Savings/retirement

[obiwan]

For those who are able to max out contributions to retirement accounts like 401/IRA, what other avenues are you turning to for saving money?

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[dpmd]

Taxable investment account and online savings account (not that the rates are good but at least it is slightly better).

 

[Plastikos]

HSA, taxable account, and starting real estate portfolio. If you're self employed you can do a cash balance or define benefit pension plan and really crank up the tax deferred savings.

 

[dpmd]

I was looking at those kind of plans but it seemed complicated to do (unlike my solo 401k which was easy to set up). Plus, i am interested in being financially independent well before retirement age and may work sporadically at some point before then (meaning i might need to use money before retirement age) so i wasn't sure that it would work out for me.

 

[Plastikos]

There are always ways to get at the money before retirement age. Penalties assume you're still working. However, I have the same plan so wonder about how much I really need to put into deferred instruments as opposed to others so theres a hefty bridge until standard age and its just sat there mindlessly compounding for decades.

However, you can actually annuitize an IRA even without penalty, the catch is you're technically not allowed to turn it off. There are a whole slew of other ways to get around the penalty actually.

 

[dynx]

SEP IRAs are great if you can (throw in a lump at the end of the year into my wifes) real estate was good but depends on your local. If your area is good and you know the market I dont think you can beat it but its getting harder to find property that flows cash from the start and I think thats key. i have some friends that buy stuff out of state and god bless them but I wouldnt buy anywhere that I don't really know the market.
That pretty much leaves you with a taxable brokerage which is where I now put anything extra over what you mentioned. Index and blue chips, slow and steady. Not smart enough to get there quick but I do have a single moon-shot in the portfolio.

 

[MD Financial Services Scott]

You can always use the rule 72T if you want distribution prior to age 59 1/2 and still not have a tax penalty, your broker should be able to advise you on it.

 

[Smart Money MD]

btw, you might get whole life insurance pitched at you at some point. I'm not a fan of it, and it probably doesn't work for many people either.

 

[ThoracicGuy]

SEP IRAs are great if you can (throw in a lump at the end of the year into my wifes) real estate was good but depends on your local. If your area is good and you know the market I dont think you can beat it but its getting harder to find property that flows cash from the start and I think thats key. i have some friends that buy stuff out of state and god bless them but I wouldnt buy anywhere that I don't really know the market.
That pretty much leaves you with a taxable brokerage which is where I now put anything extra over what you mentioned. Index and blue chips, slow and steady. Not smart enough to get there quick but I do have a single moon-shot in the portfolio.

Solo 401k will let you put in the same as a SEP according to your AGI and will allow you to do a backdoor Roth. You can't have any SEP money out there, though, or you'll pay a pro rata tax on the Roth conversion.

 

[dynx]

Solo 401k will let you put in the same as a SEP according to your AGI and will allow you to do a backdoor Roth. You can't have any SEP money out there, though, or you'll pay a pro rata tax on the Roth conversion.

Well what we do is take the max deductions and dont pay estimated taxes on dividends through the year. We use the SEP when we file because you can get your tax liability then just put in whatever amount you need in the SEP as late as april I think to reduce your income to the point you dont owe anything anymore. I'd have to run the math on a solo IRA. I'd never heard of it but it looks interesting. To be honest I'm paranoid and I think the Gov is going to change the rules on retirement accounts in the future so I'm worried about getting double screwed on a roth (post tax now, rule change = tax later) not likely in the form of a direct tax on a roth IRA but income based reduction in gov benefits, wealth tax etc. Thats probably going to cost me money in the long run but cant seem to shake the thought.

 

[dynx]

Well what we do is take the max deductions and dont pay estimated taxes on dividends through the year. We use the SEP when we file because you can get your tax liability then just put in whatever amount you need in the SEP as late as april I think to reduce your income to the point you dont owe anything anymore. I'd have to run the math on a solo IRA. I'd never heard of it but it looks interesting. To be honest I'm paranoid and I think the Gov is going to change the rules on retirement accounts in the future so I'm worried about getting double screwed on a roth (post tax now, rule change = tax later) not likely in the form of a direct tax on a roth IRA but income based reduction in gov benefits, wealth tax etc. Thats probably going to cost me money in the long run but cant seem to shake the thought.

In regards to a whole life plan. Im not an expert but from what I've seen it only makes sense as an estate planning tool if you accumulate a significant amount of wealth in your life and is highly dependent upon the current tax situation. For example you've got 10 million, the tax man is going to take X% at your demise. You get coverage to pay out tax free insurance benefit on your death knowing the insurance company is going to take a large percent but less than the gov is.

 

[dpmd]

Well what we do is take the max deductions and dont pay estimated taxes on dividends through the year. We use the SEP when we file because you can get your tax liability then just put in whatever amount you need in the SEP as late as april I think to reduce your income to the point you dont owe anything anymore. I'd have to run the math on a solo IRA. I'd never heard of it but it looks interesting. To be honest I'm paranoid and I think the Gov is going to change the rules on retirement accounts in the future so I'm worried about getting double screwed on a roth (post tax now, rule change = tax later) not likely in the form of a direct tax on a roth IRA but income based reduction in gov benefits, wealth tax etc. Thats probably going to cost me money in the long run but cant seem to shake the thought.

The solo 401k comes in handy if you don't make enough to max out a sep (because the ability to do the employee contribution without regard to profits lets you put away more) or if you plan to do backdoor roth. You can also set it up with the employee contribution as a roth if you want (depending on who you set it up with)