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If you're referring to income tax (as opposed to other taxes), my effective tax rate is:
No pension. We're too young to collect SS yet. Property taxes take a chunk.
I think the tax advantage is more apparent for those of us that live modestly via the kindness of Uncle Sam. The self-made retirement types, not as much.
You guys who are paying so much in taxes must be very high income.
My wife and I can make up to $74K in taxable income and still be in the 15% tax bracket, which allows us to pay 0% on long-term capital gains and qualified dividends, which is a good percent of our income.
Aren't most retired couples making less than $74K in taxable income (after all the deductions) in America?
Our health care premiums are low because of ObamaCare subsidies. Life is good.
Exactly. For the average retiree, taxes are a non-issues. But C-D seems to have a disproportionate number of high net worth types with significant tax issues.
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.
I think that's not accurate. (not a tax expert though) As a renter, I've received $1200 to $1500 in Property Tax Refund every year for the past 7 years when I was paying zero state income tax.
I think one could say that state property tax paid by me as a renter was included in my monthly rent paid.
Last edited by matisse12; 05-15-2017 at 02:56 PM..
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.
Perry was responding to one of my comments. I had described my plan for retirement funding. Our assets are split between taxable accounts and deferred 401k's, so like your situation. Simplified version is as follows... Live on 401k prior to age 70, then after 70 live on SS plus dividends and cap gains from the taxable accounts.
During after-70 part there's likely no tax until something above $100k income because of the way SS and investment income get taxed.
Exactly! If a two earner couple with very high SS delays filing to 70, then just SS is almost $80k today. So one could easily have $20k in LTCGs or dividends, and pay no or very little tax. But the instant the extra income makes SS taxable (as 50% of SS is included in calculating AGI when there is other income), then taxes easily jump to 25% bracket at that level. When I reach 70, it will be closer to $90k. (Which is what I was thinking)
I am only saying this as a casual observation and at the moment realization. When reading through this thread and many others over the years I wonder how our under 50 population views us. If so many of us pay so little in federal income taxes and we as a group in retirement consume such a large part of the federal budget are we worth it?
What are we contributing to society to justify the cost? Tax revenues? Working labor? Investment capital? What is our societal value? What is our cost with SS, Medicare, Medicaid, housing being a needed source for government revenues?
Is it really a good thing we pay minimal taxes with a federal debt at 20 trillion?
You guys who are paying so much in taxes must be very high income.
My wife and I can make up to $74K in taxable income and still be in the 15% tax bracket, which allows us to pay 0% on long-term capital gains and qualified dividends, which is a good percent of our income.
Aren't most retired couples making less than $74K in taxable income (after all the deductions) in America?
Our health care premiums are low because of ObamaCare subsidies. Life is good.
Please explain that? Are you retired and collecting SS? A couple with combined pensions of $70k (taxable income) and combined SS of $60k will pay $16000 in federal taxes. Clearly 25% bracket. Certainly not very high income!!!
No. It is not, in my opinion. And certainly not very high income which I consider normally over $250k /yr. If a couple have both worked with moderately successful careers, and living with (not on) a combined $250k, then dropping to $130k is a (certainly first world) significant adjustment in lifestyle. I'm not saying that it is not more than acceptably comfortable, but it is far from a very high income, and certainly not wealthy.
Even with not needing to pay a monthly house payment, since your house is most likely paid for?
I cannot imagine what one would do with all that money in retirement! I'd buy or rent a beach house!
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