What To Do With Money After Retirement Is Maxed?

[Singuy]

I am wondering what would you guys do with extra cash monthly if all debts are paid and retirement funds are maxed out. With bank CDs at 1.5% or so, is it really worth it to get CDs? Are mutual funds always the go to answer. When you guys say "I rather invest"...what is this investment?

[Fishindude77]

Nothing wrong with having a big fat bank account full of cash.

What you do with it kind of depends upon how much you have amassed to work with.

[feh]

I am wondering what would you guys do with extra cash monthly if all debts are paid and retirement funds are maxed out. With bank CDs at 1.5% or so, is it really worth it to get CDs? Are mutual funds always the go to answer. When you guys say "I rather invest"...what is this investment?

Just open a taxable brokerage account. You invest like you would in tax-advantaged accounts, except capital gains/dividends are income that you are taxed on.

https://www.bogleheads.org/wiki/Principles_of_tax-efficient_fund_placement

https://www.bogleheads.org/wiki/Tax-adjusted_asset_allocation

We've been investing in taxable accounts for years and years. As a result only about half of our funds designated for retirement are actually in 401K/IRA accounts.

We've used Ameritrade in the past. Currently have taxable accounts at Vanguard and Fidelity.

[kork13]

Just open a taxable brokerage account. You invest like you would in tax-advantaged accounts, except capital gains/dividends are income that you are taxed on.

We've been investing in taxable accounts for years and years. As a result only about half of our funds designated for retirement are actually in 401K/IRA accounts.

I would second all of this. I have about 1/3 of my savings in taxable accounts, because in college I only had access to a Roth IRA, and now I'm maxing the Roth IRA plus my TSP retirement account, so taxable is the only thing that makes sense.

Invest in a taxable investment account with tax-efficient mutual funds, such as a a simple stock index mutual fund, which won't throw off much in the way of income. Held for the long term, most of your gains here can be taxed at a lower long-term capital gains/dividends rate. In a taxable account, avoid funds that have frequent/significant interest payments, such as REITs and bond funds.... That will only mean more taxes for you -- keep those funds in your tax-advantaged retirement accounts.

[Singuy]

Just open a taxable brokerage account. You invest like you would in tax-advantaged accounts, except capital gains/dividends are income that you are taxed on.

https://www.bogleheads.org/wiki/Principles_of_tax-efficient_fund_placement

https://www.bogleheads.org/wiki/Tax-adjusted_asset_allocation

We've been investing in taxable accounts for years and years. As a result only about half of our funds designated for retirement are actually in 401K/IRA accounts.

We've used Ameritrade in the past. Currently have taxable accounts at Vanguard and Fidelity.

What is your rate of return generally? And you just pick "conservative/aggressive" or you actually manages which stocks to pick?

[corn18]

I am wondering what would you guys do with extra cash monthly if all debts are paid and retirement funds are maxed out. With bank CDs at 1.5% or so, is it really worth it to get CDs? Are mutual funds always the go to answer. When you guys say "I rather invest"...what is this investment?

Are you certain all your tax advantaged space is max'd out? I ask because I thought I had max'd all of my tax advantaged space and then found the after tax 401k mega back door Roth option that has highly accelerated my retirement savings.

What tax advantaged space are you using now?

feh offers sage advice. Visit the boglehead site and follow their recommendation for asset allocation and tax efficient allocation. My aftertax is all in a low turnover equity index fund with a tiny expense ratio. Won't have to pay any tax until I sell and then I will pay capital gains tax vs. ordinary income tax.

Tax Efficient

Low-yield money market, cash, short-term bond funds
Tax-managed stock funds
Large-cap and total-market stock index funds
Balanced index funds
Small-cap or mid-cap index funds
Value index funds

Moderately inefficient

Moderate-yield money market, bond funds
Total-market bond funds
Active stock funds

Very inefficient

Real estate or REIT funds
High-turnover active funds
High-yield corporate bonds

[feh]

What is your rate of return generally? And you just pick "conservative/aggressive" or you actually manages which stocks to pick?

Your rate of return will depend on what investments you make. Risk vs reward. You can be as conservative or aggressive as you want.

I treat my retirement portfolio as a whole (that is, my asset allocation is the sum of my taxable accounts and tax-advantaged accounts). I don't look at the return of our taxable accounts in isolation.

Given that equities are almost always more tax efficient than fixed income, our taxable accounts are 100% equities. We use index funds; no individual stocks.

Read the links I provided above regarding asset location. Also read this page, if you haven't seen it before: https://www.bogleheads.org/wiki/Bogl...g_start-up_kit

[tripods68]

I am wondering what would you guys do with extra cash monthly if all debts are paid and retirement funds are maxed out. With bank CDs at 1.5% or so, is it really worth it to get CDs? Are mutual funds always the go to answer. When you guys say "I rather invest"...what is this investment?

Once we are completely debt free, our goal is to accumulate more cash ($300K) outside EF.

We need $100K a year of income to retire comfortably times 3 years in addition to our monthly pensions= $300K.

This way we are not force start withdrawing our retirements.

[Drake3287]

I'm in the same exact boat and don't wish to invest anymore in the market. I've been saving my extra "cash" in CD's and Money Markets which of course are making 1% or so.

For me, having cash in the bank is a backup plan that lets me sleep better at night. I would say I have 75% in various stock investments along with 25% in cash. Having a Defined retirement plan also helps.

[disneysteve]

I am wondering what would you guys do with extra cash monthly if all debts are paid and retirement funds are maxed out. With bank CDs at 1.5% or so, is it really worth it to get CDs? Are mutual funds always the go to answer. When you guys say "I rather invest"...what is this investment?

We invest in taxable accounts. The only retirement account I have is my Roth which isn't nearly enough so using a taxable account is my only choice. Most of my money is with Vanguard but I also have accounts with a couple of other mutual fund companies as well as some money in individual stocks with Scottrade and Schwab.

[LivingAlmostLarge]

Same we've done a lot of bonds in retirement accounts and ETFs for our taxable accounts. But right now we're cash heavy for personal reasons of having enough cash to weather 3 years of no income.

I second following the boglehead allocation. Also a good read is william bernstein the intelligent asset allocator. Great portfolio and he gives you the stats behind it.

[QuarterMillionMan]

After maxing out these;

401(k), $18,000 (50+, $24,000, I'm on par to attain this amount for 2015)

Roth IRA, $5500 (50+, $6500, I've hit this number for 2015)


Maybe consider these;

High deductible health insurance plan (approx. $3500/yr, I can't do this because I don't have a high deductible health plan)

529 College savings plan (which I know nothing about since I don't have kids)

[97guns]

I havnt invested in an IRA, 401k or the markets since 2007, only hard assets and one of them was guns for over 50K. Right now I'm liquidating my collection and am at minimum doubling up and tripling up on some pieces, doubling up in 7 years works out to a 14% return on my investment, tripling up in the same time period works out to around a 27% return and all tax free, I also have a large high end knife collection that has not done nearly as well but it is still deep in the green.


Just thought I'd throw a different investing perspective out there other than traditional types of investments

[Singuy]

Okay I will definitely look into taxable accounts in the future.

And no my tax free retirement accounts have not been maxed out. I have a maxed 401k and roth, but my wife has nothing and we still need to work on that. Because she has a LLC scorp, I am not sure if setting up a 401k "with matching" will also translate to matching if she has future workers under her belt(which is something we don't want to provide).

With that being said, our cash flow is about 20-25k/month after taxes (and expenses/month after property taxes is about 2.5k/month) so maxing out a retirement account for the year takes only a month.

Also anyone here do any investing with the Lending Club (or something similar?)