Following an epic collapse of double bubbles in the stock market and real estate prices, Japan “suffered” 2+ decades of stagnation and deflation.
You would be hard pressed to find somebody who hasn’t at least heard of Japan’s Lost Decade(s.) It’s a popular topic people raise as soon as our early retirement and living off an investment portfolio comes up in polite conversation.
“Oh man, what are you doing to do when the United States (inevitably) experiences it’s Lost Decade(s)?!”
“20 years of 0% investment performance is bound to put a dent in your retirement plans, hehe”
“I want to retire early too but I’m really concerned about a Japan-style financial collapse. What can I do?”
That last question is probably the best – What lessons can we learn from Japan’s challenging times?
2019 was our 7th full year of post-work life and probably our most “normal” year to date – we lived in a normal city, Jr went to a normal school, and we did normal life things. It was nice. And different.
We did manage ~5 weeks of travel vacation (Thailand, Vietnam, Bali) and I took most of the summer off from anything with a screen, which was also very wholesome and normal and nice.
So of course something happened that will completely change our lives, forever.
After 10 years or so of “this legislation will pass soon”, at the end of 2019 the Setting Every Community Up for Retirement Enhancement Act finally became law.
Besides a cool acronym, the SECURE Act offers a wide range of changes and “enhancements” to 401(k)s, IRAs, and 529s, as well as a whole slew of incentives for small businesses to add or expand retirement plans to both full and part-time workers.
In my opinion, most of the changes (including the much-touted compression of the stretch IRA) are of limited interested (to the living.)
Earning a little income in your retirement years is becoming increasingly common.
Some choose to work part-time for benefits or socialization or fun, and others accidentally make a little extra while pursuing their hobbies or passions.
With a powerful investment portfolio behind these (early) retirees, this income is often just added to a Roth IRA for further tax-free growth.
Now, what if there was a way to double those Roth contributions without working or earning more? Turns out, there is.
The Retirement Savers Contribution Credit, aka the Saver’s Credit, is a nice incentive for households to contribute to qualified retirement accounts (IRAs, 401ks, etc…)
It’s also a nice incentive for early retirees who make a little hobby / side-hustle money to make MASSIVE Roth conversions on Uncle Sam’s dime.
