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Thread: Retiring as a professional gambler

  1. #1
    I used some of Rob Singer's numbers in one of our Las Vegas discussions to come up with a warning about relying on a 401k for retirement income. This would apply to all workers including professional gamblers:

    Let's say Worker X earned $100,000 per year and socked away 7% into his 401k plus got a 100% match. That would have meant a combined annual 401k contribution of $14,000 and over 25 years in private industry that would mean $350,000 in the 401k. Not every worker gets a 100% match and to be honest I know few companies or employers that make a 100% match. A seven percent annual contribution is to be commended. Professional gamblers don't get a match.

    Let's also assume that our worker got lucky with his investments and managed a 5% annual return over the 25 years. Keep in mind that would not be 5% every year for 25 years on all $350,000 but just on the total year by year as he accumulated that total of $350,000.

    I went to Bankrate.com and used their retirement calculator. http://www.bankrate.com/calculators/...alculator.aspx

    What I found was, using 0% inflation and 0% taxes, that our Worker X would have a 401k worth $364,000. To be honest, I don't know if that's correct, but 5% return on the total of $350,000 is $17,500 and 5% on the first year contribution of $14,000 is $700. 25 years X $700 = $17,500 and what's missing is the compounding on the 5% return. Anyway... we're pretty close.

    This illustrates the problem with a 401k. With a total of $364,000 and no additional 401k contributions and a living budget of $3,000 a month, that 401k will be exhausted in 121 months which is about 10 years. Don't forget to add social security.

  2. #2
    I think your total after 25 years at 5% is way off. Gains are not taxed annualy are they?
    Last edited by quahaug; 12-06-2015 at 02:33 PM.
    Take off that stupid mask you big baby.

  3. #3
    Everything about what you deduced from wherever about 401k's is either a misstatement or mostly wrong. What you're trying to do is make some sort of case that nobody can possibly have 7 or more figures in theirs. When I retured from Northrop-Grumman my boss had over $20million in his. He showed me because up until that point I really never knew many of the ins & outs of mine or my wife's. He's the one who advised me not to touch it until at least age 59-1/2 because of the 10% penalty involved.

    Not a good thread when you don't know all the facts.

  4. #4
    Originally Posted by quahaug View Post
    I think your total after 25 years at 5% is way off. Gains are not taxed annualy are they?
    Gains would be taxed annually if in a taxable savings account or money market fund or even CDs. But the gains in a 401(k) are not taxed annually. That is why I entered 0% in the tax part of the calculator. The error would only be in the compounding of the 5% interest year after year and frankly the calculator doesn't show that for some reason.

  5. #5
    Originally Posted by Rob.Singer View Post
    Everything about what you deduced from wherever about 401k's is either a misstatement or mostly wrong. What you're trying to do is make some sort of case that nobody can possibly have 7 or more figures in theirs. When I retured from Northrop-Grumman my boss had over $20million in his. He showed me because up until that point I really never knew many of the ins & outs of mine or my wife's. He's the one who advised me not to touch it until at least age 59-1/2 because of the 10% penalty involved.

    Not a good thread when you don't know all the facts.
    I am going to refer you to the IRS.gov website. The limits on an individual's 401(k) contributions as of the latest update is $18,000 for a single year (not including catch up contributions which have a max of, if I recall, $26,000). Are you sure the boss wasn't showing you an overall pension and retirement fund?

    My pension fund is the equivalent of having more than two-million dollars in it, even though I contributed nothing on my own since all contributions come from my employers.

  6. #6
    Here are two pages from the IRS website that give info on maximum contributions to a 401(k) plus OTHER retirement plans with tax benefits:

    https://www.irs.gov/Retirement-Plans...ibution-Limits

    https://www.irs.gov/Retirement-Plans...-Contributions

  7. #7
    Those are the limits on tax exempt contributions to a 401k. You can contribute far, far more than that when it's taxable, which we always did. Not sure how retirement plans administer that as far as what they call it, but our balances are all in the T. Rowe Price 401k/retirement statements. And neither of us here ever paid one penny into a private pension plan. The 3 we get were all 100% company funded by the aerospace corporations we worked for. My US Gov't. pension was an employer/employee funded program because there was no SS deducted.
    Last edited by Rob.Singer; 12-06-2015 at 05:35 PM.

  8. #8
    I'm sorry Rob but you cannot contribute more than the stated limits to a "qualified plan." The law is specific. Anything above the limits must be returned or the entire tax free plan is canceled out.

    Now, if you made contributions to your own taxable savings account, that's fine. But you didn't "over-contribute" to a tax sheltered 401(k).

  9. #9
    You can also make after tax contributions to a 401K, at least the ones I've dealt with. It's a different limit than the before tax contributions. They can all go into the same 401K fund at your employer but are tracked separately for tax purposes once you get to retirement age and start taking money out, much the same as many company plans track your contributions separately from company match funds. In the case of the fellow with $20 million, I would expect that some of that was after-tax contributions, and much of that was also good stock performance, price as well as splits.

  10. #10
    Originally Posted by pkspins View Post
    You can also make after tax contributions to a 401K, at least the ones I've dealt with. It's a different limit than the before tax contributions. They can all go into the same 401K fund at your employer but are tracked separately for tax purposes once you get to retirement age and start taking money out, much the same as many company plans track your contributions separately from company match funds. In the case of the fellow with $20 million, I would expect that some of that was after-tax contributions, and much of that was also good stock performance, price as well as splits.
    Exactly what I was trying to say and clearly did say above, only for some reason Alan's trying to "prove" my 401k....and Cindy's, which because she's a wife would be extraordinarily foreign to him--has nothing but peanuts in it, because that's what he would like to see. Earlier he even tried to downplay the stock market's performance over the past 30+ years. That tells me he has no clue above where the nearest vp machine is.

  11. #11
    Originally Posted by Rob.Singer View Post
    Exactly what I was trying to say and clearly did say above, only for some reason Alan's trying to "prove" my 401k....and Cindy's, which because she's a wife would be extraordinarily foreign to him--has nothing but peanuts in it, because that's what he would like to see. Earlier he even tried to downplay the stock market's performance over the past 30+ years. That tells me he has no clue above where the nearest vp machine is.
    I apologize as I should have said that I agreed with you. I was distracted doing the mental math on your former boss's $20 million 401K balance and wondering how that was accumulated. While I'm sure he put a lot of money it in, I'm assuming much of that is due to having that money in there at the right times for the market and your company's stock, as well as investment shifts at the right times?

  12. #12
    Singer gets caught in another obvious lie. So little time, so many lies.

  13. #13
    Originally Posted by arcimede$ View Post
    Singer gets caught in another obvious lie. So little time, so many lies.
    Exactly what is the obvious lie?

  14. #14
    Originally Posted by pkspins View Post
    I apologize as I should have said that I agreed with you. I was distracted doing the mental math on your former boss's $20 million 401K balance and wondering how that was accumulated. While I'm sure he put a lot of money it in, I'm assuming much of that is due to having that money in there at the right times for the market and your company's stock, as well as investment shifts at the right times?
    Company stock growth is where the majority of 401k growth originates I believe, and in the time my wife and I worked aerospace companies saw phenomenal growth.

  15. #15
    Originally Posted by Alan Mendelson View Post
    Exactly what is the obvious lie?
    He's probably unhappy that he (and the missus, of course) plowed thru their meager retirement savings by feeding the poker machines that he doesn't even have the scratch left--as a lonely old man in his declining years--to play above dollars (or $2 after a jackpot is hit, which is what all addicts do). Imagine the pain: squander the retirement, drag the wife down into her deepest, darkest hole, then celebrate by going on weekly gambling binges.

    Nice guy.

  16. #16
    Rob, you just got through telling us you also don't play big denominations and it's because you are conserving your retirement resources. Sounds to me like you are Arc are in the same place as all retirees.

  17. #17
    Originally Posted by Rob.Singer View Post
    Company stock growth is where the majority of 401k growth originates I believe, and in the time my wife and I worked aerospace companies saw phenomenal growth.
    Yes. After I posted my response I looked up the stock charts for the companies you mentioned working for and was quite impressed. I don't doubt that you both left employment with healthy balances, particularly if you left company matches sit. I know from my personal experience with company stock with growth (but at a much lower rate, mine only quadrupled) what a difference that makes.

  18. #18
    Consider these annualized growth rates for the S&P 500. Many 401(k) plans use the S&P 500 as the stock market option. There are few 401(k) plans that are self-directed or all you to put the lion share of your money into a rip-roaring company stock.

    2014 13.80
    2013 32.43
    2012 15.88
    2011 2.07
    2010 14.87
    2009 27.11
    2008 -37.22
    2007 5.46
    2006 15.74
    2005 4.79
    2004 10.82
    2003 28.72
    2002 -22.27
    2001 -11.98
    2000 -9.11
    1999 21.11
    1998 28.73
    1997 33.67
    1996 23.06
    1995 38.02
    1994 1.19
    1993 10.17
    1992 7.60
    1991 30.95
    1990 -3.42
    1989 32.00
    1988 16.64
    1987 5.69
    1986 19.06
    1985 32.24
    1984 5.96
    1983 23.13
    1982 21.22
    1981 -5.33
    1980 32.76
    1979 18.69
    1978 6.41
    1977 -7.78
    1976 24.20
    1975 38.46
    1974 -26.95
    1973 -15.03
    1972 19.15
    1971 14.54
    1970 3.60

  19. #19
    Originally Posted by Alan Mendelson View Post
    Exactly what is the obvious lie?
    That he made 100K from gambling and was able to deduct it all from his taxes. Now you know why you never got a copy of his 1040 even though he said he mailed it to you.

  20. #20
    Originally Posted by arcimede$ View Post
    you never got a copy of his 1040 even though he said he mailed it to you.
    This is specific accusation that's been repeated several times.

    Alan, did Rob claim that he mailed his 1040 to you?

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