David Cooper

Comments:

• I can only speak to my own personal experience, but after two years living here in Florida, I am very confident in saying that our net cost of living is lower than it was in Rhode Island. Not having any state income tax is huge, especially since Rhode Island income tax rates were very high. Our sales tax here is roughly the same. Our real estate taxes are actually slightly lower (and under the state's homestead rule for primary residences these will not rise by more than 3% per year regardless of rising real estate values). Food, fuel, and utilities are all lower. The big exception is that our home and auto insurance are higher, but in our case at least, not dramatically, and certainly not enough to offset the above savings. However, for anyone with a poor driving record or a high-risk home (flood zone, old roof, etc.) I can imagine that the higher insurance factor might easily offset the others. Fingers crossed that isn't us in the future!!

  Post: A Taller Ladder

  Link to comment from December 13, 2023

• Thanks Buz, I appreciate the comment. Yes, that is the double-edge sword of not paying interest every year like with a CD, but rather only when you cash in. For us, this is desirable because we are using these MYGAs to backstop needing to sell stocks in down years. Thus, paying taxes on the MYGA interest when we cash it out should be more than offset by not having to paying taxes on selling stocks (especially stocks from our traditional retirement accounts that are taxed as regular income). A question for you: would paying annual taxes on the interest on several CDs be that much less of a tax hit than paying several years worth of interest earned on a single maturing MYGA? It seems like those would balance out in the wash?

  Post: A Taller Ladder

  Link to comment from December 13, 2023

• Hi and thanks. Per my response to mytimetotravel, these are more complicated than CDs, but it really isn't too bad.

  Post: A Taller Ladder

  Link to comment from December 13, 2023

• Thanks for the retirement welcome! I didn't want to sugarcoat things, but at the same time I also hope that I didn't make this sound more complex than it really is. There is no question that using a MYGA ladder is more complicated than for CDs, but it really isn't too bad. I probably spent 15 hours setting up the initial ladder of five MYGAs. This took a bit longer than might otherwise have been the case because I was unfamiliar with the process and carefully reviewed and asked question about each contract. I just did my annual 1035 exchange--rolling over the initial 3-year MYGA in the ladder to a 5-year MYGA with a different company-- and the entire process took about two hours. My agent discussed options and then sent me the new contract to review (which didn't take as long now that I know what I am looking for) and walked me through the online application (including a state-required financial suitability questionnaire). So more complicated than CDs, but a couple of hours every year isn't terrible if this makes financial sense for your situation.

  Post: A Taller Ladder

  Link to comment from December 13, 2023

• Thanks for the positive feedback. Yes, MYGAs have many virtues under the right circumstances, but simplicity isn't one of them!

  Post: A Taller Ladder

  Link to comment from December 13, 2023

• Thanks for your question! I should have clarified that the 3.5% drawdown rate is only until we start claiming social security, after which it will go down. So yes, I am confident this is sustainable.

  Post: A Taller Ladder

  Link to comment from December 13, 2023

• Great piece! That said, there are at least a couple of reasons to spread retirement/investment accounts across at least two reputable brokerage companies. Firstly, if you are lucky enough that your account values exceed SIPC Insurance limits, then doing so mitigates the risk of your brokerage company failing. Secondly, this mitigates the risk that access to your funds could be disrupted by a cyber attack against your brokerage company. Sure, these are pretty unlikely risks, especially if you are with a large and established company like Vanguard or Fidelity. But unlikely is not impossible. The good news is that doing this need not make things overly complicated assuming your account comprises a straightforward mix of a few basic index funds. These and other large brokerages offer similar low-cost fund options (e.g., large cap, small cap, ex-US), so you can easily set up accounts with essentially parallel positions. Yes, this means two log-ins, two sets of tax docs, etc. But these may be minor inconveniences to mitigate unlikely but not impossible risks.

  Post: Coming Together

  Link to comment from June 21, 2023