Very sorry to hear the news. HD was a wonderful, informative and enjoyable discovery a few years back as I was beginning my early retirement. So thank you for all you've given back to readers over the years. While my own prognosis at age 41 with the big "C" 12 years ago was better (Stage 3, 50% chance 5-year survival rate), it forever changed my outlook. Surgery, chemo, the works for better part of a year and 5 years follow up CT scans, among other tests. It made me be extra discerning about who I surround myself with. Two last toxic work environments led me to early retirement. To this day, living in the present and giving myself permission to spend is a constant balance against planning for a longer future that's uncertain. Everyone has the same struggle but for people with life threatening illnesses, there is no "ignorance is bliss." Any illusion of control or certainty vanishes. Wishing you much healing and peace as you continue on your journey.
Congrats on your success. The only point where I have my changed my position on is #3. We used to be proud of driving our old beater, a 2001 Rav 4 with 160K miles, until it suddenly gave out in early 2023. It was a near death experience: as I accelerated to 40-45 mph on a highway on ramp preparing to merge, the rear differential failed and both rear wheels immediately locked up, sending the car swerving and spinning out. Luckily I was on the on ramp still and the car behind me had enough braking distance. 2 seconds later and I would have been on a busy highway, and likely in a serious car accident. It's simply not safe to drive old cars past a certain point. They seem fine until one day, when they aren't and you can't predict when it will fail. Not saying new cars can't fail too but statistically, it's much higher with very old cars. I don't have the stat but I recall seeing one quoted where a good majority of car accidents involved old cars (10+ years).
Informative article. We've thought a lot about asset location especially given all the interest income with current yields. What has always stopped us is the psychological comfort of being able to tap a large sum of money for big changes (trading up or down residence or simply a new residence) or a new venture, etc. Having a good chunk of money trapped in IRA doesn't make sense for us in that scenario -- but keeping that flexibility of options comes at the cost of more ordinary income and therefore, higher taxes. I can see if you're completely settled and have no major anticipated lifestyle changes ahead then it makes sense. Maybe we will revisit further into retirement.
As an executor and trustee for my parents in two different jurisdictions, I would recommend having an honest talk about your intentions and a general overview of your finances/estate...especially your daughter who'll become the executor. Inheritances are fraught with a lot of emotions and bring up all the family dynamics and you wouldn't want any drama to be your final legacy. Leaving anything less than equal shares among the children, irregardless of their financial situation will only cause strife and resentment. One of my siblings, though professionally successful (mid-six figures), is a spendthrift and married a woman with serious liabilities PLUS the same spendthrift tendencies. He blows through his money and was secretly supported by my parents six figures every year. When they passed, I was named trustee for his share, and to this day he will never believe that is what our parents intended. Needless to say, we do not speak any more, and there was over a year of wasted attorney's fees while he processed his emotions about what our parents planned. I completely relate to your not wanting to condone your son's life of avoiding work, but if you are truly hesistant to give him an equal share, or plan to attach conditions, it's best that everyone knows of your plans. Instead, I am now trying to execute what my parents couldn't or was to afraid to do or say when they were alive, as they couldn't control or instill any financial discipline or responsibility. As for your daughter, even if she is well off and doesn't need the inheritance, it is helpful to know roughly the responsibilities that lay ahead and also a rough ballpark to guide in her own financial planning. I was 50 when the inheritance came in, and while I was financially well off, I was not prepared for the level of wealth that came to me -- how to use it, how much to invest. It took me a full 3 years to grow into an understanding of the level of wealth...the opportunities and the limits of wealth. As you, Bill Perkins and others have said, it's better to give while alive and in my case, it would have opened up life-altering options had I received or at least known what was going to come my way. I find myself wondering what my parents would have wanted, but the only thing I have to go on is the trust documents and some casual comments over the years. It would have been amazing to have had a discussion and ask them questions about their intentions.
Thanks Marjorie. Our CPA prepared the form so I'm guessing she knew how to file the form. Still have not received the refund even though they sent a notice in December 1 saying they adjusted my refund upward due to an error on the advanced premium tax credit. They give you only the option to "not contest" the new refund amount, in which case they say wait 6-8 weeks. It's now been 4 months. 2 years later on, no interest to them holding on to my refund, but a whopping 8% interest if you "underpay." The $80 penalty isn't enough for me to care about, but it's the principle that irks. Now if I want to avoid the underpayment for 2024, I'm going to have to handover money quarterly even though I'm not sure I will do the Roth conversion in 2024 or how much, and may have no tax liability. Now how is that fair?
What's irritating about the IRS and this whole issue is that it's confusing to figure out what constitutes underpayment. We just did 2023 taxes and even though we have a $80 refund from Federal, we have an underpayment penalty because we only made a $5000 payment in Q4 to cover a $60K Roth conversion. Additionally, +/- 40% of our interest and dividend income came in Q4, so we did not owe taxes until we decided to capitalize on the market correction in Oct to buy stock and do the Roth conversion. We still had to pay a penalty, given we had no taxable income Q1-Q3 that wasn't covered by our deductions. Based on the complicated Form 2210 and its schedules, we ended up owing $22 in penalty. To add insult to injury, when the IRS lost our 2021 return (resulting in hours of time chasing them, as well as refiling the same return a year later as they recommended), our refund of $3700, -- finally return processed but refund still not paid yet, has not been adjusted for any interest.
Possible get a source for this? Like Jonathan, I always thought each conversion has its own clock. The folks at Vanguard weren't able to answer definitively either, so we now have a ladder of Roth conversions, which is tedious.
Rick -- do you (or anyone following this thread) have any opinion about the net worth tracking apps/websites such as Empower (which in turns Yodlee authentication)? My main concern has been security breaches, but apparently logging on all the time direct to banks/brokerages can constitute more risk than the read-only functions of these apps. Like you, I have my spreadsheet detailing all, but I've gotten tired of manually updating all since there are so many accounts (each with 2 factor authentication). So time consuming.
Appreciate the context and your personal position. That's what's great about Humble Dollar. I have done exactly as you have stated...came into a big lump sum (and will continue to) and as a young-ish retiree (52), I've jumped in earlier in the year and in this latest correction since I've got a longer runway ahead and need equities to keep up. At the same time, on the fixed-income front, I'm contemplating for the first time in my life getting further out into longer durations because it feels like we're at the end of the hiking cycle and can see potential upside there.
Comments
Very sorry to hear the news. HD was a wonderful, informative and enjoyable discovery a few years back as I was beginning my early retirement. So thank you for all you've given back to readers over the years. While my own prognosis at age 41 with the big "C" 12 years ago was better (Stage 3, 50% chance 5-year survival rate), it forever changed my outlook. Surgery, chemo, the works for better part of a year and 5 years follow up CT scans, among other tests. It made me be extra discerning about who I surround myself with. Two last toxic work environments led me to early retirement. To this day, living in the present and giving myself permission to spend is a constant balance against planning for a longer future that's uncertain. Everyone has the same struggle but for people with life threatening illnesses, there is no "ignorance is bliss." Any illusion of control or certainty vanishes. Wishing you much healing and peace as you continue on your journey.
Post: The C Word
Link to comment from June 17, 2024
Congrats on your success. The only point where I have my changed my position on is #3. We used to be proud of driving our old beater, a 2001 Rav 4 with 160K miles, until it suddenly gave out in early 2023. It was a near death experience: as I accelerated to 40-45 mph on a highway on ramp preparing to merge, the rear differential failed and both rear wheels immediately locked up, sending the car swerving and spinning out. Luckily I was on the on ramp still and the car behind me had enough braking distance. 2 seconds later and I would have been on a busy highway, and likely in a serious car accident. It's simply not safe to drive old cars past a certain point. They seem fine until one day, when they aren't and you can't predict when it will fail. Not saying new cars can't fail too but statistically, it's much higher with very old cars. I don't have the stat but I recall seeing one quoted where a good majority of car accidents involved old cars (10+ years).
Post: Six Rules for Wealth
Link to comment from June 14, 2024
Informative article. We've thought a lot about asset location especially given all the interest income with current yields. What has always stopped us is the psychological comfort of being able to tap a large sum of money for big changes (trading up or down residence or simply a new residence) or a new venture, etc. Having a good chunk of money trapped in IRA doesn't make sense for us in that scenario -- but keeping that flexibility of options comes at the cost of more ordinary income and therefore, higher taxes. I can see if you're completely settled and have no major anticipated lifestyle changes ahead then it makes sense. Maybe we will revisit further into retirement.
Post: Seeking Shelter
Link to comment from June 6, 2024
As an executor and trustee for my parents in two different jurisdictions, I would recommend having an honest talk about your intentions and a general overview of your finances/estate...especially your daughter who'll become the executor. Inheritances are fraught with a lot of emotions and bring up all the family dynamics and you wouldn't want any drama to be your final legacy. Leaving anything less than equal shares among the children, irregardless of their financial situation will only cause strife and resentment. One of my siblings, though professionally successful (mid-six figures), is a spendthrift and married a woman with serious liabilities PLUS the same spendthrift tendencies. He blows through his money and was secretly supported by my parents six figures every year. When they passed, I was named trustee for his share, and to this day he will never believe that is what our parents intended. Needless to say, we do not speak any more, and there was over a year of wasted attorney's fees while he processed his emotions about what our parents planned. I completely relate to your not wanting to condone your son's life of avoiding work, but if you are truly hesistant to give him an equal share, or plan to attach conditions, it's best that everyone knows of your plans. Instead, I am now trying to execute what my parents couldn't or was to afraid to do or say when they were alive, as they couldn't control or instill any financial discipline or responsibility. As for your daughter, even if she is well off and doesn't need the inheritance, it is helpful to know roughly the responsibilities that lay ahead and also a rough ballpark to guide in her own financial planning. I was 50 when the inheritance came in, and while I was financially well off, I was not prepared for the level of wealth that came to me -- how to use it, how much to invest. It took me a full 3 years to grow into an understanding of the level of wealth...the opportunities and the limits of wealth. As you, Bill Perkins and others have said, it's better to give while alive and in my case, it would have opened up life-altering options had I received or at least known what was going to come my way. I find myself wondering what my parents would have wanted, but the only thing I have to go on is the trust documents and some casual comments over the years. It would have been amazing to have had a discussion and ask them questions about their intentions.
Post: Good for Them?
Link to comment from March 29, 2024
Thanks Marjorie. Our CPA prepared the form so I'm guessing she knew how to file the form. Still have not received the refund even though they sent a notice in December 1 saying they adjusted my refund upward due to an error on the advanced premium tax credit. They give you only the option to "not contest" the new refund amount, in which case they say wait 6-8 weeks. It's now been 4 months. 2 years later on, no interest to them holding on to my refund, but a whopping 8% interest if you "underpay." The $80 penalty isn't enough for me to care about, but it's the principle that irks. Now if I want to avoid the underpayment for 2024, I'm going to have to handover money quarterly even though I'm not sure I will do the Roth conversion in 2024 or how much, and may have no tax liability. Now how is that fair?
Post: The Downside of Up
Link to comment from March 17, 2024
What's irritating about the IRS and this whole issue is that it's confusing to figure out what constitutes underpayment. We just did 2023 taxes and even though we have a $80 refund from Federal, we have an underpayment penalty because we only made a $5000 payment in Q4 to cover a $60K Roth conversion. Additionally, +/- 40% of our interest and dividend income came in Q4, so we did not owe taxes until we decided to capitalize on the market correction in Oct to buy stock and do the Roth conversion. We still had to pay a penalty, given we had no taxable income Q1-Q3 that wasn't covered by our deductions. Based on the complicated Form 2210 and its schedules, we ended up owing $22 in penalty. To add insult to injury, when the IRS lost our 2021 return (resulting in hours of time chasing them, as well as refiling the same return a year later as they recommended), our refund of $3700, -- finally return processed but refund still not paid yet, has not been adjusted for any interest.
Post: The Downside of Up
Link to comment from March 14, 2024
Possible get a source for this? Like Jonathan, I always thought each conversion has its own clock. The folks at Vanguard weren't able to answer definitively either, so we now have a ladder of Roth conversions, which is tedious.
Post: Seven Reasons to Work
Link to comment from March 14, 2024
Rick -- do you (or anyone following this thread) have any opinion about the net worth tracking apps/websites such as Empower (which in turns Yodlee authentication)? My main concern has been security breaches, but apparently logging on all the time direct to banks/brokerages can constitute more risk than the read-only functions of these apps. Like you, I have my spreadsheet detailing all, but I've gotten tired of manually updating all since there are so many accounts (each with 2 factor authentication). So time consuming.
Post: Withdrawal Symptoms
Link to comment from November 30, 2023
A wonderful story. Thanks for sharing.
Post: Everything She Needed
Link to comment from November 15, 2023
Appreciate the context and your personal position. That's what's great about Humble Dollar. I have done exactly as you have stated...came into a big lump sum (and will continue to) and as a young-ish retiree (52), I've jumped in earlier in the year and in this latest correction since I've got a longer runway ahead and need equities to keep up. At the same time, on the fixed-income front, I'm contemplating for the first time in my life getting further out into longer durations because it feels like we're at the end of the hiking cycle and can see potential upside there.
Post: What Goes Up
Link to comment from November 9, 2023