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Old 09-24-2017, 05:13 PM
 
7,933 posts, read 5,045,305 times
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Quote:
Originally Posted by bobandsherry View Post
From what I read here, most people are OK with giving "B" a subsidy even though they were stupid in managing their finances, but find it deplorable for "A" who lived within their means and now just work within the tax code.

Seems odd that people want to penalize savers but reward spenders.
Our system's core postulates are akin to those of the parable of the prodigal son. The prodigal son gets a second chance, and is welcomed with a feast. The steadfast and assiduously-working son is basically told to be grateful for having had a roof over his head for all of those years. No glorious feast for him. Continuing the same theme, the workmen who were hired in the morning to work in the vineyard, are paid just the same, as those who were recruited in the late-evening, who sat around idly all day. This is the nature of modern society, regardless of its orientation on theological matters.

While this is patently unfair, I'm not sure that a comprehensive solution is viable. In bobandsherry's example, if Couple-B reach retirement age indigent, because they frittered away their money, we can't exactly send them to debtors' prison, or a punitive labor-camp, or the glue-factory. Civilization demands, that something be done to help them. And with Couple-A, the natural sentiment is to regard them as fat-cats who ought to take care of themselves, be it regarding healthcare or housing or whatever else. Our society just isn't set up, to penalize the spendthrifts and reward the savers.
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Old 09-24-2017, 05:19 PM
 
1,066 posts, read 518,049 times
Reputation: 1824
Quote:
Originally Posted by mathjak107 View Post
if i planned better using roths we could have had a 100k plus income and got some nice subsidies from 62 to 65 .

you can draw roth income , set a side a few years cash , delay taking ss so you can use the zero capital gains brackets .

just using the standard deduction and exemptions will let you take up to 22k out of retirement money tax free .

i could have over funded my life insurance policy for decades with money i was holding as cash anyway and gotten 4% on it with no fees . i could have borrowed it out tax free at retirement and never paid it back .

all in all for 3 years until medicare you could have drawn a very high income and paid very little tax but it takes planning early onto get all the pieces in place .

early on we tend to only know what we know and we know little about what we don't know so we don't know we don't know . back then i thought i knew about retirement planning . boy if i only knew back then what i know now
The income limitations on Roth conversions were pretty tight up until 2010, if I recall correctly. So if you were still working, you probably didn't miss out as much as you think.

That's why I enjoy these forums. I'll tell you my tips, you tell me yours, and we can all benefit. And commisserate.
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Old 09-24-2017, 05:23 PM
 
1,066 posts, read 518,049 times
Reputation: 1824
Quote:
Originally Posted by ohio_peasant View Post
Our system's core postulates are akin to those of the parable of the prodigal son. The prodigal son gets a second chance, and is welcomed with a feast. The steadfast and assiduously-working son is basically told to be grateful for having had a roof over his head for all of those years. No glorious feast for him. Continuing the same theme, the workmen who were hired in the morning to work in the vineyard, are paid just the same, as those who were recruited in the late-evening, who sat around idly all day. This is the nature of modern society, regardless of its orientation on theological matters.

While this is patently unfair, I'm not sure that a comprehensive solution is viable. In bobandsherry's example, if Couple-B reach retirement age indigent, because they frittered away their money, we can't exactly send them to debtors' prison, or a punitive labor-camp, or the glue-factory. Civilization demands, that something be done to help them. And with Couple-A, the natural sentiment is to regard them as fat-cats who ought to take care of themselves, be it regarding healthcare or housing or whatever else. Our society just isn't set up, to penalize the spendthrifts and reward the savers.
I'm all for debtors prison.....just kidding, sort of.
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Old 09-24-2017, 05:32 PM
 
71,650 posts, read 71,777,271 times
Reputation: 49240
Quote:
Originally Posted by Cabound1 View Post
The income limitations on Roth conversions were pretty tight up until 2010, if I recall correctly. So if you were still working, you probably didn't miss out as much as you think.

That's why I enjoy these forums. I'll tell you my tips, you tell me yours, and we can all benefit. And commisserate.
we had 401k's for quite a few years at our company . i wanted my tax deduction so i never did any . boy was that a mistake . never did ira's for my wife either , another mistake .
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Old 09-24-2017, 07:19 PM
 
1,066 posts, read 518,049 times
Reputation: 1824
Quote:
Originally Posted by bobandsherry View Post
For those who consider "managing" taxable income something bad... Consider let's consider this scenario. There's two couples, couple "A" and "B". Both made the same money over their lifetime.
  • Couple "A" - lived within their means, saved for rainy day and is prepared for their retirement with net worth in excess of $1 million.
  • Couple "B" - spent like there was no tomorrow and has basically no net worth.

From what I read here, most people are OK with giving "B" a subsidy even though they were stupid in managing their finances, but find it deplorable for "A" who lived within their means and now just work within the tax code.

Seems odd that people want to penalize savers but reward spenders.
Yeah, ironic, isn't it?

I have neighbors who are 70 and have 4 checks coming in every month.....2 SS and 2 public sector pensions. 110k between the 4 checks. They live paycheck to paycheck because they are in debt up to their eyeballs. 3 total bankruptcies over both their lifetimes.

I have zero checks coming in every month. Yet I'm the bad guy because I planned well enough to reduce my expenses(and thus my "income" ) enough to qualify for free healthcare.

Who's the real villain here?
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Old 09-25-2017, 10:34 AM
 
29,782 posts, read 34,876,173 times
Reputation: 11705
Quote:
Originally Posted by Cabound1 View Post
Yeah, ironic, isn't it?

I have neighbors who are 70 and have 4 checks coming in every month.....2 SS and 2 public sector pensions. 110k between the 4 checks. They live paycheck to paycheck because they are in debt up to their eyeballs. 3 total bankruptcies over both their lifetimes.

I have zero checks coming in every month. Yet I'm the bad guy because I planned well enough to reduce my expenses(and thus my "income" ) enough to qualify for free healthcare.

Who's the real villain here?
I am missing something. They have six figure incomes are 70 receiving and paying for Medicare and any supplemental insurance. At that income level they are paying taxes etc. in the context of this discussion, what could make them villians?
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Old 09-25-2017, 11:25 AM
 
1,066 posts, read 518,049 times
Reputation: 1824
Quote:
Originally Posted by TuborgP View Post
I am missing something. They have six figure incomes are 70 receiving and paying for Medicare and any supplemental insurance. At that income level they are paying taxes etc. in the context of this discussion, what could make them villians?
I was trying to point out that they have had 3 bankruptcies despite their incomes, but are generally not considered villains, but someone managing income to get ACA is.
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Old 09-26-2017, 07:00 PM
 
Location: On the road
5,957 posts, read 2,897,780 times
Reputation: 11407
Quote:
Originally Posted by ohio_peasant View Post
Bottom line: I have no moral qualms about “rich” people getting an ACA subsidy; none whatsoever. What I can’t fathom is how this is actually done.
It's easy! Say you are a couple that retired early and have 2 million bucks, half in taxable and half in tax deferred. You own your home and your expenses are $60k annually. To fund your expenses you have $25k of dividends from taxable investments and sell $35k which from your basis generates $25k of capital gains.

Congrats! Your income (as far as ACA sees it) is $50k, which in Arizona for a married couple filing jointly means $1,013/month in subsidies for a Silver Plan.
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Old 09-27-2017, 11:32 PM
 
Location: Pueblo area
213 posts, read 121,976 times
Reputation: 483
Thank you all for your input. This is fun. Let me clarify. Simulation numbers, 400K taxable in 5% dividend stocks, 20K taxable income. 600K in IRAs generating 30K tax-deferred.

Cash out 100K in dividend-paying stocks in 2017. Pay maybe 10K in cap gains, $90K in the bank.

2018, live off the $90K and getting a $9,000 ACA subsidy because my taxable is now under 20.

Lose $5K in dividends and get a $9K tax subsidy.

61 play this game for 4 years, then get for Medicare for $150 a month.
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Old 09-28-2017, 01:35 AM
 
71,650 posts, read 71,777,271 times
Reputation: 49240
medicare is the cheap part . if you want a good supplement like an f-plan depending on your state it can run 330 a month plus another 450 a year or so for a drug plan .
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