Thanks! By the way, in the link to the IRS 1099r draft document the i1099r--dft.pdf file name was displayed using a single long dash instead of two short dashes, or it appeared this way on my browser screen.
How would the IRA custodian know what the IRA distributions were for? We have IRA check-writing and could use these for any purpose but currently only use for QCDs. Our IRA custodian (Schwab) is out of the loop on this.
1. Risk tolerance: When I was working “I will make more” was my answer to any investment loss, unexpected expense, or when I paid more than I should. Have not changed in retirement but optimistically expect long term growth for even our most volatile investments. 2. Use of money: Feel good about donating, but joy comes from buying and using a good tool. 3. Flat stock market: Shortly after retirement did a thought experiment where we cashed out all our investments and put the money under our mattress. Estimated we would be okay for the rest of our expected lifetimes. So yes. 4. Feeling of success: Retirement date was not my decision, but if success was enjoying every day of work and knowing that what I produced was valued, then yes. 5. Enough: Our plan is to spend less than what our investments return because more is always better than less. 6. Purpose and happiness: Too busy with too many projects to think about this one. 7. End of life care and expense: And I do not want to think about this one. Best case scenario: I am found tool in hand still working on something. 8. Heirs: Never considered generational wealth to be a positive for our society. Funding scholarships is the plan.
I downloaded PDF's for W-2 and twelve 1099's; and 18 QCD cashed check images with 18 scanned QCD receipts; and scanned winter and summer property tax documents. Uploaded everything to our accountant's secure portal along with my notes. Result from accountant was within a few dollars of the online tax estimator I use, except for some carried forward capital gains losses that the accountant remembered. Paid $535 for what amounts to a data entry process and the cost of the accountant's software. Thinking about changing but perhaps there is some value in having someone else review the numbers.
Our goals for non-equity cash-equivalent investments are to 1) never decrease in absolute value; and 2) stay at or ahead of inflation. Growth and income are not expected from the cash-equivalents. Money market funds, high-yield savings, CDs, and I-bonds achieve what we want, with everything except for I-bonds currently at or above 4%. We hold about 5 years of spending in cash and cash-equivalents if withdrawn at nominal 4% rate but our actual draw-down rate is almost zero. It is likely that our CDs that mature this year will be rolled into additional money market investments, depending on rates and terms available then. We avoid bond funds because they do not meet criteria #1 listed above. Equity funds are for long-term growth.
Like many others we became interested in I-bonds during the 2022 inflation rate peak. We cashed our matured e-bonds and started buying I-bonds every 6 months since then. This year instead of buying more I-bonds we are “rolling over” the 0% fixed rate I-bonds from 2022 and buying replacement I-bonds with the current 1.2% fixed rate. This is safe way to satisfy my itch to “do something” during the current market decline.
Wait the storm out. Conserve cash and capital. Delay spending. Reduce expenses. Take no risks. All good strategies for individuals and businesses. Not so good for the economy.
This year is my first year with no earned income and therefore no way to contribute to our IRAs. Which is kind of a shame considering the current market downturn. I remember how during the 2020 downturn the maximized contributions to IRAs and 401(k) helped to keep our retirement account balances flush. Perhaps I could work just enough to earn the $16,000 needed for our IRA contributions. At my states minimum wage of $12.48 per hour that’s 1,282 hours. The typical retail wage of $16.00 per hour lowers this to 1,000 hours. Perhaps a retail job is not such a great plan. My pre-retirement salaried engineering compensation came to about $80 per hour in actual money (not counting benefits). That would be only 200 hours of work for the IRA contributions. But so far finding some kind of side-gig doing what I did in my career seems unlikely. But being able to also contribute to my SEP IRA would be sweet. And there is still the dream of creating my own business where I can apply the knowledge and skills acquired during my engineering career. My 1 year retired anniversary is approaching. Time to get serious. I only wear Rockport XCS walkers which I buy 3 or 4 pairs at a time. I keep a clean pair for “going out” and an everyday pair that gets replaced only some time after the soles have been duct taped to the uppers.
As a long-view investor the single most important data point for me is cumulative 10-year returns (with reinvestment). Yes, this is backward looking; but everything forward looking is just a guess. I also have a list of annual performance for each of my current investments for as far back as data is available. From this I estimate how my portfolio would have handled prior market events and determine if I could also handle these.
And I keep this posted in my office for times like these: Frequency of stock market declines
-5% 3 times per year
-10% 1 time per year
-15% 1 time every 4 years
-20% 1 time every 6 years
-30% 1 time every 18 years
I compared our 2024 tax return results from 1) our accountant; 2) the AARP tax calculator; and 3) www.irscalculators.com/tax-calculator. All 3 were within a few 10’s of dollars. We have been using irscalculators for a few years for tax planning. The AARP calculator does handle more items than irscalculators but if using the standard deduction with the common income sources it is fine. Two advantages irscalculators provides is that it can calculate your state income tax, and the tax year can be selected. Unless I missed something the AARP calculator is only for the current tax year. Not sure when it is updated to the next. I have already used irscalculators for 2025 tax planning including: 1) our currently planned IRA distribution for spending; 2) with a small Roth conversion keeping our income within our current marginal rate; and 3) with a larger Roth conversion up to just below the next IRMAA threshold.
Comments
Thanks! By the way, in the link to the IRS 1099r draft document the i1099r--dft.pdf file name was displayed using a single long dash instead of two short dashes, or it appeared this way on my browser screen.
Post: New in 2025 – Code Y on 1099-R box 7 for QCD’s
Link to comment from April 27, 2025
How would the IRA custodian know what the IRA distributions were for? We have IRA check-writing and could use these for any purpose but currently only use for QCDs. Our IRA custodian (Schwab) is out of the loop on this.
Post: New in 2025 – Code Y on 1099-R box 7 for QCD’s
Link to comment from April 26, 2025
1. Risk tolerance: When I was working “I will make more” was my answer to any investment loss, unexpected expense, or when I paid more than I should. Have not changed in retirement but optimistically expect long term growth for even our most volatile investments. 2. Use of money: Feel good about donating, but joy comes from buying and using a good tool. 3. Flat stock market: Shortly after retirement did a thought experiment where we cashed out all our investments and put the money under our mattress. Estimated we would be okay for the rest of our expected lifetimes. So yes. 4. Feeling of success: Retirement date was not my decision, but if success was enjoying every day of work and knowing that what I produced was valued, then yes. 5. Enough: Our plan is to spend less than what our investments return because more is always better than less. 6. Purpose and happiness: Too busy with too many projects to think about this one. 7. End of life care and expense: And I do not want to think about this one. Best case scenario: I am found tool in hand still working on something. 8. Heirs: Never considered generational wealth to be a positive for our society. Funding scholarships is the plan.
Post: Ask Me a Tough One by Jonathan Clements
Link to comment from April 18, 2025
I downloaded PDF's for W-2 and twelve 1099's; and 18 QCD cashed check images with 18 scanned QCD receipts; and scanned winter and summer property tax documents. Uploaded everything to our accountant's secure portal along with my notes. Result from accountant was within a few dollars of the online tax estimator I use, except for some carried forward capital gains losses that the accountant remembered. Paid $535 for what amounts to a data entry process and the cost of the accountant's software. Thinking about changing but perhaps there is some value in having someone else review the numbers.
Post: Now it’s over, taxes are filed, but I have a question. How did prepare your your taxes?
Link to comment from April 16, 2025
Our goals for non-equity cash-equivalent investments are to 1) never decrease in absolute value; and 2) stay at or ahead of inflation. Growth and income are not expected from the cash-equivalents. Money market funds, high-yield savings, CDs, and I-bonds achieve what we want, with everything except for I-bonds currently at or above 4%. We hold about 5 years of spending in cash and cash-equivalents if withdrawn at nominal 4% rate but our actual draw-down rate is almost zero. It is likely that our CDs that mature this year will be rolled into additional money market investments, depending on rates and terms available then. We avoid bond funds because they do not meet criteria #1 listed above. Equity funds are for long-term growth.
Post: Buying Treasury Bond ETFs vs. MM Funds in this Moment
Link to comment from April 10, 2025
Like many others we became interested in I-bonds during the 2022 inflation rate peak. We cashed our matured e-bonds and started buying I-bonds every 6 months since then. This year instead of buying more I-bonds we are “rolling over” the 0% fixed rate I-bonds from 2022 and buying replacement I-bonds with the current 1.2% fixed rate. This is safe way to satisfy my itch to “do something” during the current market decline.
Post: Any Bonds Today? By Marjorie Kondrack
Link to comment from April 6, 2025
Wait the storm out. Conserve cash and capital. Delay spending. Reduce expenses. Take no risks. All good strategies for individuals and businesses. Not so good for the economy.
Post: Tariffs and our retirement assets
Link to comment from April 4, 2025
This year is my first year with no earned income and therefore no way to contribute to our IRAs. Which is kind of a shame considering the current market downturn. I remember how during the 2020 downturn the maximized contributions to IRAs and 401(k) helped to keep our retirement account balances flush. Perhaps I could work just enough to earn the $16,000 needed for our IRA contributions. At my states minimum wage of $12.48 per hour that’s 1,282 hours. The typical retail wage of $16.00 per hour lowers this to 1,000 hours. Perhaps a retail job is not such a great plan. My pre-retirement salaried engineering compensation came to about $80 per hour in actual money (not counting benefits). That would be only 200 hours of work for the IRA contributions. But so far finding some kind of side-gig doing what I did in my career seems unlikely. But being able to also contribute to my SEP IRA would be sweet. And there is still the dream of creating my own business where I can apply the knowledge and skills acquired during my engineering career. My 1 year retired anniversary is approaching. Time to get serious. I only wear Rockport XCS walkers which I buy 3 or 4 pairs at a time. I keep a clean pair for “going out” and an everyday pair that gets replaced only some time after the soles have been duct taped to the uppers.
Post: Going Back to Work (Briefly)
Link to comment from March 26, 2025
As a long-view investor the single most important data point for me is cumulative 10-year returns (with reinvestment). Yes, this is backward looking; but everything forward looking is just a guess. I also have a list of annual performance for each of my current investments for as far back as data is available. From this I estimate how my portfolio would have handled prior market events and determine if I could also handle these. And I keep this posted in my office for times like these: Frequency of stock market declines -5% 3 times per year -10% 1 time per year -15% 1 time every 4 years -20% 1 time every 6 years -30% 1 time every 18 years
Post: All In the Numbers by Dennis Friedman
Link to comment from March 11, 2025
I compared our 2024 tax return results from 1) our accountant; 2) the AARP tax calculator; and 3) www.irscalculators.com/tax-calculator. All 3 were within a few 10’s of dollars. We have been using irscalculators for a few years for tax planning. The AARP calculator does handle more items than irscalculators but if using the standard deduction with the common income sources it is fine. Two advantages irscalculators provides is that it can calculate your state income tax, and the tax year can be selected. Unless I missed something the AARP calculator is only for the current tax year. Not sure when it is updated to the next. I have already used irscalculators for 2025 tax planning including: 1) our currently planned IRA distribution for spending; 2) with a small Roth conversion keeping our income within our current marginal rate; and 3) with a larger Roth conversion up to just below the next IRMAA threshold.
Post: How do you check your tax return? Bill P comes through
Link to comment from March 6, 2025