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the tax hit is unavoidable if it is in a taxable accounrt unless you income is low enough to qualify for zero % capital gains tax.
is your income low enough to maybe do a bit at a time and get maybe a 5% tax rate?
Yep that's what I thought and it was probably you that delivered the bad news. I'm still working and fortunately my income is not that low so I'll take a hit for sure. Maybe the idea of doing it a bit at a time will lessen the pain but will my gains offset the tax hit? That's the hard part to figure.
But we do have 2 Roths in this brokerage account set up specifically for new car purchases in retirement. Maybe the move is when we get to 60 start by moving that money?
You can and you will. You enjoy to much in life. Camera equipment, and expensive lens, food both eat in and eat out. Diabetic without financial restrictions on what and where to eat. Trips, gifts etc etc.
I asked this question before and I'm pretty sure I got the answer I didn't want. But I'll ask again.
I have been convinced that index funds have a real value for me and others. Problem is my money (not 401 which is still in the managed funds available through work) has been with a brokerage account who has put me in a mix of funds. If I were to pull some or all of the money out and invest in a series of low fee index funds how would I avoid the huge tax hit on the cap gains? And how would that huge tax hit not take decades to recover even if my index funds outperform my current situation of paying fees?
I do not think you can avoid the taxes. Just put new money into indexes. Stop reinvesting in your current mutual funds and take that income and move to an index.
If you are able to delay retirement and work longer the difference from 62 to 70 can make a world of difference in having a workable plan.
Saving 8 years of withdrawals, earning money and adding to savings, growing existing savings and an almost 80% bigger check from ss can beef up a weak crappy plan into a pretty solid good one.
Perhaps they need to rename 70 full retirement age since most folks can really use the extra working time.
Yep that's what I thought and it was probably you that delivered the bad news. I'm still working and fortunately my income is not that low so I'll take a hit for sure. Maybe the idea of doing it a bit at a time will lessen the pain but will my gains offset the tax hit? That's the hard part to figure.
But we do have 2 Roths in this brokerage account set up specifically for new car purchases in retirement. Maybe the move is when we get to 60 start by moving that money?
You have to pay taxes on a taxable account sooner or later unless you leave that money to your heirs.
Presumably, the fees you are paying do not approach the capital gains rate so I would wait. Decide when you want to take the hit and if you will ever be in a position to take a lower hit. Or, as someone else said, invest new money in EFT's.
Maybe wait for losses you can use to offset the gains. And, keep your eye on the 2016 elections. Democrats will likely win the presidency; if they also regain majority in Congress, capital gain taxes may be raised/and or the stepped up basis for heirs may be eliminated. Might be prudent to take gains at the current cap gains rate before that happens.
Why smack yourself over Mathjacks success and interest in life and options ? As we get older in retirement the number of years we need to plan for decreases. Bernstein when discussing RLE incorporates age. This thread like many others focuses on how to avoid failure and or how to stay above water. There is also the Monte Carlo simulation possibility of success beyond goals. When doing Fire Calc simulations one of the very real possibilities is continued long term growth of resources which raises other questions and choices. MathJak has planned income streams kicking in at various age points with a very good chance of his overall/comprehensive nest egg growing as they do.
Yes there is the accumulation stage
Yes there is the drawdown stage
Yes there is the possibility of a long term accumulation stage after retirement. MathJak is shooting for that and my comments are with that in mind. MJ is still in the early stages of his plan unfolding. Once he has the wife's pension, their SS and annuities fully deployed as fixed income streams he will as planned reevaluate and hopefully if desired be able to crank the lifestyle up. Each year his long term horizon will be reevaluated ( they have LTC ) and as he stated his peak spending age will shorten. This is why I made my comments. From your head slap I decided to explain.
I don't mind sharing a few details of our final plan . we are already drawing off it as both of us only work part time this final year.
my wife's pension has always been something she received since she was a widow but it represents only 15% of our pretax budget.
since I will delay ss until fra basically the only income sources other than our own portfolio is we will have that small pension and my wife's small ss check I think it is about 800 a month .
we did originally count on a nice income stream from those commercial lease rights we owned but since those were sold in march by our partner we lost that aspect which was the largest chunk of our income sources outside of drawing from our portfolio .
of course the big problem with the sale is 40% of the proceeds are gone as taxes as it triggers the amt tax and all those high state and local taxes to go with it. .
now investing that difference for that same income is near impossible.
so the bulk of it will be coming from our portfolio until fra. although the buyer of our lease rights still owes us a small part which they are paying out over 4 years via mostly interest and a bit of principal ,we could see another 5-8k a year from that for 3 more years and then a lump sum payment of remaining principal.
75% the fidelity insight income and capital preservation model and 25% the growth and income model are the engines portfolio wise with 2 years of withdrawals held in cash instruments..
I will cobra my medical as a single and until fra and Marilyn will be on medicare as of august.
we put a ny partnership LTC PLAN into effect a few months ago . that will cost us about 8k a year for the two of us.
the real good perks are not the 3 years insurance it buys but the fact there is no look back ,no assets or trusts have to limit access for the stay at home spouse and most important no income restrictions after the insurance runs out and Medicaid picks up the tab for either in home care or facilities forever..
for just a small percentage of the assets it protects I can protect all those assets and have new York states blessing that if I do buy that policy they will pick up all expenses after the insurance runs out.
that is why it is called a partnership plan..
that is a sweet deal.
down the road if I am not here Marilyn does not want to get stuck counting on mr markets and rates to pay her bills or deal with all that volatility .
she wants the non discretionary expenses locked in with a monthly check from a single premium annuity which we will ladder as time goes on .
if I am gone she will just need to follow the newsletter for the rest of the portfolio which will cover wants , inflation adjusting and heirs. so simple to do my 80 year old aunt has been doing it on her own for years with zero knowledge of anything,.
all you do it yourself investors out there may want to chat with your wives and get their feeling about getting left a hodge podge of investments to deal with. I would bet the last thing most of your wives want to have to contend with is your volatile pile of assets for all her living expenses other than ss.
mens goals and greed are usually very different than a woman's desire for stability and assurance she will not outlive her money and be a homeless bag lady.
while 80% of us married men will die married 80% of our wives will die alone. this is a very important difference between us and it may require very different planning on your behalf.
things will be refined along the way but basically that is our outline today.
Last edited by mathjak107; 01-25-2015 at 04:23 AM..
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