2017 in Review 6


It’s that time of year again. Time to look back on 2017 and what a year it has been. Our budget was blown but what made up for it was a spectacular return on my investments. It was a mixed bag but I must admit, I think I must land on a positive note for us personally.

The blown budget

Let’s begin with the not so successful feature of 2017. When I retired, our budget was set at $65,000 a year. Due to extremely high and continuously high medical costs, I upped the budget to $71,000 going forward (increasing each year for inflation). The medical expenses are the new normal for us and we’ll cope but, just when you figure you’ve found a balance a botched up root canal happens and expenses go even higher. Higher by some $5,880, to be exact.

This was also the year my father passed away. As if the emotional blow isn’t hard enough, living 4,100 miles from home add a financial blow as well. The costs associated with travel, attending my father’s “memorial” and spending some time with my mom for a over week: $2,242

Those and some additional smaller expenses (new dryer, car repair) put our total expenditure for 2017 at $79,000.

On the bright side: Our son, who was scheduled for some very expensive orthodontics, managed to manually correct the situation by patiently pushing his jaw in the right direction.

Keeping busy

Retirement isn’t for all. You need to be able to stay busy when retiring and more importantly, you need to stay busy doing something you love. I’ve managed to find my passion and no, it’s not blogging about personal finance (the infrequent posts will tell you that). My passion lies in designing and building 3D printers. I spend 60% of my time working with Fusion 360 designing the perfect printer and 20% building them.

I’ve also gotten my feet wet in building prosthetic hands for those that really need it, but haven’t yet actually built one for an individual. Maybe next year.

The last few months I’ve been sharing my designs so other can use or build on them on Instructables.com and GrabCad.com.

Retirement also still allows me to spend whatever time I want with my kids. When their heads aren’t buried in the latest Minecraft, Terraria, or Undertale games, I try to stay active with them.

 

How about that Stock market

Can’t talk about 2017 and not talk about the stock market. For those of you that follow my, you know how much I’m invested in the Stock market. Mostly ETF(s) (electronically traded funds) and some tech stock (I own some google, Amazon and Apple).

As of this writing (who knows what the last 3 days of the year will bring) the S&P 500 (SPY) is up 19.84%, the NASDAQ (QQQ) up 29% and the Dow (DJI) is up 25.3%. A year like this, easily makes up for the budget failure and hopefully will ease the burden of our medical expenses for a few years to come.

My retirement has always been a risky one (retired at 43 with “just” a little over a million). Boosts like this make me optimistic about the chances of staying retired for the long run.

Thanks to the high rise in stock, I sold some additional stock for next year. For one, I’m expecting more health care cost (not medical cost but insurance premiums) and I’m also looking into having our waterfront dredged (a costly but good investment). I’m offsetting the additional capital gains with a loss I’ve been sitting on for the last 5 years. I once invested heavily in Energy Conversion Devices, which went belly up in 2012. I’ve kept the loss of some 11K on the books for when I really needed it. This year in order to stay within the 15% tax bracket, I needed it.

 

Preparing for the next 10 years

In my rush to retire at 43, I accidentally put too much of my paycheck in my 401(k) and too little in my after tax stock accounts. Not a problem for most individuals but it left me with the issue, of running out of funds from my after tax accounts at the age of 52. 7.5 years before I can start dipping(penalty free) into my retirement accounts.

For that reason, I started the Roth IRA conversion ladder this year. This year, and for the next foreseeable years, I’ll be converting $40,000 annually from my 401(k) to a Roth IRA. When contributing (on in this case rollover) to a Roth IRA, it’s allowed to take out the principal, 5 years after converting it. This means that 7 years from now (when I need it), I will be able to start getting at my retirement money, penalty and tax free.

The downside to this process is, paying regular income tax on the amount converted. Adding an automatic 40K of taxable income (income you can’t touch, btw) makes it challenging to stay within the 15% tax bracket (or whatever it will be going forward). Staying within the 15% tax bracket is important as it means paying 0% capital gains.

I’ll keep you posted in years to come as I keep climbing rungs of the Roth IRA conversion ladder.

 

Am I getting through?

My cousin approached me about Crypto currency and asked whether I had gotten in. I haven’t and I probably won’t. Am I right or wrong? I don’t know. What I do know is that I lost about 200k in the internet bubble and this smells, feels and looks like it, all over again.

My cousin will learn his own lessons (I advised him at smaller scale) but what is important here is that my cousin is talking about, and most importantly asking questions about finances and his future. I like to think I had a little to do with that.

Support

Last but not least, I’d like to thank my supporters in the Personal Finance world this year. Like I said, I don’t nearly blog enough so if you’re looking for a more regular dose of good information on personal finance, please visit Mr. and Mrs. Groovy at Freedom Is Groovy,  Jane and John at johnjanedoe.com and James at Retirement Savvy

 

Happy New Year and good luck reaching your financial goals

 


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About Maarten van Lier

Maarten came to this country with a suitcase and a diploma. He created a financial plan and goal to become a millionaire in 10 years. He successfully turned his financial goals into reality, wrote a book about it and now blogs actively in hope of inspiring other to do the same.


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6 thoughts on “2017 in Review

  • Mrs. Groovy

    Nice going with managing your tax bracket and starting the Roth Conversion Ladder!

    I’m sorry the healthcare premiums and other medical costs will continue to be of concern to you. But thank God there are treatments available to keep your son healthy. And I’m sure you’ll do whatever must be done to continue providing him with the best care. I also admire you for sharing all that you’re learning in the 3D world so that others can benefit from your designs.

    Thank you so much for the shout-out! We really appreciate it.

    Wishing you and your family a wonderful 2018.

    • Maarten van Lier Post author

      Thank you. I think medical cost (if premiums alone) will be a burden on many. Unlike most, I do have the nuclear option of going back to the Netherlands. I truly hope it will never come to that but, like you said we will do whatever it takes to take care of our son.

      Have a great 2018

  • MrWow

    sounds like a good year all in all.

    Sorry about the medical stuff. it happens. But hopefully it’s a one time thing.

    Also sorry to hear about the memorial.

    Seems like the market helped out a bit, so that’s not all bad. And here’s hoping 2018 brings you a good year!

  • Mr. Groovy

    Hey, Maarten. I’m glad the stock market helped cushion the emotional and healthcare costs you faced in 2017. Thankfully, we have you for at least another year. I don’t want to lose you to the Netherlands. And I can’t wait to see what prosthetic hands you create in 2018. Any possibility that that might turn into a lucrative side-hustle? Best of luck in 2018, my friend. I truly look forward to your posts. Cheers.

    P.S. I’m so sorry about your dad’s passing. Going through that is difficult enough, never mind being an ocean away. If it’s any consolation, the memorial you had for him struck me as a fitting tribute to such a wonderful man. And his art work looked pretty special too. Thanks for letting us get to know a little about him.

    • Maarten van Lier Post author

      Thank you for those kind words. I am proud of the work and legacy my dad left behind (much of it shaped me). I will keep posting as I find things I want to talk about. Going back to the Netherlands truly would be the nuclear option (one I hope to never need).

      The prosthetic hands are purely pro-bono but, this year I do hope to sell one or two 3D printers. I’m currently working on a easily repeatable and easy to assemble design. Fingers crossed on that one.

      Happy New Year to you and Mrs. Groovy