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Old 03-28-2015, 09:30 AM
 
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Quote:
Originally Posted by mathjak107 View Post
excellent point and so timely . just yesterday marilyn and i were talking about that fact.

you know when we take a snap shot of assets on the day we are ready to go live and we ball park a 4% initial starting point the draw rate is a bit flawed since a big part is in my ira and that draw rate does not reflect a good 1/3 may end up as taxes. i said we may want to cut the initial rate down to allow for that fact , especially looking at the rmd's as they stand now on the fidelity RIP calculator. they become very very high down the road.

i have to see how firecalc deals with taxes. it is likely you have to create some kind of expense thing to allow for them. i use fidelity's rip calculator more often.
Life in and managing retirement can be different than the planning stage. It can be a lot cheaper than planned for in some ways and more expensive than planned for in other ways. As you age you begin to put things in a different perspective with the overall economic background as a big factor. With your overall plan you will see changes in thinking as a result. You have staggered income increases and that can create a new ball game especially in a booming investment market.
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Old 03-28-2015, 09:37 AM
 
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yep , which is why i decided to use a variable system as our max for the year.

our limit will be based on each years actual balance on 12/31 . we will use 4% or if a down year 95% of what we took the year before ,which ever is higher.

the only question is how much of an adjustment to make based on the fact the ira is all taxable. i may just do 3.50% instead of 4.

folks don't forget , the difference between 3% and 4% withdrawals sound small but it represents a 25% pay cut.
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Old 03-28-2015, 09:44 AM
 
71,651 posts, read 71,801,099 times
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Quote:
Originally Posted by TuborgP View Post
Life in and managing retirement can be different than the planning stage. It can be a lot cheaper than planned for in some ways and more expensive than planned for in other ways. As you age you begin to put things in a different perspective with the overall economic background as a big factor. With your overall plan you will see changes in thinking as a result. You have staggered income increases and that can create a new ball game especially in a booming investment market.


exactly the reasoin these discussions are so important.

the knowledge one usually has early on in the accumulation stage is very different from how the 2nd half of the game is played.

the youngins do not understand yet how all the various pieces of the puzzzle will eventually mesh together and play havoc with each other.

the power of roths are not fully understood until you start looking at different scenarios with parameters you have never seen before.

it is only then what you thought roths were all about turn out to be very different now.


how many times have heard me say in the past roths are a waste for most of us. how many of us will be in a higher tax bracket with no pay checks ?

well as my education about the second 1/2 got better and more detailed i learned that was a poor statement.

the actual power had nothing to do with that fact but rather the interaction with all the other pieces.
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Old 03-28-2015, 09:44 AM
 
29,782 posts, read 34,876,173 times
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Quote:
Originally Posted by mathjak107 View Post
yep , which is why i decided to use a variable system as our max for the year.

our limit will be based on each years actual balance on 12/31 . we will use 4% or if a down year 95% of what we took the year before ,which ever is higher.

the only question is how much of an adjustment to make based on the fact the ira is all taxable. i may just do 3.50% instead of 4.
Remember you have fixed income streams phased to kick in as you get older for awhile. Remember the old days of planning when a 4 percent draw down had a reasonable chance of a bond or CD rate return greater than that and your principle increasing to keep up with inflation? The new normal has crushed that expectation. However depending on your portfolio allocation and markets moving forward you may well find yourself with a larger portfolio each year moving forward and your nest egg growing larger than inflation etc. When a planned income stream kicks in and you run Fire Calc and your success rate stays at 90 percent or more even with increased spending. There are tremendous advantages as you know to delaying SS and drawing down your nest egg if needed to do so. However when the market rewards you with a larger nest egg when you reach your SS benefit stage, you can really smile as you didn't really draw down but just slowed the rate of increase in your nest egg. As you know managing retirement savings while being retired can be a pain or a sheer joy.
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Old 03-28-2015, 10:01 AM
 
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actually new numbers crunching by kitces has shown as long as we achieve a 2% real return average over the first 15 years of a 30 year time frame mathamaticaaly 4% inflation adjusted will hold true.

very interesting study by kitces. he looked in to eveytime you would have gone bust before running out of time and the numbers crunching showed one common denominator and that was it.

studies alsio now show that once you figure in the lost checks and potential returns on the money spent down waiting for ss loses the advantage it has when you are delaying and still working. very different situation. if you delay retirement you get about 6% increases up to fra and 8% to 770. but that all changes once lost checks are added in to the equation even without counting the fact you are spending down from investments which you could leave alone if you collected ss.

after looking at numbers and studies i may take mine at 63.

even survivor benefits for marilyn as i just learned have a floor of x.81 off my full as long as she is at fra herself so she is not effected much by me taking it earlier.

the articles you read about waiting are not really for those who have choices . waiting is a big advantage for those who are counting on ss to eat.

Last edited by mathjak107; 03-28-2015 at 10:11 AM..
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Old 03-28-2015, 10:11 AM
 
Location: Colorado Springs
4,845 posts, read 4,962,112 times
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Quote:
Originally Posted by LookingatFL View Post
Vison67, I'm not sure I understand your scenario, but attempting to answer it:

If Donald and Sara earned a combined $58,160 from wages and interest income, and they supplemented their lives by withdrawing $10,000 from savings:

The $10,000 would have no effect on their income.

Their tax return would show $58,160 of earned income and interest. Their combined AGI would be $58,160. Their standard deduction in 2014 would be $12,400. Their exemption would be $7,900 assuming that neither had reached age 65 or was blind. Taxable income would be $37,860. Total tax would be $4,772.
I found this in Kiplingers: So, who gets taxed and who doesn’t?

First the good news: About 70% of all beneficiaries are still safe.

You’re among the 18 million or so who aren’t so lucky, though, if your “provisional income” is more than $25,000 on a single return or $32,000 on a joint return. Provisional income is adjusted gross income (not including Social Security) plus 50% of your benefits plus any tax-free interest from municipal bonds.


Read more at Are Your Social Security Benefits Taxable?-Kiplinger

So if our income is solely from SS and jointly amounts to $58,160, our "provisional income" is just one half of the SS benefit or $29,080. That is less than the $32,000 for a joint return stated above. Doesn't that make the SS income non-taxable?
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Old 03-28-2015, 10:15 AM
 
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here is a chart pfau worked up countiung the checks given up by waiting in to the equation. this does not count the spending down from investments and the potential gains lost either by hitting your savings .

once i ran numbers based on including even below average returns on the money i won't spend down from my portfolio waiting i realized there is no reason i should even wait to fra. i think 63 will be my target.


Last edited by mathjak107; 03-28-2015 at 10:42 AM..
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Old 03-28-2015, 10:18 AM
 
71,651 posts, read 71,801,099 times
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Quote:
Originally Posted by Vision67 View Post
I found this in Kiplingers: So, who gets taxed and who doesn’t?

First the good news: About 70% of all beneficiaries are still safe.

You’re among the 18 million or so who aren’t so lucky, though, if your “provisional income” is more than $25,000 on a single return or $32,000 on a joint return. Provisional income is adjusted gross income (not including Social Security) plus 50% of your benefits plus any tax-free interest from municipal bonds.


Read more at Are Your Social Security Benefits Taxable?-Kiplinger

So if our income is solely from SS and jointly amounts to $58,160, our "provisional income" is just one half of the SS benefit or $29,080. That is less than the $32,000 for a joint return stated above. Doesn't that make the SS income non-taxable?
actually you have it backwards . it is those that have provisional incomes up to 32k that have to be the most careful about things. take a few extra thousand for an emergency from your deferred ira and you can see that money go up in smoke as ss gets taxed on that overage as well as you owe tax on the money if it came from an ira . .


the two moving targets can hurt you real bad when your income is low and anything extra is over the limit.

once you are well over the 44k limit your brackets are your brackets and ss being taxed is a moot point as the two moving targets are no more.

it is those folks who are near the limits of 0- 50%-85% of having ss taxed that have to be real careful about taking a few bucks extra out of deferred retirement plans .
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Old 03-28-2015, 10:20 AM
 
29,782 posts, read 34,876,173 times
Reputation: 11705
Quote:
Originally Posted by Vision67 View Post
I found this in Kiplingers: So, who gets taxed and who doesn’t?

First the good news: About 70% of all beneficiaries are still safe.

You’re among the 18 million or so who aren’t so lucky, though, if your “provisional income” is more than $25,000 on a single return or $32,000 on a joint return. Provisional income is adjusted gross income (not including Social Security) plus 50% of your benefits plus any tax-free interest from municipal bonds.


Read more at Are Your Social Security Benefits Taxable?-Kiplinger

So if our income is solely from SS and jointly amounts to $58,160, our "provisional income" is just one half of the SS benefit or $29,080. That is less than the $32,000 for a joint return stated above. Doesn't that make the SS income non-taxable?
I am confused, why is having a low enough income to not get taxed being lucky? Wouldn't being lucky be to have a high enough income to be unable to avoid the maximum SS tax?
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Old 03-28-2015, 10:20 AM
 
2,409 posts, read 2,641,357 times
Reputation: 1807
Quote:
Originally Posted by mathjak107 View Post
actually new numbers crunching by kitces has shown as long as we achieve a 2% real return average over the first 15 years of a 30 year time frame mathamaticaaly 4% inflation adjusted will hold true.

very interesting study by kitces. he looked in to eveytime you would have gone bust before running out of time and the numbers crunching showed one common denominator and that was it.

studies alsio now show that once you figure in the lost checks and potential returns on the money spent down waiting for ss loses the advantage it has when you are delaying and still working. very different situation. if you delay retirement you get about 6% increases up to fra and 8% to 770. but that all changes once lost checks are added in to the equation even without counting the fact you are spending down from investments which you could leave alone if you collected ss.

after looking at numbers and studies i may take mine at 63.

even survivor benefits for marilyn as i just learned have a floor of x.81 off my full as long as she is at fra herself so she is not effected much by me taking it earlier.

the articles you read about waiting are not really for those who have choices . waiting is a big advantage for those who are counting on ss to eat.
Didn't you say things are going to be different now? If so, you can't trust a historical study like the one aforementioned.
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