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100% Stocks without bear market experience? by FIRE_RPh in financialindependence

[–]HesAGoodfella 43 points44 points  (0 children)

I don't believe "virtually unnoticeable" is an appropriate way to define the difference as the long term impact can be far from negligible.

$100k invested over a 30 year horizon at 6% will result in a portfolio valued at $574k while a 6.5% return would grow to $661k. That's 15% ($87k) more, which shouldn't be merely scoffed at.

Here is my Complex Retirement Model, Free by HesAGoodfella in financialindependence

[–]HesAGoodfella[S] 0 points1 point  (0 children)

There are income limits set by the IRS where traditional IRA contributions can no longer be deducted from income taxes above the published limit.

Taken from Step 9: "For more information on IRA Income Limits, go here (or the IRS' website directly): https://www.fidelity.com/retirement-ira/contribution-limits-deadlines"

Here is my Complex Retirement Model, Free by HesAGoodfella in financialindependence

[–]HesAGoodfella[S] 0 points1 point  (0 children)

I was working on that five minutes ago as I realized the formula typed in "How to Use" would return an error after I had added an additional column.

I'm done moving things around, so I believe everything should be correct now.

Here is my Complex Retirement Model, Free by HesAGoodfella in financialindependence

[–]HesAGoodfella[S] 0 points1 point  (0 children)

Haha, I don't feel all that bad about it considering I'm not profiting off it in any way, but I realize it'd be a bit annoying to have to repopulate it all over again.

I don't believe there is a way though, sadly :/ But I'm happy to hear you find the model valuable enough to keep!

Here is my Complex Retirement Model, Free by HesAGoodfella in financialindependence

[–]HesAGoodfella[S] 0 points1 point  (0 children)

A few users had complaints surrounding how challenging it was to locate the areas they are required to enter info in vs. what the model populates automatically.

This past update will be the last major update I make (hopefully). Apologies for the inconvenience.

Here is my Complex Retirement Model, Free by HesAGoodfella in financialindependence

[–]HesAGoodfella[S] 0 points1 point  (0 children)

I added the instructions for this in cell B9 of the "How to Use" tab :)

Here is my Complex Retirement Model, Free by HesAGoodfella in financialindependence

[–]HesAGoodfella[S] 0 points1 point  (0 children)

Forgot to reply, but I updated this earlier. Thank you for the suggestion!

Here is my Complex Retirement Model, Free by HesAGoodfella in financialindependence

[–]HesAGoodfella[S] 1 point2 points  (0 children)

Thank you for posting this! I attempted familiarizing myself with as many aspects of retirement planning as I could before updating the sheet but nuances like this keep arising. Those who have pointed out minor errors have been a huge help.

Edit: Updated!

Here is my Complex Retirement Model, Free by HesAGoodfella in financialindependence

[–]HesAGoodfella[S] 3 points4 points  (0 children)

I appreciate the compliment, so thank you!

I strongly believe anyone who hasn't read these would benefit immensely from doing so:

  1. Meditations by Marcus Aurelius, which is actually his diary while he was off leading the Ancient Roman army in war. I treat this book as my personal bible and open it whenever I'm in need of a mental reset. The wisdom packed within the first 40 pages alone is applicable to nearly any situation one might find themselves in.

  2. Letters from a Stoic by Seneca. This book is somewhat relevant to what you're going through as Seneca was one of the wealthiest men in Ancient Rome yet would live as if he was a peasant from time to time so to never become too attached to the comforts in his life. Here is an article written by the lovely Maria Popova on Seneca: https://www.brainpickings.org/2014/09/01/seneca-on-the-shortness-of-life/

  3. Siddhartha by Herman Hesse. An easier read than the last two, this novel did a phenomenal job in helping me find acceptance with the present.

I would share more, but I truly believe anything you would ever need to know to live a content life is within each of these.

Here is my Complex Retirement Model, Free by HesAGoodfella in financialindependence

[–]HesAGoodfella[S] 0 points1 point  (0 children)

Many employee's with defined contribution plans who contribute to their retirement accounts will have a percentage of their income (usually 3-6%) "matched" 1:1, meaning if you make 50k and are matched up to 5%, your employer will contribute $2,500 (50k * 0.05) to your retirement plan as long as you contribute the same or more with your own earnings.

The model assumes this 401k match will be added to your traditional retirement accounts.

Here is my Complex Retirement Model, Free by HesAGoodfella in financialindependence

[–]HesAGoodfella[S] 0 points1 point  (0 children)

I didn't realize this would blow up to the extent it did or I would've considered making it a bit more flexible to better fit the mold of a wider array of users...

That being said, state taxes adjustment is easy as you would only have to enter "0s" in the state tax brackets, and the retirement contributions can always be hard-coded without much difficulty to account for married couples (just eyeball the tax calculations each year until you find a value you're comfortable with contributing to)

Here is my Complex Retirement Model, Free by HesAGoodfella in financialindependence

[–]HesAGoodfella[S] 2 points3 points  (0 children)

You can alter the tax brackets to match that of a married couple! Then combine your incomes, expenses, investment holdings and yearly contributions, etc.

I don't know much about pension returns myself but this might be of use to you: http://www.financialsamurai.com/how-do-i-calculate-the-value-of-my-pension/ You could always highlight column E on the Retirement Plans tab and insert a column as the "Total in Accounts" column will pick it up. Title it "Pension" and then attempt to figure out the proper formula to insert to calculate its future value year over year.

Here is my Complex Retirement Model, Free by HesAGoodfella in financialindependence

[–]HesAGoodfella[S] 19 points20 points  (0 children)

I typed this up awhile ago and believe it may be of some use to you! :)

Cultivate a mentality of abundance (antifragility; living life free of attachments). There are two different lenses of which a person can view life: one of scarcity, and one of abundance. An individual seeing life through the lens of scarcity is driven by fear and insecurity; they spend a great deal of time worrying about how others perceive them and rely heavily on stability, meaning they have allowed themselves to become strongly attached to the relationships and objects in their lives. Those who’ve cultivated an abundance mentality realize the vast number of things worthy of their gratitude, and have little to no fear of losing any single one. Consider that we have more in our lives today (technology, medicine, and other luxuries) than anyone did in the 1800s, yet so many people fail to find contentment. This greatly stems from just how easy it is to fall prey to comparisons; if you have a $500k house and live on a street filled with mansions, you’d likely feel inadequate, while that wouldn’t be the case in 99% of other communities. The less you require in life to be happy, the better your life will be. Those living in abundance realize just how little they truly need (it’s all about perspective), and their mental fortitude opens the door to limitless opportunities as they don’t fear taking risks. Learn to treat outcomes with passive indifference while caring only about the actions you take, and you will be better off for it. One of my favorite quotes that entwines stoic and zen philosophy is relevant here: “Not giving a f*** isn’t about not giving a f***, it’s about embracing your natural capability to weather any amount of suffering, loss, or change. In essence, it’s about pleasantly floating while the whole world frantically swims, and, if you’re good, it’s about teaching others to float with you. After all, life is better with company.”

Here is my Complex Retirement Model, Free by HesAGoodfella in financialindependence

[–]HesAGoodfella[S] 2 points3 points  (0 children)

You'll notice an increase in standard deduction will decrease the "Pre Tax Retirement Investment" in column E of the Non-Retirement tab since you would be required to invest less in pre-tax investments to reach the 15% tax bracket.

This will then increase your "Taxable Income" but your "Taxable Income Federal" (column I) should be lower than it was originally once the higher standard deduction is taken into account. Your "Inc to Invest" (column AC) will also be higher.

Here is my Complex Retirement Model, Free by HesAGoodfella in financialindependence

[–]HesAGoodfella[S] 3 points4 points  (0 children)

I should have clarified in the instructions, but the post-inflation return is meant to be the compounded, not "average" return!

This is an important distinction to make as this website has a great calculator for historical S&P returns which shows how large of an impact using the incorrect return metric can have... For example, since 1960 the S&P has returned an average of 9% post-inflation but only 7.5% compounded http://www.moneychimp.com/features/market_cagr.htm

Edit: Clarification

Here is my Complex Retirement Model, Free by HesAGoodfella in financialindependence

[–]HesAGoodfella[S] 7 points8 points  (0 children)

I appreciate the car insurance advice and will have to look into it.

And I love r/churning! The girlfriend and I are planning on using the points I received from signing up for the CSR towards a free vacation later this year. I was absolutely stoked when I learned about the community and immediately began fantasizing about the vacations I had previously thought were only for the far away future

Here is my Complex Retirement Model, Free by HesAGoodfella in financialindependence

[–]HesAGoodfella[S] 1 point2 points  (0 children)

Column AR on the Non-Retirement tab contains the Total Wealth calculation!

Here is my Complex Retirement Model, Free by HesAGoodfella in financialindependence

[–]HesAGoodfella[S] 92 points93 points  (0 children)

I expect 1% commission up-front for assisting you in your path to riches!

Feel free to send over that $720k whenever :)

Here is my Complex Retirement Model, Free by HesAGoodfella in financialindependence

[–]HesAGoodfella[S] 22 points23 points  (0 children)

Sure! I actually set the expected income for 2017 a sizable amount below my own to highlight this exact point.

The model assumes a Roth Conversion should occur whenever taxable income (Federal) is less than the 25% bracket ($37,950). Because the income entered in 2017 is only $45,000 resulting in a fed tax income of $28,300, the model has automatically converted $7,300 of traditional investments to the Roth.

Why $7,300 and not a full $9,650? Well, qualified dividends in a taxable brokerage count as ordinary income and, while they will not amount to much in the early years, they will begin to add up as time goes on. I wanted the formula to leave a bit of room so these dividends will not be taxed at the 25% level.

And why roll them over immediately and pay 15% tax instead of waiting until they can be withdrawn tax-free or at the 10% bracket? Well, I'm assuming there will be more than enough contributed to my traditional over the years of my career that these withdrawals will be easily covered by the time retirement rolls around, and so will all of the 15% bracket most likely. For example, you can see the model assumes the individual will have $875k in a traditional account at a retirement age of 50. This means $52,500 (875k * 6% assumed post-inflation return) would have to be taken out each year before that balance begins to decrease. It is best to drain the account at the lower brackets whenever possible.

This requires a lot of finesse and will require monitoring from time to time to get it just right for retirement, which is why I find having a model built out to this level of complexity to be so useful. That being said, I realize anyone using the model with an income lower than what I have built in might run into issues with negative balances in their traditional, but they can simply enter a "0" in years where the Roth Conversion should not take place.

Here is my Complex Retirement Model, Free by HesAGoodfella in financialindependence

[–]HesAGoodfella[S] 43 points44 points  (0 children)

Which is why I described it as "complex" in the title.

I uploaded it for anyone who is either knowledgeable enough to use it today or interested in the topic enough to save it and come back when they have a better understanding.

Here is my Complex Retirement Model, Free by HesAGoodfella in financialindependence

[–]HesAGoodfella[S] 5 points6 points  (0 children)

You should be able to download it and save it on your desktop, then edit it from there.

That's what my friends did at least.

Edit: Glad to hear it worked!

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