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How much do YOU think YOU need to retire? ...and at what age will you (and spouse) retire?

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Replies to: How much do YOU think YOU need to retire? ...and at what age will you (and spouse) retire?

  • bluebayoubluebayou Registered User Posts: 25,937 Senior Member
    Good for you if you can do that. it is not unusual people to have $1M or more in their retirement account. To stay below IRMAA, $170K for MJ, it would take quite a few years to complete the conversion.

    Which is why I am not doing that much of a conversion and leaving the RMD's for 70.5, at normal tax rates. Why pay a bunch of taxes today, at higher marginal rates, just so you can pay zero tax later. Much better to smooth them all out so you pay less taxes in total.

    Look at IRMAA as just another tax, and if converting another $10k puts one over the IRMAA threshold, then the marginal tax rate for that last $10k is very expensive (your current marginal rate+IRMAA).

    The standard ROT is just to do enough conversions to use up low tax brackets AND stay under the IRMAA threshold.

    A $1M IRA balance means a RMD of ~$37k in year 1 (12% tax bracket).

    A $3M IRA balance means a RMD of ~$111k, well under the IRMAA limit, and a 22% marginal tax bracket (MJ).

    (Technically, the best way is to run a tax forecaster and estimate your marginal tax rates at age 70+ with and without RMD's from conversions and compare that to the marginal taxes paid today, and then discount those future dollars back.)

  • bluebayoubluebayou Registered User Posts: 25,937 Senior Member
  • BunsenBurnerBunsenBurner Registered User Posts: 37,727 Senior Member
    Good articles.
  • busdriver11busdriver11 Registered User Posts: 15,091 Senior Member
    Yes @sherpa, sometimes it might seem funny to others the things that people pay attention to. Much of it is probably habit or upbringing, I suspect. I wear some of my clothes until they are threadbare, as I hate shopping, and have other cheapskate habits. Maybe the answer to when I will consider myself "rich" is when I don't pay attention to pricing. So that will probably be never.
  • deb922deb922 Registered User Posts: 5,497 Senior Member
    My sil and I had pretty similar upbringings. Her parents are very cheap. Mine are blue collar lower middle class. My H and his brother had the same upbringing ;). My MIL has always known how to stretch a dollar and now even when they could, and we try, do not spend money needlessly.

    But how my H and I spend money is so different. My bil makes a lot more money than my H. But even with that, their attitudes toward money are so different. They spend money likes it’s their last day on earth. They are mortgaged to the hilt and keep buying and taking trip after trip.

    My H and I are pretty cheap. We try to live pretty cheaply and try to save for a reasonable retirement. My bil thinks he will work until he’s 70. We gave our kids a college education debt free and then set them free. They are still supporting theirs.

    I think it’s that people are different and some are risk adverse, I know we are. I think it’s big that now I buy the more expensive chicken at the market.
  • HImomHImom Registered User Posts: 33,535 Senior Member
    I pay attention to prices and look at bills and invoices. I do comparison shopping and use coupons when they are available. If that makes me cheap, OK, I'm probably not going to change. I don't like debt and we have paid off all debts we owe. Our kids have no debt and like it that way--were fortunate to graduate from college debt-free.

    My siblings differ. Some of them spend money as fast (or faster) than it comes in while others save for the future--theirs and their kids & grandkids. We paid for our new car in cash because we don't like debt while my sister and BIL just bought their new car via a car loan (hopefully at a good % interest rate).
  • anxiousmomanxiousmom Registered User Posts: 5,866 Senior Member
    RE: post 14598 - the whole reasoning behind “wait until 70 to claim SS” assumes that the rules will still be the same when you hit age 70. I am going into this assuming that there will be changes to SS, such as means testing. Part of me thinks its a better idea to collect at 62 and invest the money in something safe like CD ladders...
  • bluebayoubluebayou Registered User Posts: 25,937 Senior Member
    edited February 17
    ^^well, in reality, SS benefits already face a tax on up to 85% of the benefits received when your retirement incomes over $34k single, or $44k MJ. (The other 15% has already been taxed.)

    I suppose that the feds could always lower the bend point, but I'm guessing that would not impact too many folks on cc.

    CD ladders (or treasuries) are great, but will still result in interest income, bumping one up against the SS bend points. And the interest earned is less than the gain by waiting to file for SS. (which was the point of the article.)
    You will pay tax on only 85 percent of your Social Security benefits, based on Internal Revenue Service (IRS) rules. If you:

    file a federal tax return as an "individual" and your combined income* is
    between $25,000 and $34,000, you may have to pay income tax on up to 50 percent of your benefits.
    more than $34,000, up to 85 percent of your benefits may be taxable.
    file a joint return, and you and your spouse have a combined income* that is
    between $32,000 and $44,000, you may have to pay income tax on up to 50 percent of your benefits.
    more than $44,000, up to 85 percent of your benefits may be taxable.

    https://www.ssa.gov/planners/taxes.html


    But in the end, it becomes a decision on how long you think you and your spouse will live. Living beyond ~80 makes it beneficial to wait, at least for the higher income spouse. In poor health? File before FRA.
  • busdriver11busdriver11 Registered User Posts: 15,091 Senior Member
    That's always the rub, isn't it? Knowing how long we are going to live!
  • sherpasherpa Registered User Posts: 4,723 Senior Member
    From the article posted by @BunsenBurner -
    Investors long ago figured out that they don’t want to pay high expense ratios on funds. Paying, say, $4 in transaction costs on a $100 deposit — and doing it repeatedly — would be dumb, so consumers really have not used ETF accounts to slowly accumulate assets over time.

    The dramatic expanse of commission-free trading means that investors who prefer ETFs can now use them on small trades to build positions. While ETFs were built to be trading vehicles, this makes them more attractive to the long-term investors with small dollars, who can now build a portfolio efficiently with regular electronic deposits being added to their account without a trading cost.
    Good news for many of our kids who are building their IRA's.
  • bluebayoubluebayou Registered User Posts: 25,937 Senior Member
    edited February 17
    Good news for many of our kids who are building their IRA's.

    Not sure why our kids would want to put an etf in an IRA. Zero cost mutual funds work great. Fidelity offers several which are perfect for buy and hold. And other big fund companies are near zero.

    https://www.fidelity.com/mutual-funds/investing-ideas/index-funds?&imm_pid=700000001009773&immid=100611&imm_eid=ep11640221645&gclid=CjwKCAiAqaTjBRAdEiwAOdx9xjjC2Yk8WJd6_1m7SeUk2lV3iDp8MNQPtCgvDhnJM_es9LvliCgXJRoC0xQQAvD_BwE&gclsrc=aw.ds
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