be earning 5%?
A couple other items I forgot to mention earlier, I do have some money invested in iBonds - it may be worthwhile to check out as the fixed rate has gone up in the past year, it had been sitting at zero for roughly a decade. A couple of my bonds will be maturing over the next decade, a couple more are still in their infancy. I had thought about investing in them every year until my figure but I’ve rethought that since there’s a limited amount of money but so many other options that’d offer better liquidity.
Another investment item i