U.S. CitiesCity-Data Forum Index
Go Back   City-Data Forum > General Forums > Retirement
 [Register]
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
View detailed profile (Advanced) or search
site with Google Custom Search

Search Forums  (Advanced)
Reply Start New Thread
 
Old 01-30-2015, 09:49 AM
 
Location: Real Texas.
12,600 posts, read 16,682,600 times
Reputation: 24348

Advertisements

Quote:
Originally Posted by PAhippo View Post
or just move to a state that doesn't tax ss.
Or a state that doesn't tax income at all.
Reply With Quote Quick reply to this message

 
Old 01-30-2015, 09:50 AM
 
Location: WA
5,397 posts, read 21,412,400 times
Reputation: 5903
Quote:
Originally Posted by arrieros81 View Post
[/b]

At what age would you ideally start?
Not only should you start as soon as you begin saving for retirement (thirties for many) but it should be revisited occasionally as the environment changes.

I started with a strategy after several visits with 'experts' but changes to tax policies, the introduction of Roth's, changes to 401s, and revised retirement plans all came later.

I would have done better with annual reviews of the plan.
Reply With Quote Quick reply to this message
 
Old 01-30-2015, 11:15 AM
 
71,763 posts, read 71,875,234 times
Reputation: 49311
Quote:
Originally Posted by Blondy View Post
Any way you look at it, someone has to eventually pay tax on the 401K money. Either when you convert it to Roth, withdraw it or your heirs if you leave it to them.

If you need to use the money, the latest you can defer the taxes will be 70.5 when RMD's kick in. By then your social security will be higher and the amount excluded hasn't changed in forever.....its not indexed to inflation.

So, the issue is not just whether or not your SS or some part becomes taxable, but also when you will have the lowest tax rate to pay taxes on the 401k money.

I think a lot of people get sucked into the myth that their tax bracket will be lower in retirement and that's just not always true, or its not that much lower.
the fact you have to pay taxes on your deferred retirement money is not quite true.

a retired couple can pull up 22k a year out of their ira's and pay zero tax while delaying ss and letting it grow.

just the standard deduction and exemptions give you 22k a year tax free from money you deducted at higher tax rates working, delay ss 8 years and that is 22k tax free for 8 years. in fact take 42k for 8 years and pay as little as 4.50% plus a zero capital gains bracket too.

couple that with some roth income and borrowed over funded life insurance , you are in the zero capital gains bracket and can sell some stock from the taxable account and you can see 100k income and zero tax.

not only that but there are ways of leveraging single premium life insurance policies and turrning forever taxed ira money into never taxed money.


if i leave my wife a 500k ira those rmd's are taxable forever or it is taxable to the heirs.

but if a buy a leveraged single premium life insurance policy with the ira money i will pay tax on the part the life insurance is bought with but that cost will not be anywhere near 500k.

so i get to leave my wife a cool tax free 500k with never a dime of tax due.

what ever is left in the ira's after the insurance and spending the kids can have and pay the taxes over their lifetime plus they get all the tax free money left over from wife at some point.

your conception is what is wrong with the way folks think when they only know what they know but know little about all the things they don't know .it takes a tax advisor well schooled in this stuff to really plan things well.
Reply With Quote Quick reply to this message
 
Old 01-30-2015, 11:34 AM
 
Location: Los Angeles area
14,018 posts, read 17,754,097 times
Reputation: 32309
Quote:
Originally Posted by High_Plains_Retired View Post
Or a state that doesn't tax income at all.
Hello? This thread is about federal taxation. In any case MOST states do not tax Social Security income.
Reply With Quote Quick reply to this message
 
Old 01-30-2015, 01:12 PM
 
2,429 posts, read 3,227,603 times
Reputation: 3330
PAHippo, no I didn't declare that I was specifically talking about fed tax, but I did say "just to not pay taxes on 85 percent of my Soc Sec." And that is a reference to the fed tax formula for taxing Soc. Soc. I'm not arguing with you and appreciate your comments. But it's not my fault you presumed I was talking about state taxes.

Thanks, mathjack...if a couple can use the 22K number, as a single I can use 11K? Or whatever the standard deduction and exemptions are for singles. THESE are the kinds of strategies, and others that I'm hoping we can discuss, to help each other. As a single I'll have a pension (company defined benefit plan), defined contribution plan which the company switched to when it froze the pension, my own ROTH IRA, my own savings, Soc. Sec. a paid off family home for retirement, and proceeds from MY own home -- ((which I could also rent but that's not likely, it would still have a mortgage so that's likely, plus I don't want the deal with having a property manager and the state red tape of rentals here in MD))

My big decisions will be "retire" at 62 or 65, TAKE reduced Soc Soc and the reduced pension and work part time...or WORK full time until 65, then MAYbe work part-time with the full pension, and not take Soc Sec until 70.....we'll see. I'm not even close now, but these are the things I muse about. (My FULL retirement age is 67)

Great conversation so far. I think we can all learn strategies and help each other. No need to pay more taxes than required.

Last edited by rdflk; 01-30-2015 at 01:25 PM..
Reply With Quote Quick reply to this message
 
Old 01-30-2015, 01:22 PM
 
48,516 posts, read 83,989,888 times
Reputation: 18050
Standard deduction and 85% taxable is better than otherwise.
Reply With Quote Quick reply to this message
 
Old 01-30-2015, 01:54 PM
 
Location: Myrtle Creek, Oregon
12,290 posts, read 12,529,205 times
Reputation: 19502
A simple list of tax brackets, rates and potential deductions is sometimes helpful.

IRS Announces 2015 Tax Brackets, Standard Deduction Amounts And More - Forbes
Reply With Quote Quick reply to this message
 
Old 01-30-2015, 03:24 PM
 
71,763 posts, read 71,875,234 times
Reputation: 49311
most schedule A deductions do not count in the equation for figuring magi. that is figured above the line before those deductions come into play. basically it is only adjustments to income that count not deductions.
Reply With Quote Quick reply to this message
 
Old 01-30-2015, 03:52 PM
 
71,763 posts, read 71,875,234 times
Reputation: 49311
Quote:
Originally Posted by rdflk View Post
PAHippo, no I didn't declare that I was specifically talking about fed tax, but I did say "just to not pay taxes on 85 percent of my Soc Sec." And that is a reference to the fed tax formula for taxing Soc. Soc. I'm not arguing with you and appreciate your comments. But it's not my fault you presumed I was talking about state taxes.

Thanks, mathjack...if a couple can use the 22K number, as a single I can use 11K? Or whatever the standard deduction and exemptions are for singles. THESE are the kinds of strategies, and others that I'm hoping we can discuss, to help each other. As a single I'll have a pension (company defined benefit plan), defined contribution plan which the company switched to when it froze the pension, my own ROTH IRA, my own savings, Soc. Sec. a paid off family home for retirement, and proceeds from MY own home -- ((which I could also rent but that's not likely, it would still have a mortgage so that's likely, plus I don't want the deal with having a property manager and the state red tape of rentals here in MD))

My big decisions will be "retire" at 62 or 65, TAKE reduced Soc Soc and the reduced pension and work part time...or WORK full time until 65, then MAYbe work part-time with the full pension, and not take Soc Sec until 70.....we'll see. I'm not even close now, but these are the things I muse about. (My FULL retirement age is 67)

Great conversation so far. I think we can all learn strategies and help each other. No need to pay more taxes than required.
I am retiring at 62 also, in july. do to lack of knowledge the plan is not as good as it could have been.

I am working part time now so I am doubling up on my 401k contributions to get the max in the 401k in just 6 months. that will reduce my income a lot along with an ira contribution for Marilyn .

I am delaying ss until fra .

I have 2 years withdrawals in cash to add to other income we have coming in . I should be low enough to get a medical subsidy while waiting for medicare. I will also be in the 0 to 5% capital gains bracket. so I can sell some equities at not much tax.

we draw 42k from the deferred iras and that should cost us about 1800 bucks in tax at that level.

all in all at least the next 2 years we should pay very little tax and see 100k plus in income.

had I planned better I could have had very low tax once ss kicked in.


at this stage roth conversions make little sense for us.
Reply With Quote Quick reply to this message
 
Old 01-30-2015, 06:08 PM
 
4,447 posts, read 2,621,737 times
Reputation: 10380
Quote:
Originally Posted by rdflk View Post
But I'm also not crazy about limiting my income just to avoid taxes*.

So I'm looking for options for income that's not counted in the combined income calculation.***
~Consult a tax accountant, but you may still lack some of the finer details til you get closer to drawing your SS.

~* limiting income is about the best way to guarantee not to pay on it. Po' people don't pay on their SS.

~*** according to the IRS , even Bartering and even ILLEGAL activities, such as sales of illegal drugs or taking BRIBES are TAXABLE and DECLARABLE "income". SO looking for a *magical income bullet not taxed* is going to be harder than you thought.

Quote:
Originally Posted by rdflk View Post
Thanks all. I'm not retired yet. have a ways to go actually. I'm Just thinking ahead and musing about strategies.

Muni bonds...maybe THAT"S why I've heard that Suze Orman is BIIIG into munis. AND she lives in FLA!
Exactly.

We'd all like to not pay taxes, but...
Reply With Quote Quick reply to this message
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.

Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.


Reply
Please update this thread with any new information or opinions. This open thread is still read by thousands of people, so we encourage all additional points of view.

Quick Reply
Message:

Over $104,000 in prizes was already given out to active posters on our forum and additional giveaways are planned!

Go Back   City-Data Forum > General Forums > Retirement
Similar Threads
Follow City-Data.com founder on our Forum or

All times are GMT -6.

2005-2019, Advameg, Inc. · Please obey Forum Rules · Terms of Use and Privacy Policy · Bug Bounty

City-Data.com - Archive 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35 - Top