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Old 03-28-2015, 10:23 AM
 
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Quote:
Originally Posted by AmFest View Post
Didn't you say things are going to be different now? If so, you can't trust a historical study like the one aforementioned.
I think the study is reinforcing that the under the new normal it still works. It is a post new normal study applying historical data.
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Old 03-28-2015, 10:29 AM
 
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Quote:
Originally Posted by AmFest View Post
Didn't you say things are going to be different now? If so, you can't trust a historical study like the one aforementioned.
what i said is high stock valuations and low rates point to below average returns because things are different now . but that does not mean the safe withdrawal rate won't hold unless we get below a 2% real return for 15 years .

the hypothetical y2k retiree is just about at that level. real returns on stocks have been under 2% and bonds about 1% or so . that hypothetical retiree could be a failure in the end. but the 2001 or later retiree is just fine
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Old 03-28-2015, 10:30 AM
 
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This conversation just reminded me that this year my emergency fund will be back up to a level where I'm willing to let it grow on it's own with no more contributions.....so I can get back to putting more than I have been in my Roth.
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Old 03-28-2015, 10:31 AM
 
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Old 03-28-2015, 10:33 AM
 
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Quote:
Originally Posted by TuborgP View Post
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?
he has it backwards .

as i pointed out it those low provisional incomes that are the ones in the greatest danger of having anything over they may need to take from taxible retirement money taxed at an insane marginal rate.

imagine needing an extra grand or two for a trip or an emergency and losing 50% to tax at that income level ? that is just what would happen. the taxing of ss makes for some crazy marginal tax rates at low incomes if you get just a touch above the thresholds ..

it is the lower incomes that have to pay attention , not the higher incomes , none of this means a thing for those who are well above 44k .

Last edited by mathjak107; 03-28-2015 at 11:03 AM..
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Old 03-28-2015, 10:59 AM
 
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here is another example of what happens at lower provisional incomes .

Jeremy and Martha have an AGI of $28,000 (and no tax-exempt or foreign income), and receive combined Social Security benefits of $14,000. As a result, their provisional income is $28,000 + $7,000 (half of Social Security benefits) = $35,000, which is $3,000 above the $32,000 threshold. This means that 50% x $3,000 = $1,500 of their Social Security benefits are subject to taxation, which ultimately increases their AGI to $28,000 + $1,500 = $29,500.

Continuing the earlier example of Jeremy and Martha, if the couple decides to take another $1,000 out of their IRA, this will increase their AGI by $1,000 to $29,000. As a result, it will also increase their provisional income by $1,000, which leaves them $4,000 above the threshold, resulting in $2,000 of their Social Security benefits being taxable. In the end, this means Jeremy and Martha end out with a total AGI of $31,000... their AGI increased by $1,500 even though they only took out a $1,000 IRA withdrawal due to the taxation of Social Security benefits! If the couple is subject to the 15% tax bracket, their additional tax liability on $1,500 of income is $225, which equates to a marginal tax rate of $225 (additional taxes) / $1,000 (additional income) = 22.5%. In other words, even though the couple is in the 15% tax bracket, their $1,000 IRA withdrawal is subject to a 22.5% marginal tax rate due to the formulas triggering taxation of Social Security benefits!
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Old 03-28-2015, 11:06 AM
 
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Breaking news. Once retired the only difference between retirement savings and your other money is the tax rate now and tomorrow as in inheritance taxes etc etc or feared changes in government policy. Otherwise it is just your money.
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Old 03-28-2015, 11:11 AM
 
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yes and no . it is alot more than just tax brackets alone because of the taxing of ss , rmd's , medicare surcharges , taxed gains on the rmd's that are reinvested , medical subsidies if retiring at 62 , etc. in fact if you got your taxable income low enough on roths you could get free medicaid health coverage with a 6 figure non taxable income .

some folks planned so well that they let their taxable incomes fall below 16k and got free medicaid until 65. in fact you have no choice in taking an aca plan instead. once you dip below 16,500 or so you are not given the option.


so many things hinge on that "taxable " retirement income , that how you save that retirement money and where can make a big difference. not having retirement money that is taxable can have so many other benefits.
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Old 03-28-2015, 11:13 AM
 
Location: Colorado Springs
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So if all my savings are in post tax accounts I don't need to consider taxes on SS.
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Old 03-28-2015, 11:17 AM
 
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you only need to consider them if they spin off taxable distributions . index funds and etf's spin off very little so there is almost nothing to count. of course if you sell it counts .

even if you get the zero capital gains taxe rates the amounts will count towards that provisional income.
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