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Old 03-19-2017, 09:26 AM
 
Location: Central Massachusetts
4,800 posts, read 4,842,106 times
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Quote:
Originally Posted by bigbear99 View Post
So you recommend living on 40k per year? Truly, these gyrations to avoid a few tax $ are silly for most people. You also must consider that, as your SS increases with time, so does your likelihood of it being taxed, and moving you to a higher tax bracket.

You just can't generalize about this stuff. There are too many moving parts.
Yup but there is one pleasant aspect of all this. Because we have RMD's coming in the future means we have enough to make living enjoyable instead of living month to month hoping that nothing bad happens.
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Old 03-19-2017, 10:05 AM
 
71,461 posts, read 71,629,249 times
Reputation: 49027
Quote:
Originally Posted by bigbear99 View Post
So you recommend living on 40k per year? Truly, these gyrations to avoid a few tax $ are silly for most people. You also must consider that, as your SS increases with time, so does your likelihood of it being taxed, and moving you to a higher tax bracket.

You just can't generalize about this stuff. There are too many moving parts.
no i don't recommend living on 40k a year . what i recommend is what i failed to grasp all those years when i was investing for retirement . good tax planning .

had i done more roths along the way i would be adding that along with that 40k drawing over a 100k plus income while delaying ss .

i could have over funded a life insurance policy with my idle cash i was holding and got 4% tax free with no fees or expenses for years . today i could have borrowed out the over funding , never paid it back and got 4% compounded tax free on it all along . the combo would have made me eligible for aca subsidy's on my health insurance too .

this where we hurt ourselves . we think because we buy a bunch of index funds we don't need professional help .

eventually by the time i learned it was impossible to redo things . it is like telling the guy who built the brooklyn bridge , it's nice , but can you move it 2" left .

Last edited by mathjak107; 03-19-2017 at 10:14 AM..
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Old 03-19-2017, 02:07 PM
 
Location: South Jersey
69 posts, read 52,095 times
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Hey I'm with Mathjak107! DW and I are confident we can live on approx $42,000 social security alone this year.. converting $40,000 from tIRA to Roth staying in 15% tax bracket, staying just under where SS would be taxed at 85%...will do so for next 5 years before RMDs start.

Have always lived frugally and will continue to do so (altho the new Jags look hot!)
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Old 03-19-2017, 02:15 PM
 
71,461 posts, read 71,629,249 times
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what did that conversion get taxed at ?
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Old 03-19-2017, 03:47 PM
 
Location: South Jersey
69 posts, read 52,095 times
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15%... using Taxcaster, I'm expecting my 2017 fed tax will be around $4,800. That's why I started SS at age 65... using that money to pay the tax bill, also enabled low-earning DW to get spousal benefit.
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Old 01-31-2018, 09:22 AM
 
659 posts, read 324,279 times
Reputation: 1974
Default Want tax strategy advice

Yes, I bumped an old thread to not be accused of ignoring the search feature

I just turned 59 1/2 and am single. I have taxable IRAs: 1 Trad IRA and two 401K rollover IRAs. I have no income coming in save for investment returns from taxable accounts. I should have been in the 15% bracket for 2017, but I had a huge capital gain last year that pushed me into the 25% bracket and made me ineligible for subsidized healthcare. So, no more expensive mistakes, and I am currently looking for a financial adviser that specializes in tax management.

This year I want to ensure I am firmly in the 15% bracket (Single: $9,325-$37,948) . I want to take advantage of my low tax bracket years to minimize the effect of taking RMDs later; plus qualify for subsidized healthcare (47K is the max income for a single) for 2019.

I can live on $37, 948 just fine. For emergencies and special events I have a decent MM cash account to draw from. If what I have previously read in this thread is good advice, if I have say 17K in taxable investment income, I should start withdrawing 20K per year from my IRAs and pay the tax now? Or should I be converting it and putting the proceeds it in a Roth account to grow tax free; thus continuing to live on withdrawals from my taxable accounts? In addition, should I plan to delay SS as long as possible? I was a high earner, any my SS projections are more than adequate, even at 62. If not, what would you do? I want to think things through so I am prepared to meet with the adviser.
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Old 01-31-2018, 11:43 AM
 
6,875 posts, read 7,267,992 times
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Just FYI...isn't the 15 % bracket is now 12%.

And I'm thinking about converting as well.....every year between age 58 and retirement.
That 12% bracket is just too enticing.
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Old 01-31-2018, 12:02 PM
 
659 posts, read 324,279 times
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Thanks Selhars! Your conversion strategy is likely one I will follow too. I'm glad I know about it at the beginning of being 59 1/2. I just read a summary of the changes, my new bracket is $9,525-$38,700 I can live with that. A 12K standard deduction too!
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Old 01-31-2018, 12:09 PM
 
13,872 posts, read 7,381,208 times
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Quote:
Originally Posted by selhars View Post
Just FYI...isn't the 15 % bracket is now 12%.

And I'm thinking about converting as well.....every year between age 58 and retirement.
That 12% bracket is just too enticing.
I'm putting all my new money in a Roth 401(k) but I'm on the upper end of the 24% tax bracket after things like medical/dental & flex spending are backed out. Roth conversions would bump me to the 32% bracket.

There's not much I can do until I stop working. At that point, I'll have to do the math on Roth conversions to avoid the Social Security tax torpedo. There are too many unknowns now.
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Old 01-31-2018, 05:06 PM
 
6,875 posts, read 7,267,992 times
Reputation: 9785
Well, I don't know that the lower bracket 15% vs 12% would have made a difference -- but I had a financial advisor recommend that I NOT convert what I can to a Roth. (which might only be 10K a year for the next 8 years).....

She says I should keep it all invested in my 401k Rollover Trad IRA....so I can get more growth....and that I should worry about taxes when the time comes.

I see her rationale.....I just think I need to grab this 12% while the getting is good.

I also have been, of course, putting what I can into my Roth from monthly earnings. The only thing going into my new 401k is just enough to get the full employer match. Everything else I can afford to divert (which isn't much and no where near the max amount) -- goes my Roth.

So keep more invested now in a regular IRA, that will have an RMD at 70 1/2, and count as income....OR
Pay taxes now, INVEST LESS to GROW -- and have no RMDs that count as income.
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