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This thread has be thinking and realizing a number of things. These thoughts are not directed at anyone poster but about the general world of money in this forum and our country. When is money income and if income what type? How do we pay our bills? Is it from new income or is it from existing pools of money previously taxed. As noted a person can have 5 million when entering retirement and place it in a non ROI after tax account. They could draw down $100,000 per year adjusted annually with a fixed 3% inflation and never pay taxes on it and their also available SS.
We are all very different with how we fund our retirements and the amounts we have to work with are not just varied in amount but also sources. I wonder how many thread readers have the triple six digits of:
100k plus in annual fixed income
100k plus in non retirement investments
100k plus in retirement account investments
Each one of those pools can be treated and taxed at different rates depending on when they are accessed. Taking a large amount out of retirement accounts in one year can easily in this situation influence the tax rate you pay that year.
I have learned to look at my retirement accounts knowing they are the last income to kick in and will be taxed at the marginal tax rate.
-50K Retirement Account
-$55K HSA Account
-12K Emergency Fund
-$140K value of Real Estate
The 50K account became undesirable to contribute to when our Medical Insurance costs increased.
We are very frugal. Own our modest home, grow our own food, and raise pigs for food. Trade with the neighbors and others for vegetables, fruits and beef. The primary goal is ensuring our medical expenses are fully covered in retirement. We can easily live off of SS. Most likely we will be fine due to future inheritance which will, for the most part, be passed down to our children
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I have just spent a good deal of time cleaning this thread. It looks like an interesting topic that could be benifical to others, so I would like to be able to keep it open. That can only happen if it can stay on topic and not devolve into a series of personal attacks again.
Thread re-opened.
__________________
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This thread has be thinking and realizing a number of things. These thoughts are not directed at anyone poster but about the general world of money in this forum and our country. When is money income and if income what type? How do we pay our bills? Is it from new income or is it from existing pools of money previously taxed. As noted a person can have 5 million when entering retirement and place it in a non ROI after tax account. They could draw down $100,000 per year adjusted annually with a fixed 3% inflation and never pay taxes on it and their also available SS.
We are all very different with how we fund our retirements and the amounts we have to work with are not just varied in amount but also sources. I wonder how many thread readers have the triple six digits of:
100k plus in annual fixed income
100k plus in non retirement investments
100k plus in retirement account investments
Each one of those pools can be treated and taxed at different rates depending on when they are accessed. Taking a large amount out of retirement accounts in one year can easily in this situation influence the tax rate you pay that year.
I have learned to look at my retirement accounts knowing they are the last income to kick in and will be taxed at the marginal tax rate.
if i could re do things with the knowledge i have now and the options available , i would have:
done way more roths through my lower earning years .
had not listened to conventional wisdom back then that said keep stocks in a brokerage account and interest stuff in the deferred accounts .
i would have over funded my life insurance up to the limit . i would have gotten 4% on my free cash compounding for years , now borrowed it out tax free and never repaid it .
i could be living on a 100k plus income on cash set a side , roth income , the borrowed out over funding and the zero capital gains bracket , not got social security taxed and had little rmds .
if i could re do things with the knowledge i have now and the options available , i would have:
done way more roths through my lower earning years .
had not listened to conventional wisdom back then that said keep stocks in a brokerage account and interest stuff in the deferred accounts .
i would have over funded my life insurance up to the limit . i would have gotten 4% on my free cash compounding for years , now borrowed it out tax free and never repaid it .
i could be living on a 100k plus income on cash set a side , roth income , the borrowed out over funding and the zero capital gains bracket , not got social security taxed and had little rmds .
Let me have a heart to heart talk with you my friend. This TuborgP to MathJak. At some point when all of your stages have kicked in you will go WTF oh well and smile. For you coulda, woulda, shoulda will be in your rear view mirror. You are so far ahead of most people and so well secured all of this at worse will be academic. Your historical expenses will be in the past and your discretionary income far more than most people have necessary and discretionary spending.
I am shocked how little taxes I am paying in my first full year of retirement (2016).
I was used to paying Social Security and Medicare Taxes and a higher tax bracket. Now I have the same take (real) home income after taxes but far fewer taxes.
Taxable dividends (mostly qualified) so 0%
Capital Gains (At most 15% of TAXABLE income)
Sale of stocks bonds and mutual funds (Mostly 0% because they are long term holdings.)
With the standard deduction and two personal exemptions, I pay almost no taxes on $50K in dividends, capital gains and sale of investments. What is your story with taxes in retirement?
Pretty common. This is the variable that people overlook when they state a person can't retire on X income per year. Equivalent working income is significantly more than retirement income. Throw in being mortgage or rent free, and the difference is astounding.
I gather that refund only applies if you pay state income taxes. I don't know about Minnesota, but in many states, retirement income is exempt from income tax. So you can't get a refund from zero.
There is no more bigger exemption after 65. They stopped that a few years ago and cut the threshold for medical deductions from 10% to 7-1/2% for age 65 or older
There's still $1250 added to the standard deduction for those over 65.
Really? I guess since we aren't 65 yet, I never noticed. I really though the standard deduction was larger for 65 and up! Well, at least Virgina exempts the first $12k of income for each of us from state taxes.
He's confusing personal exemptions with the standard deduction.
I keep my AGI under the 25% rate, which is just under 40k. I purposely stay in the 15% tax bracket with my part-time W2 job.
In my case, I've never found a part time job that would be worth the effort, for the very reason that it throws my taxes out of wack. The SS penalty on earned income for those under full retirement age also comes into play. Might as well find some meaningful volunteer activity, if staying busy is a goal, which in my case it is not.
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