Several readers and two of our children are asking the same question at about the same time:
“If I take an early 401(k) distribution because of a change in where I work and pay taxes on the money, how’s the best way to spend or invest it?“
Today, we play out a few scenarios – and see which ones make the most sense.
After we consider the Tuesday market action, see where the charts have us going, and mull the future of life once upon a time…
More for Subscribers ||| SUBSCRIBE NOW! ||| Subscriber Help Center
Good article today! I appreciate your thoughts for those of us who can’t/won’t do the constant monitoring and short turnarounds that you do. Many of us would rather have longer term plays, and hands off except for perhaps a weekly or monthly monitoring. Life gets busy when you’re retired.
I have a good friend who will be 62 in a couple of years. I took early SS and am very glad for doing so. She thinks otherwise, but who am I to say. I just think that those who wait too long will get paid in useless dollars or no dollars at all, and I’d rather spend mine while I’m young enough to do so in fun ways. At least I’ll get the memories(and hopefully keep them.
Just FYI, the icon on the address bar used to be yellow. Now it’s black and gets lost among the other 100 open tabs. I found the yellow icon to be very helpful. I’m not sure how others feel.
I will put the Icon on the list Mike – thanks!
You know I respect your opinion George, but there are two things in this mornings column that I vehemently disagree with you on.
1. There is absolutely, positively no media bias against Trump. Just truth. Just the facts man. Even legitimate Fox hosts have had it with Hannity and friends and their blatant disregard for the truth and unparalleled sucking up to this egomaniac. The bias is 100% with the “For Trumpers”. I hear the same things coming out of his mouth that everyone else does….and much of it it isn’t even slightly coherent. He is not a very smart guy. I am embarrassed for him and by him.
When there are dozens media companies worldwide that call our president out and only one that supports him…Like a drug addict in Denial …an intervention is needed to help cure and nurture the addicted. Fox is addicted to a very dangerous, life threatening drug.
2. Big cities are not dead. They are thriving more than ever. Medium size cities…Yes..they are dying. The Midwestern and southern service towns like Memphis, St. Louis, Louisville, Little Rock, Oklahoma City, Tulsa, Jackson, Birmingham, Wichita, Ames, etc. are on their last leg. They don’t provide high paying jobs, and have missed out on opportunities that the big cities now own….Anyone that struggles in these aforementioned medium size cities is better off taking George’s survival advice and should move away from the clutter and settle in a rural area. You will be happier and less stressed.
The truly big cities…like the Bay Area, L.A, New York, Dallas, etc. are like a major league, all star studded sports franchise. We can recruit the best and brightest minds..who in turn make the highest salaries and financial packages…And…that help support those around them who can earn a great living supporting the robust nature created by the best of the best. The growth in big cities is contagious…and will continue to be. It’s a lot more stressful, and the out of pocket costs are higher… but are relative to the pocket filling opportunities available. In the end…making money has a way of easing many woes.
“Big cities are not dead.”
I’ll agree to that.. our industrial cities are thriving..better than before.. well maybe not.. you decide
https://www.gannett-cdn.com/-mm-/da83f2a7e6b3ff3e1fe16be33ac6efe308339b0b/c=0-214-1998-1343&r=x1683&c=3200×1680/local/-/media/2018/05/28/DetroitNews/DetroitNews/636630972817126275-AP18148034810457.jpg
https://img.huffingtonpost.com/asset/56f57f2b1e0000870070559c.png?cache=uknywvo3sf&ops=crop_110_1241_1694_1056,scalefit_970_noupscale
http://4.bp.blogspot.com/-UIeu_eDH6as/UBcmnH1DNQI/AAAAAAAAJlM/c08J_DZvmpI/s640/det+now.jpg
http://www.chicagotribune.com/business/ct-rural-start-up-decline-20160522-story.html
https://www.usatoday.com/story/money/economy/2018/04/23/cities-hit-hardest-extreme-poverty/528514002/
http://time.com/4039249/detroit-poverty-rate-census/
https://www.development.ohio.gov/files/research/p7005.pdf
https://www.census.gov/prod/2012pubs/p60-243.pdf
As a bottom feeder.. I see the world from a different perspective.. that of the average working citizen.. many cities the schools look like prisons to keep the riff raff out.. neighborhoods that are controlled by the local gangs.. citizens afraid of the police that once was there to protect and serve.. many police that are afraid to venture into some neighborhoods due to crime violence and the possibility of not making it home alive..
Jobs being shipped out and only low wage service positions left.. there is a huge divide between the haves and the have nots.. what is surprising is it follows a plan devised by Adolph Hitler and laid out in his book.. I think the hard copy is in the boston library but you can get the scanned version easy enough.. or buy a copy of it.. what is scary is it is overlaying into the upper twenty nine percent.. https://www.cbsnews.com/news/80-percent-of-us-adults-face-near-poverty-unemployment-survey-finds/
https://www.theglobeandmail.com/report-on-business/top-business-stories/poverty-and-unemployment-the-american-dream-is-dead/article4183511/
the thing is.. I think as you look at the problem.. by looking at the numbers everyone in our area should be making almost thirty dollars an hour.. yet there are those that will argue that to increase minimum wage to ten or fifteen dollars an hour would destroy the american economy..
https://www.epionline.org/release/o178/
http://www.chicagotribune.com/news/opinion/chapman/ct-minimum-wage-labor-nixon-reagan-carter-perspec-0528-jm-20150527-column.html
Now consider this..all these people.. and the wages..
https://www.bls.gov/oes/current/oes_nat.htm#13-0000
According to thos figures my career choice I was making almost forty dollars an hour.. in real life my wage scale had an upper end of thirteen.. ( today that upper end wage scale is 17.00) almost everyone makes about fourteen top end.. when they do the scales they take into account all the numbers.. and average it out.. not real life.. it is the fluffed up version..
take expenses.. if you take just an average the woman dumping the trash needs to be clearing twenty dollars an hour minimum just to survive.. this won’t ever happen and the cities will continue to decay and fall apart.. maybe not at the top.. but ask any five year old building a tower with blocks.. that if you don’t put enough on the bottom the top will fall over.. kind of like the game Jinga.. the top may look good but give it time..
So you like Big Cities with Robust Growth? Well, check out the ghettos at 2 AM and see if you still feel the same way about them. In our city, we can confidently walk home at 2 AM through what is considered bad part of town without having to watch our backs. Yes we do have crime, that is, property crime, but personal safety not in jeopardy. Our population is 1 million.
First, if you don’t perceive the anti- trump bias, you are probably a “sensor” …a term referring to one of four personality dimensions in jungian psychology. Take the myers briggs type test to understand more about each dimension. This is not good or bad or a reflection on IQ.
Mark, I did not take Trump seriously for a long time, but I watched him and read what he was saying 20 years ago, 10 years ago, 2-5 years ago and recently. He is remarkably consistent, like him or not. And when you say Trump is not a smart guy, that receals a lot about how you fail to assess him. He is very strategic, uses language with a great deal of intention. What you judge as incoherent is exactly how he intends to use language. When you imagine walking a mile in another man’s mocassins, you begin to understand things at a different level. Again, a “sensor” would see this differently.
Step
As my man Charlie Brown would say ‘good grief’
George:
Great column lots to think about.
1) whats up with the DOW vs the S&P and NASDAQ? they appear to be going in different directions. I keep a 2/5/9 128 day chart on the individual indexes and the Brain Amp(thank you!) and the Dow looks like it is going down now verses the other two. (And today they swap out GE for Walgreen’s as of 6/26.
2) I solved the Car and Medical by having A2 be a ASE certified mechanic. Alabama passed laws that require various shops to have certified individuals on site. Shops now need at least 1 certified mechanic. He is his shop’s.
We can only flip three cars a year w/o a dealer licence but we can do all the off road stuff like dune buggy carts we want. Buy a few for $100 each from various yards, about $300 in parts and such to restore and rebuild, then by October they are ready to go for about $1200-1500 each (you know what happens in October.
The medical is solved by a2 (Anna2) entering Nursing School next semester (Yes!). Anna1 wanted a daughter to have someone to pick her up out of bed or the tub when she is old. Now she will be there to take care of both of us.
3) I can agree with buying an economy car IF you can pay cash and IF it will last 250K-300K miles, and if you are a careful driver who will not wreak it. If you live in an area where someone else is likely to wreak it for you it is still not a good deal to chase gas mileage. Trading to get mileage will not save anything, best to drive what you have until the wheels fall off.
I am driving a Buick Le Saber with 220K miles still running fine due to my and A2’s attention. Right now it costs me nothing but gas and minimal insurance. It is about like your Lexus on the comfort scale. It gets 19-21 around town but I only drive 8 miles each way to work. (That’s where to save money as you pointed out in “How to live on $10K a Year.” Worth re-reading every year.) On the highway home on weekends or every other weekend, it gets 29 mpg in cruise at 69-70 (set so I can stay in the right lane and let everyone go around without me having to hit the brakes and take it out of cruise). My fear is that going forward the next hit from “Cash for Clunkers” is that the used cars available will be laden with electronics (electric Power steering, Power brakes, transmission shift, CPU and a Screen on the Dash instead of switches) that will not make it the 250-300 K-miles that mechanical parts will go, and will cost more than the car is worth when they fail at about 120 K-miles. Remember Cell Phone “Black-Eye?” That and tiny over-stressed turbo engines. So one thing I am looking to stockpile is a few cars with naturally aspirated engines, 4 or 5 speed auto trans, and less electronics everywhere (and small PU trucks too). Best to pay the rock bottom on the most reliable and cheapest to operate, fix, and insure, simple car or truck, and let the gas mileage fall where it may.
Dear Mr. Ure,
Sorry to hear about South Seattle. Illinois may have a telling solution to corresponding ‘hood home neighborhoods in South Chicago. Raze the stakes and build a Presidential Palace.
I’ll include a couple of publicly available links that relate to the upcoming 2019 Illinois State budget. It would seem state taxpayers are being given pride of ownership for a $199 million tab towards infrastructure projects ramping up to a future Obama Presidential Center site. Sounds like a wrap. Enjoy.
https://illinoispolicy.org/new-illinois-budget-includes-224-million-for-obama-presidential-center/
https://www.washingtonexaminer.com/news/obama/-presidential-center-to-cost-illinois-taxpayers-nearly-200-million
If you withdraw from a 401k & you are under age 59.5, I believe there is a 15% penalty in addition to taxes.
My belief is don’t take a distribution until you retire or when the IRS forces you to at 70.5, otherwise, you are spending your retirement because you do not want to be saying “Would you like fries with that” at 75.
Poker is a game of skill. It is the only casino game you can consistently win at over time, especially if you concentrate on playing with people who have less skill than you. All you have to beat is the house rake. I never play no limit Texas Hold ’em because it attracts the best players. I learned my lesson the hard way. Play limit. If available, my favorite is $3-6, because your competition is generally not that skilled.