Investing megathread extravaganza

[DaFace]

A place to talk about investing stuff.

[BigBeauford]

Anyone have experience with FERS from a federal job? I am on the eve of getting my firm offer from the VA, and in case the salary might not be what I want, I was wondering if anyone could speak to whether it is massively better than a employers matching plan + self started Roth IRA.

[rydogg58]

Originally Posted by BigBeauford

Anyone have experience with FERS from a federal job? I am on the eve of getting my firm offer from the VA, and in case the salary might not be what I want, I was wondering if anyone could speak to whether it is massively better than a employers matching plan + self started Roth IRA.

Your FERS benefit is actually a combination of a few different areas. You have your basic FERS amount which is roughly 1% of your highest averaged 3 years of pay, times years in service. The next part is your TSP contributions. Each federal agency is different, but generally once you become a federal employee you will start contributing to the TSP. The basic amount is 1%, and they will match each dollar for the next 3% you contribute, and then 50 cents on the dollar for the next 2%. Obviously, you want to max at least to get the free money. The very last part is comprised of social security benefits. If you retire before age 62 you can get what's called an SRS. That's a special retirement supplement that allows you to draw a reduced social security check if you have enough time in service.

It's a good retirement if you are young enough and can put enough years in.

[BigBeauford]

Originally Posted by rydogg58

Your FERS benefit is actually a combination of a few different areas. You have your basic FERS amount which is roughly 1% of your highest averaged 3 years of pay, times years in service. The next part is your TSP contributions. Each federal agency is different, but generally once you become a federal employee you will start contributing to the TSP. The basic amount is 1%, and they will match each dollar for the next 3% you contribute, and then 50 cents on the dollar for the next 2%. Obviously, you want to max at least to get the free money. The very last part is comprised of social security benefits. If you retire before age 62 you can get what's called an SRS. That's a special retirement supplement that allows you to draw a reduced social security check if you have enough time in service.

It's a good retirement if you are young enough and can put enough years in.

Kickass explanation. Thanks!

[rydogg58]

Originally Posted by BigBeauford

Kickass explanation. Thanks!

OPM.gov has a lot of information about your retirement benefits.

https://www.opm.gov/retirement-servi...tor/index.html

That's a good generalized estimate of what you can be looking at. Just start plugging the numbers in.

[lewdog]

Originally Posted by petegz28

Okay so you have the Roth IRA maxed, awesome!!!

Now, change your 401k contributions to the following:

Pre-tax contribution to only the amount you have to have to get the full company match. Nothing more!! NOTHING MORE! If they only match up to 4% then you contribute no more than 4%

Put the rest of what you want to contribute in the Roth 401k. Yes, yes, I know, you don't get the tax deductions. BOO to the ****ing HOO!!! Woe is me, I had to pay taxes, wha, wha, wha.

Big ****ing deal. Put it in your Roth 401k. There are several advantages to this:

1. If for some reason you HAD to have the money before you retire you can get back up to the amount you put in (your capital) with no penalites or taxes.

2. If you hold it until you retire you pull out of it 100% tax free. No figuring that if you want $1k you might have to pull out $1.3 k because of taxes.

3. Most likely taxes will be higher than they are now when you retire


ROTHs are the ****ing awesome. I only put into pre-tax what I have to in my 403b because our company only matches pre-tax contributions. The rest goes into the ROTH.

I've thought about that before and thanks for breaking it down! I definitely need to crunch the numbers on it.

I do think dropping a tax bracket currently helps us quite a bit, but with the standard deduction being so much I might be able to split my 12% contribution to 6% 401k and 6% ROTH 401k instead of all to the 401k.

Thanks for a great post.

[lewdog]

Originally Posted by petegz28

A ROTH 401k maxes out at $19,500, bro


$19,500
The contribution limit for a designated Roth 401(k) for 2020 is $19,500, up from $19,000 in 2019. Account-holders who are age 50 or older may make catch-up contributions of up to $6,500, for a potential total annual contribution of $26,000.

$19,500 would still be the limit if contributing to both a 401k and ROTH 401k correct?

[petegz28]

Originally Posted by lewdog

$19,500 would still be the limit if contributing to both a 401k and ROTH 401k correct?

Correct. You get $19,500. How you break that up is up to you.

[petegz28]

Originally Posted by lewdog

I've thought about that before and thanks for breaking it down! I definitely need to crunch the numbers on it.

I do think dropping a tax bracket currently helps us quite a bit, but with the standard deduction being so much I might be able to split my 12% contribution to 6% 401k and 6% ROTH 401k instead of all to the 401k.

Thanks for a great post.

If your situation would cause you switch tax brackets then yeah, I would run the numbers but I myself am starting to put everything into all of my ROTH accounts. I contribute the minimum I have too to get the employer match to my pre-tax and the rest is ROTH, baby! I don't want to **** with taxes when I am old. If I need a few G's I want to put out what I need. Not what I need and Uncle Sam wants.

[Great Expectations]

Thanks for posting the Roth 401k advice. 3 years ago I would have argued against it as saving money now on taxes is better than later with the time value of money, but currently with income tax rates historically low and expected to increase by the time I retire in 20-25 years it makes more sense to pay them now. I also max out my 401k every year.

[eDave]

Originally Posted by Great Expectations

Thanks for posting the Roth 401k advice. 3 years ago I would have argued against it as saving money now on taxes is better than later with the time value of money, but currently with income tax rates historically low and expected to increase by the time I retire in 20-25 years it makes more sense to pay them now. I also max out my 401k every year.

It's what this thread used to be. Now it's just wallstreetbets.

[ChiliConCarnage]

I still say people should have a solid mix of Roth and traditional. Too many things are hard to predict over multiple decades to go 100% one way.

My state could remove income tax later, or we could end up in FL or TX because the kids/grandkids moved there, or health reasons.

Federal taxes seem like they should go up but it seemed that way after the stimulus during the GFC and trillion dollars deficits that ensued yet nearly a decade later we went back to trilly deficits and lowered taxes. Japan's got nearly twice our debt to GDP with negative rates so clearly we can keep going for a long time possibly. The Fed just created 3 trillion at the Treasury's behest and the long end didn't even budge.. and that's at the lowest rate it's ever been in history.

[lewdog]

Originally Posted by eDave

It's what this thread used to be. Now it's just wallstreetbets.

A good balance of investing and speculation is fine. It’s what makes it interesting for a thread.

[Buehler445]

Originally Posted by ChiliConCarnage

I still say people should have a solid mix of Roth and traditional. Too many things are hard to predict over multiple decades to go 100% one way.

My state could remove income tax later, or we could end up in FL or TX because the kids/grandkids moved there, or health reasons.

Federal taxes seem like they should go up but it seemed that way after the stimulus during the GFC and trillion dollars deficits that ensued yet nearly a decade later we went back to trilly deficits and lowered taxes. Japan's got nearly twice our debt to GDP with negative rates so clearly we can keep going for a long time possibly. The Fed just created 3 trillion at the Treasury's behest and the long end didn't even budge.. and that's at the lowest rate it's ever been in history.

Sound thinking here.

I won’t bust on a guy for going the traditional route because the big thing is it is I a fund.

If someone is putting money away, I’m happy.

I have some in both. Part of it is my Cabela’s 401 was traditional and I didn’t want to **** with basis so I left it traditional.

[lewdog]

Would be nice for the market to gain some traction today.

[Hammock Parties]

Nothing has run all week for me. Everyone scared to buy.