Q & A - Ask a financial advisor

phillycobra99 said:

What's your opinion on Roth vs traditional 401k?

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Depends on whether you expect to pay a higher tax rate after you retire, or not.

And never forego the company matching your employer may offer on a 401K. It's free money.

mariusvt said:

Keep in mind, pa doesn't charge income tax to retirees for income from social security or retirement accounts.

It's why I do 15% into my employer sponsored 401k to reduce my taxable income. Also the 8% on top of my contribution in matching from my employer doesn't hurt.


Great thread op.

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Excellent point on PA state tax. The “catch” is that they don’t give you a deduction for contributing to retirement accounts while you’re working.

CV355 said:

Should I sell everything I own and live in an insulated shed? Serious question, and I'm seriously contemplating it

Also, is it illegal to set up my life insurance policies as hedge funds?

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Whatever makes you happy! What would you do for money? Keep working? You can’t build long term wealth living like that, but if you don’t care about wealth, do what makes you happy!


I’ve never seen hedge funds in a life insurance policy. Most are standard mutual funds offered by the issuing company. I don’t do much with life insurance, so I’m not well versed on the current rules. Great question though.

JPD5801 said:

Whatever makes you happy! What would you do for money? Keep working? You can’t build long term wealth living like that, but if you don’t care about wealth, do what makes you happy!

I’ve never seen hedge funds in a life insurance policy. Most are standard mutual funds offered by the issuing company. I don’t do much with life insurance, so I’m not well versed on the current rules. Great question though.

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Hitting a point of total career burnout. Wondering if it is worth holding onto everything or just liquidating and having less to worry about. Figured I could work part time as a Walmart greeter- they don't even have to say "hello" anymore!

The other question was somewhat of a joke. I figured if I get people "buying in" on my life insurance, I can make short term profit and they get 1/X as beneficiaries. Craigslist keeps flagging my ads though.

I get that ROTH IRAs are recommended for young investors - but since the annual cap is relatively small at $5,500 would you recommend maxing that out and still directing 10-15% to a traditional/401k?

When should I dump my GE stocks! Also thinking about buying more TR, as its had a decent drop.

Never_Enough said:

I was thinking living on what would equal at least a $75k yearly salary.

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Remember most retired people will have less expenses. No college to save for, no rent or mortagage as their house should be paid for(just property taxes/insurance/hoa fees), you don’t have to put away a portion for retirement etc. Plus your retirement could be taxed less if you paid your income taxes on it going into retirement. Normally a $75k salary only nets one $55k or less.

JPD5801 said:

How do you define "comfy?" The rule of thumb has been that someone can withdraw about 3.5% of their portfolio for a period of 30 years without outliving their money. So, if you want to live on $35k in retirement, you would need a portfolio of $1,000,000 to support that. This doesn't include social security benefits. The average SS benefit is about $16k.

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I don’t understand this. At a million dollars, the interest earned with this retirement investment should give someone conservatively 5-8% after fees. That would mean at least $50k a year in income without touching the $1 million principal.

trxcobra said:

I get that ROTH IRAs are recommended for young investors - but since the annual cap is relatively small at $5,500 would you recommend maxing that out and still directing 10-15% to a traditional/401k?

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If you can do both, do both! 401ks have higher contribution limits and the prospect of an employer contribution.

GOTSVT? said:

When should I dump my GE stocks! Also thinking about buying more TR, as its had a decent drop.

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When did the drop start? That would have been the time to dump it!

ON D BIT said:

I don’t understand this. At a million dollars, the interest earned with this retirement investment should give someone conservatively 5-8% after fees. That would mean at least $50k a year in income without touching the $1 million principal.

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It’s just a rule of thumb. It won’t hold true for everyone. Plus, this is an average - you won’t get 5-8% every year.

http://time.com/money/4689984/safe-withdrawal-rate-retirement/