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Old 05-27-2022, 05:15 PM   #1
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Me Being Mindless ! 🙄😜

I have a disability and stopped working at age 25, I'm now 60. In five years my wife Patty will retiring and we're planning on buying a class A diesel pusher and touring around the country on saved money and our 401k.

Patty does all the billing & banking as I hate it. I've been doing a lot of researching on motorhomes and pricing. I figured a budget of around 150k.
Here's why I'm mindless. I just asked Patty on what she's thinks a budget should be and she replied that it'll be a payment on the 401k. I was kinda mad and shocked. I assumed we'd pay cash for the motorhome. I had no idea that we would pay taxes on the $150 for the motorhome ?

I'm building the last engine for our 427 Shelby Cobra I built in 2000, so I may sell it in five years or maybe less. I'll be 65 in 5 years, so it's a young mans car. 😅 That would add a bunch to the travel budget.

Patty lost her job after 35 years as the company is ''down sizing''. Even her boss lost his job after 21 years. It's a world wide mega business own by the second richest family in the USA. It was a great business owned by a family but sold out 10 years ago, then they screwed everyone over.

Anyway, Patty does get a year's severance pay, so if she gets another job soon, we can add that to the travels. Too bad the Government will tax the amount as a lump sum. 🤬

Bad me, not knowing more on 401k : nonono:
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Old 05-27-2022, 05:43 PM   #2
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a 401k is a retirement account and treated tax-wise like a traditional IRA. her contributions to the 401k and whatever matches she received from the employer were not taxed at the time. she is only taxed when she takes a withdrawal. the theory is when she starts taking withdrawals she'll be in a lower tax bracket. ha!

when your life retires she'll have a couple of options:

- she can leave it right where it is but the amount of time she can leave it with an employer will vary.

- she can cash it out but she'll pay tax on the entire amount.

- she can roll it over to a traditional IRA. she'll have hundreds and hundreds more investment options than she had in the 401k. she can then withdraw $X peridoically or as needed. she'll pay tax on any amount withdrawn.

if i may...i'd go very slow if you two are planning to fulltime in the RV. start out with some short trips working up to longer and longer trips. when you decide to go FT please remember that there will come a time when you will want to get off the road into a home, condo or apartment. be sure you set aside $X for that eventuality.

and please start learning about your finances as you may have to manage them in the future. a bit of basic knowledge will help keep you from making tragic mistakes.

good luck and safe travels.
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Old 05-27-2022, 07:02 PM   #3
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Call me crazy, but I did finance our Class A, but it wasn't $150k. My rationale was that I could finance at 5% and draw from the IRA as much each year as I could and stay in the 15% bracket to pay in principal.

Then, lo and behold, the Trump tax plan took effect, and it dropped to a 12% bracket. I paid the loan off in four years and saved a lot on taxes while our investments grew. I ran a spreadsheet on it after the fact, and we did, indeed, come out well on it. Had the market fallen during that time, we would not have.

My question for you is "How much faith do you have in the stock market in the next few years?"

One caveat is that we could have raided the IRA at any time and paid the load off.
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Old 05-27-2022, 08:01 PM   #4
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Originally Posted by rk911 View Post
a 401k is a retirement account and treated tax-wise like a traditional IRA. her contributions to the 401k and whatever matches she received from the employer were not taxed at the time. she is only taxed when she takes a withdrawal. the theory is when she starts taking withdrawals she'll be in a lower tax bracket. ha!

when your life retires she'll have a couple of options:

- she can leave it right where it is but the amount of time she can leave it with an employer will vary.

- she can cash it out but she'll pay tax on the entire amount.

- she can roll it over to a traditional IRA. she'll have hundreds and hundreds more investment options than she had in the 401k. she can then withdraw $X peridoically or as needed. she'll pay tax on any amount withdrawn.

if i may...i'd go very slow if you two are planning to fulltime in the RV. start out with some short trips working up to longer and longer trips. when you decide to go FT please remember that there will come a time when you will want to get off the road into a home, condo or apartment. be sure you set aside $X for that eventuality.

and please start learning about your finances as you may have to manage them in the future. a bit of basic knowledge will help keep you from making tragic mistakes.

good luck and safe travels.
What are the pro's & con's of a IRA for our plans ?

What we've talked about so far is, we really won't be ''full timers''. Right now, we're talking about renting a RV, I think a class A diesel pusher, like we want to buy so we can get an idea on the length, bedroom, a pull out bed I I have health issues so I'm up and down a lot of nights, having a dishwasher, washer etc....We live near Lincoln Ne. So either go to Colorado or at least Missouri for a week. I just looked at only one site and they rent at $2,600 per week. I haven't looked at what else they charge other than the cost of fuel. We do have some local RV dealer's to call for info.

If we like what we did, we'll get a class A, keep our house and go traveling apx 3-4 months then come back home. We have some bad health issues that require Doctor visits, medication refills etc. We also have pets that will be with us. That will give us a good idea on what we want to do for other trips. We went on a Alaskan cruise years ago and fell in Love !

We almost bought a RV and go back for six weeks, but thought that would be hurrying things too fast, so we decided to wait until Patty retired, which is now in five years. If we end up liking the smaller trips, then we want to go from Ne. up to the north, North east, to Wa. where some friends live on a river/beach up through Canadian to Alaska. That trip, we'll go slow taking our time to be there in May for the better weather. We could talk for days on our cruise, from the ship experience, our french doors to a small deck, the FOOD, the excursions we had to the black tie dinner up top, sharing the same table every night with the same people, which became friends with. They were a couple and family (16) from Sudan that was married by the Captain of our ship on Mendenhall Glacier ! We had a salmon and pig roast with native dancers etc..They had us in their honeymoon suite several times which was the first room 40ft from the bow ! It was a amazing view as the walls were all glass, but they could blackin out the glass and was perfectly quiet for privacy. (honeymoon suite,... ya know) ��
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Old 05-27-2022, 09:42 PM   #5
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What are the pro's & con's of a IRA for our plans ?...
the main advantage of roling the 401k to a traditional IRA is delaying taxes. if she cashes out 100% of the proceeds are taxable. for a very rough estimate just multiply the gross value of the 401k by your tax bracket. depending on the gross amount you might be pushed into a higher bracket but you'll get an idea. a very, very rough rule of thumb... over time is she should be able to annualy withdraw 4% from the IRA and assuming the balance is invested properly the market will gain at least that amount. of course that theoretical number will change over time. overall, the last 40-yrs have been stupendous for investors.

the other advantage of a rollover is you can invest the rollover dollars into a variety of vehicles...mutual funds, ETF's, bonds, stocks, CDs, a mix of all of the above. seek advice and ideas from professionals.

an ancilliary advantage is declaring a beneficiary who will inherit the IRA when your wife passes. like a life insurance policy an IRA with a POD (pay on death) beneficiary avoids probate. keeps things simple for the beneficiary.

best advice for investing...

- never, ever, ever invest in anything you don't fully understand.

- and this...the only people who get hurt on a roller coaster (the market) are the people that jump off in mid-run.

good luck.
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Old 05-28-2022, 05:24 PM   #6
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We made an appointment with a financial planner.
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Old 05-28-2022, 06:15 PM   #7
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We made an appointment with a financial planner.
good. even better if s/he is a 'fee-only FP'. start thinking about your goals.
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Old 05-28-2022, 06:29 PM   #8
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We made an appointment with a financial planner.
Good move!
With good info a pro can provide info re several what ifs?
My advice before meeting with a planner us to...
Determine where you spend your current gross income. (No need to try to get to yte pennies, OK to round off, estimate, but reconcile the income to outflow)
Think about and write down what you expect to increase, decrease, and new spending.

That tells you how much you expect to need. The planner can give you confidence whether it is doable, optimistic and needs adjustment, or pessimistic and you are in better shape than you thought.
Most people have some grasp of current situation but fail miserably trying to project future as inflation becomes a larger & larger impact when retirement income remains fixed.
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Old 05-28-2022, 07:37 PM   #9
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Have 600k (+) to work with for the RV & travels. More that we won't touch, it's for our house and life after we're done traveling.
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