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Location: Formerly Pleasanton Ca, now in Marietta Ga
10,352 posts, read 8,576,900 times
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Quote:
Originally Posted by ohio_peasant
Persons B and C might have both bought shares in Apple, Google, etc... and also intermediate-terms bonds. But B bought the stocks in his IRA, leaving the bonds in his taxable account. C did the reverse, buying stocks in a taxable account and bonds in the IRA. 10-15 years later, they have the same investment-gains and the same net worth. But B's dividends are tax-protectmed and don't count under Modified Adjusted Gross Income for Obamacare purposes, while C's do. So, B can retire a say age 55 and coast until Medicare eligibility by relying on an Obamacare subsidy, while C has to keep working. Alternatively, C has to spend $1400/month on health insurance, while B spends only $200/month, and devotes the $1200/month difference to payments on his Porsche 911.
I had an inkling it was something like that, but not sure. Thanks for clarifying that for me.
Persons B and C might have both bought shares in Apple, Google, etc... and also intermediate-terms bonds. But B bought the stocks in his IRA, leaving the bonds in his taxable account. C did the reverse, buying stocks in a taxable account and bonds in the IRA. 10-15 years later, they have the same investment-gains and the same net worth. But B's dividends are tax-protected and don't count under Modified Adjusted Gross Income for Obamacare purposes, while C's do. So, B can retire a say age 55 and coast until Medicare eligibility by relying on an Obamacare subsidy, while C has to keep working. Alternatively, C has to spend $1400/month on health insurance, while B spends only $200/month, and devotes the $1200/month difference to payments on his Porsche 911.
knowledge and use of the laws and tools available to all of us that allows us to k KEEP MORE OF WHAT WE EARNED is what makes the difference... either by rebates on things like medical insurance subsidies or saving more on our fair share of taxes or using local laws and programs like rent stabilization to name one which is open to millions regardless of income in some cities .
this is why a good financial adviser who has a team to help with tax planning and other lifestyle planning can be very valuable .
but many think the cost of using one is expensive , but wait until they see what not using one can cost , because of one's ignorance in this kind of planning ..
unknowingly we had a major estate planning issue years ago .. we were over new yorks estate tax threshold at that time which was only 1 million not the federal level like today .
what we did not know is if you were over by 5% you did not pay on the overage , you lost the 1 million dollar exclusion totally and paid from dollar 1 .
we needed special disclaimer trusts .
so you could have had someone like us financially who had these disclaimer trusts and we were not knowledgeable on our own to know about them and there would have been a huge difference in what went to heirs .
knowledge is what makes the difference .
Last edited by mathjak107; 12-08-2019 at 01:49 AM..
Perhaps this person with $800k already has a 4 year old they love with all their heart. What changes?
My desire is to live “America-middle-class” with complete ownership of my time and thoughts.
A free mind is nothing to take lightly so please don’t envy me too much. I respect the wisdom freedom allows such a young mind to harvest so early in life. I also appreciate the patterns and connections in the fabric of life it allows me to see.
I will say though - I don’t think extreme early retirement is the path for everyone. There’s still a battle to prevent the brain from consuming itself.
For several days I've popped in on your discussion. Not much to go on or find believable. No mention of where the $800K came from or what type of instrument(s) it is placed. $20K a year to live on from age 30-something to age 80-something? Where is the $20K coming from? And supporting a child for the next 15-years? I think this is a fantasy, though I must give you credit for stringing everyone along for their advice.
Living like Ted Kaczynski in meager housing and driving a 20-year old car isn't a lifestyle any books I've read describe.
Naturally you can't prove any of the figures provided and make many assumptions about later in life health costs, inflation, or the difficulty of being hired at a late age having not worked for many years. Minimum wage anyone?
Most would desire an income approximately equal to the income they had before retirement. Your figures won't get it done.
For several days I've popped in on your discussion. Not much to go on or find believable. No mention of where the $800K came from or what type of instrument(s) it is placed. $20K a year to live on from age 30-something to age 80-something? Where is the $20K coming from? And supporting a child for the next 15-years? I think this is a fantasy, though I must give you credit for stringing everyone along for their advice.
Living like Ted Kaczynski in meager housing and driving a 20-year old car isn't a lifestyle any books I've read describe.
Naturally you can't prove any of the figures provided and make many assumptions about later in life health costs, inflation, or the difficulty of being hired at a late age having not worked for many years. Minimum wage anyone?
Most would desire an income approximately equal to the income they had before retirement. Your figures won't get it done.
In any case, good luck.
Let’s call it $25k-ish inflation adjusted dollars for life...and growing considering my living costs.
Now why is so hard to make it in a low COL area? It’s comically easy if one has a spouse sharing at least a meager 15% of living costs.
Inflation has averaged 2.86% since 1981. Assuming it continues to average that for the next 60 years (when a 30 year old will be 90) and assuming their investment returns an average of 7% annually over the same period, they'd have to live on $36,550 per year (in today's dollars) for the rest of their lives. Could it be done? Probably, but they'd have to live in an area where the cost of living is very low, live an extremely frugal lifestyle, and assume absolutely nothing bad will happen. No health issues, no stock market crashes, etc.
Location: Formerly Pleasanton Ca, now in Marietta Ga
10,352 posts, read 8,576,900 times
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Quote:
Originally Posted by eddiehaskell
Let’s call it $25k-ish inflation adjusted dollars for life...and growing considering my living costs.
Now why is so hard to make it in a low COL area? It’s comically easy if one has a spouse sharing at least a meager 15% of living costs.
So I think I got it. It’s nothing enlightening or .00001. Marry someone who has an income to allow you not to work. I have a friend whose husband is retired like you while she works 50 hours a week.
This whole thread can be easily explained if you told the whole story with actual numbers and projections.
Persons B and C might have both bought shares in Apple, Google, etc... and also intermediate-terms bonds. But B bought the stocks in his IRA, leaving the bonds in his taxable account. C did the reverse, buying stocks in a taxable account and bonds in the IRA. 10-15 years later, they have the same investment-gains and the same net worth. But B's dividends are tax-protected and don't count under Modified Adjusted Gross Income for Obamacare purposes, while C's do. So, B can retire a say age 55 and coast until Medicare eligibility by relying on an Obamacare subsidy, while C has to keep working. Alternatively, C has to spend $1400/month on health insurance, while B spends only $200/month, and devotes the $1200/month difference to payments on his Porsche 911.
Quote:
Originally Posted by Cabound1
I’m speaking strictly about controlling income so as to qualify for subsidies. I paid cash for the Macan S, mostly because I like to own outright, just a personal preference. But one of the considerations was remaining eligible for free health care. In my case, I cashed in a “loser” in order to pay for it. No income generated. Had I decided to finance, there’s no guarantee that money would have remained off the MAGI line for the duration of the loan.
I don’t want to derail this thread into financing vs owning outright. I merely tried to point out that owning outright (the house being the biggest example) enables a person to reduce income requirements. I have a hard time imagining how a person paying mortgage/rent and car payments could keep their income low enough to qualify, but maybe someone out there is doing it. I’d love to hear from them.
Two excellent posts here. Anyone considering early retirement should read these carefully. Cabound1 makes a good point that controlling expenses makes it easier to control income. Paying cash for a car or paying off a mortgage can make a lot of sense as relates to ACA subsidies. Anyone planning on drawing from their non-Roth retirement accounts for income before age 65 needs to consider the impact on their subsidy.
Two excellent posts here. Anyone considering early retirement should read these carefully. Cabound1 makes a good point that controlling expenses makes it easier to control income. Paying cash for a car or paying off a mortgage can make a lot of sense as relates to ACA subsidies. Anyone planning on drawing from their non-Roth retirement accounts for income before age 65 needs to consider the impact on their subsidy.
It goes beyond drawing from accounts. A taxable account of a certain size will throw off dividend-income that exceeds the ACA cap, even if there is zero turnover, redemptions, or trading in the account. So, an early-retiree who joins an agricultural commune and lives off of cucumbers, radishes and goat-milk - withdrawing $0 from his or her accounts - would still blow through the ACA subsidy income-limit, just because his/her S&P 500 index fund at Fidelity or whatever, generates "too much" in dividend income.
And to Mathjak's point, the time to structure these investments is in our 20s, not our 40s or 50s. By the time that you have several million in your taxable accounts, it's already too late.
An intriguing option is a "golden visa" to get into the EU. I looked into options in Germany. But it ends up as false economy. Even if somehow I could qualify for their healthcare, which is debatable, the capital-gains/dividends taxes would be brutal.
It goes beyond drawing from accounts. A taxable account of a certain size will throw off dividend-income that exceeds the ACA cap, even if there is zero turnover, redemptions, or trading in the account. So, an early-retiree who joins an agricultural commune and lives off of cucumbers, radishes and goat-milk - withdrawing $0 from his or her accounts - would still blow through the ACA subsidy income-limit, just because his/her S&P 500 index fund at Fidelity or whatever, generates "too much" in dividend income.
And to Mathjak's point, the time to structure these investments is in our 20s, not our 40s or 50s. By the time that you have several million in your taxable accounts, it's already too late.
An intriguing option is a "golden visa" to get into the EU. I looked into options in Germany. But it ends up as false economy. Even if somehow I could qualify for their healthcare, which is debatable, the capital-gains/dividends taxes would be brutal.
You are forgetting about individual stocks that don’t have dividends. Keep those in the taxable accounts. I still have positions that haven’t been touched since the nineties.
Location: We_tside PNW (Columbia Gorge) / CO / SA TX / Thailand
34,744 posts, read 58,090,525 times
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Quote:
Originally Posted by ohio_peasant
It goes beyond drawing from accounts. ......
Thus tailoring investment vehicles is important to LT ER. And.... To achieve ACA (low MAGI), investment Real estate can be a very perfect vehicle for MAGI. Artificial losses from depreciation help to keep MAGI low, then.... After ACA... Liquidate or 1031 your RE.
Of course OP has little to worry about exceeding ACA cliff.
I can easily see $60k annual net from a $800k RE investment. Inflation adjusted & 35 yrs of equity gain will result in plenty of dough (now and later).
Sweet deal.
Providing the $800k exists and is accessible.
Do this in a tax free state with high potential for equity gain (hint.... Desirable areas of in-migration for next 30 yrs). The $800k equity will grow to $3m in 30 yrs at a measly 5% equity growth rate. Your NNN tenants are paying almost all your expenses, including mortgage!.. thus $400k in RE could bring adequate results to meet OP objectives, and leave $400k for diversification into other sweet deals. (Non RE).
Saving for retirement is not required if you replace your wage income with an inflation protected income stream. Age 18 would have been a good time to realize and accomplish this.
No more w-o-r-k required. (Wage income)
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