| Can this work- semi-retirement in 5 years? |
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foodeefish
Contributing Member
Cash: $ 6.00
Posts: 26
Joined: 07 Feb 2004
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| Can this work- semi-retirement in 5 years? |
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We have $230K in two 401K plans, $290K in a Defferred Compensation plan ( 1.5% return annually), $6,00 in a variable annuity, and $50K in a money Market Savings account. The Defferred Compensation plan grows taxed deffered and will be paid out in ten yearly installments once I leave the company in 5 years. Once paid out, it will be taxed as regular income and I plan to reinvest it in mutual funds ( I think) . Currently his means a payout of $29k for ten years if I do not invest in this plan in the future.
Our home is worth $750K with $146K left on the 10 year 4.75% mortgage.
We have purchased with cash 2 acres to build our retirement home in South Carolina.
We would like to simplify our life and move to South Carolina
in 5 years and change to different jobs that would gross us $60K per year versus the $250K we currently are grossing.
We estimate that to build our new home in S.C.will cost $300K which would leave $300K+ after the sale of our current home and paying off the mortgage. We would like to build in S.C. in four years and move in 5 years.
We currently are in the 33% tax bracket, I am 45 and my wife is 51, and we are wondering if we should continue to invest in the defferred compensation plan or invest some other way? I am planning on investing at least 50% of my gross income of $175K in each of the next 5 years as this will defer our income. Our on;y tax write-off is our mortgage interest. Should we invest in annuities, bonds ?????? Something different?
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Wed Nov 02, 2005 1:02 am |
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forexdaytrading
Full Member
Cash: $ 12.40
Posts: 71
Joined: 14 Jul 2005
Location: Miami, Florida, USA
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Hi foodeefish:
quote:
We currently are in the 33% tax bracket, I am 45 and my wife is 51, and we are wondering if we should continue to invest in the defferred compensation plan or invest some other way?
A 1.5% tax-deferred annual return in your Deffered Comp plan is horrible. At a 33% tax bracket, this is equivalent to a 2.24% before-tax return. There are many CD's right now that are paying over 4.5% a year and IRA CD's that are paying over 4% a year.
Is your Deferred Comp plan a 457 plan? If it is, you can roll it over to an IRA when you leave your employer and continue to enjoy tax deferred growth (plus have much better investment options than you have right now).
quote:
We estimate that to build our new home in S.C.will cost $300K which would leave $300K+ after the sale of our current home and paying off the mortgage.
You are assuming that you are at least going to get the same price that your house is worth right now in the market. This might not be true, considering the drastic overvaluation of the current housing market (remember the 2000 stock market bubble?). The drastic price increase that your house has experienced in the last 8 years is more of an anomaly than a sign of what's to come in the future. Speculation in real estate has been rampant in the last decade and is not justified by building cost increases or population increases. To learn more about what lies in store for the financial markets (stocks, real estate, bonds, currencies, gold, etc.) going forward, I urge you to go to the link below and play a recording of our most recent online webinar. Our webinars are given by a top-ranked alternative investment manager who has over 20 years of experience in the business. Alternative investments can protect you from a drastic drop in traditional investments like stocks and bonds that depend on the well being of the economy. You need a portion of alternative investments in your portfolio or else everything might drop at the same time if the going gets tough (which we believe it will). Here is the link to the archive section of our webinars:
forex-day-trading.com/managed-forex-video.htm
Follow the instructions on the page to play the recording and scroll down to the bottom to download and play the most recent one.
quote:
Should we invest in annuities, bonds ?????? Something different?
Despite what some people in this forum will tell you, the only good time to invest in bonds is when interest rates are relatively "high" based on the historical range. Right now, rates are still low. If you buy a bond when rates are low, the price of that bond will drop when rates go higher. Your overall return will suffer because you won't take full advantage of the capital appreciation that bonds can offer you.
Annuities are not investments. They are a packaged products. Inside the annuity you have different investment options; mostly, pretty average mutual funds. Whenever you package an investment with an insurance product, you get a crappy investment and a crappy insurance. Separate your insurance from your investments. It is the best thing to do (even though you have many robotic financial planners and brokers that will disagree with this - guess why?).
Play the above recording that I mentioned before you start taking advice from clueless planners and advisors (yes, there are many out there). Also read some of my older posts.
After you do that, if you want to set up a conference call with a top-ranked money manager or investment expert, please let me know.
I have been a private stock and bond money manager in the past as well as a financial consultant. Now I am strictly involved in alternative investments because of the bleak outlook for traditional investment products. I can give you pretty detailed suggestions if you wish.
This is the toll free number to our office 800.366.4157.
Best of luck to you.
Dan
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Sat Nov 05, 2005 5:45 am |
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