100% spot on in your interpretation Dick. Look on the bright side, with a reduced or eliminated Social Security benefit you won't care how it is taxed-nothing to tax.
I'm all about financial simplicity particularly in retirement.
Toward that end, all this talk of Roths whetted my appetite for another sizable Roth conversion yesterday.
Investing in a simplified future tax situation always gives me a dose of dopamine. I'll get another dopamine hit when I make the associated sizeable tax pre-payment next month. That payment in effect gives Uncle Sam that tax revenue over 10 years prior to the beginning of my RMDs when he'd just begin to otherwise incrementally see this revenue. Once and done, no more tax calculations on that money after this year and Uncle Sam can spend it next month.. Win, Win. See, I have no aversion to taxes, I even like to pay them early.
I know you'll never agree with my view on true independence from government dole but I do put my money where my mouth is on the topic of never relying on S.S. nor wanting anything to do with it. I will do it again next quarter with another Roth conversion.
Oh Marilyn, I apologize for starting your morning like this but it gets so much worse.
Imagine a non- working spouse who was astute enough back in 1998 in their 30's to open and contribute to a Roth account and contribute each year since. They have amassed approaching 3/4 of a million dollars in that account by trusting that the U.S. Equity Market is a wealth building engine. Presently, they are still a few years from collecting Social Security. By the time their spousal S.S. payments commence who knows, it may be approaching a million dollars in the account. Thanks to the largess of the Social Security program, that spouse will be able to leave much more invested for longer tax free in the Roth AND probably pass some down to the next generation who can leave it invested tax free for 10 years.
All very wonderful for the spouse and their family.
You can't make this stuff up. Only a government program mired in the past could operate this way.
The good news though Marilyn, not everyone lined up on the receiving end of this largess feels entitled to it nor wants others taxed more to sustain it.
I leave you on that positive note. Enjoy your morning.
"Roth is for upper income people not the bulk of American workers": This is simply inaccurate particularly with the advent of Roth 401Ks. You must have a very different definition of "upper income" to include anyone with a 401K or IRA account evidently. If anything Roth participation should be encouraged and fostered not discouraged with taxation etc. "You say SS pays benefits to independently wealthy individuals and yet you don’t want those benefits taxed for individuals whose independent wealth comes from a Roth account. I do get that at all". You are fixated on taxation vs prudent spending. There is also prudent taxation that does not induce disincentives in the wrong areas. Taxing Roths is a disincentive to a rare positive note in our economic universe."It simply is not fair that a person with retirement income of say $40,000 has their SS benefits deemed taxable while a person with Roth income of $100,000 does not".Again, step outside the echo chamber. Taxation is not the only solution. What is not fair is that you and I are even eligible to collect. By eliminating/reducing S.S. benefits for people like you and I, we are making a much bigger contribution to the solution. Expanding taxation on S.S. benefits is indeed minor in the scheme of things for people like you and I but to tax Roth in any manner has broader deleterious implications. Roth is an incremental solution not a problem.
Dick,
I’ll politely reel you back into the conversation at hand from your self-imposed, tangential echo chamber on this topic.
At no time did I indicate that those in need of Social Security should not continue to receive it now or in the future. That notion originated in your response.
I’ll be more explicit to help you along.
The shrinking of Social Security should happen in the upper income thresholds which based on your rather detailed disclosures of your situation, includes you and while I would never disclose my situation in detail, includes me as well. The fact that you or I and anyone in our economic demographic or above collects or is about to collect S.S. is thenonsense. If there is going to be a hit to benefits, it needs to start at the top. My closing statement specifically stated as much if you read that far.
With that basis (re)set; if you re-read my comments, it is directed at the notion that Roth IRA’s should not be used to help fix or perpetuate the current S.S. mess. I gather you are not a participant in the Roth IRA universe. If that is the case then frankly you are not in a position to have personally experienced how much progress toward financial independence has been and continues to be facilitated for so many with Roth IRA’s as a powerful element in their portfolios. I’ll skip over the politically charged rhetoric in your response and only address the items that are relevant to my original post. · I don’t see employer benefits (be they public or private) germane to self-reliance in this context. Benefits are part of compensation that we all work for and consider when opting to accept or reject employment as we work toward financial security and ideally true independence in retirement. So, this is out of context, no comment necessary. I’ll skip further down a few paragraphs as they are solely within your own echo chamber. I made my point above that the shrinking of Social Security needs to be at the upper end of the economic strata not the lower or even mid. Enough said. · Regarding your paragraph on the ability to achieve greater results by investing a dollar vs paying S.S. tax. From a sheer return perspective, I’ll bet on the U.S. equity market over time vs S.S. It’s unfortunate that the S.S. program itself does not have a market-based component to aid in long term liquidity. That said, before you place any more words in my mouth from your echo chamber, I believe strongly that virtually everyone should have to pay into the system to support those who NEED Social Security. I’ll also add that I’ll continue to side with the Warren Buffets of the world who have faith in the U.S. equity markets to create true wealth and financial independence. In closing, the solution to the Social Security morass need not be to solely address the revenue/tax side of the equation. There needs to be a reduction in spend and it needs to start at the top with people like you and me. Roth IRA’s are one vehicle to lift people out of the lower and indeed mid economic levels; some percentage of whom could be (and are) in a position to live entirely without S.S. one day. This is a worthy goal for society and the individual. Back to my original point in all this: Why sully a solid, successful, win-win program such as Roth IRAs to fund the failings of a runaway Social Security program …and to add…that is so poorly administrated that it pays benefits to independently wealthy individuals.
If the Federal Government were to look at individual states for benchmarking on how to diminish the economic quality of life of its citizenry, New Jersey would be an excellent benchmark.
Luckily, there are 49 more states to benchmark.
Roth IRA’s are one of the best vehicles yet developed to reduce seniors’ reliance on the archaic, politically poisoned Social Security Program…..at least for those who opted to participate. To entangle Roth IRAs with the lamentable state of the Social Security mess is ridiculous.
With the advent of the Tax Payer Relief Act of 1997, a rare “ win- win” occurred where the Federal Government received accelerated tax payments and tax payers gained long term tax relief.
Behold: people gained more incentive to save for retirement and self reliance / independence from government in retirement. Isn’t that what we as a nation want to encourage?
The insatiable federal appetite for more accelerated tax revenue resulted in further adjustments after 1997 to Roth resulting in Roth conversions and “ back door” contributions.
Those who opted to contribute to Roths are virtually universally glad they did and many wish they participated more/ earlier. Even non- working spouses who contributed the maximum amount allowed each year since Roth inception in January, 1998 through January, 2026 could have approximately $695,000 in tax free funds if invested in a Total U.S. Market Index fund with dividend reinvestment. Talk about a spousal benefit!
The focus should be on shrinking Social Security by encouraging self reliance, not breaking even more promises outside the program to have it muddle along in its current decrepit state.
I’d rather see my future S.S. Benefits slashed or eliminated vs poison the wealth creating, self empowering and yes, tax revenue accelerating “ win- win” engine that the Roth IRA is.
Dick,
I think an excerpt from your post above bears amplification for our younger readers:
Your words: "One other difference from many others is that we lived on one income our entire married life and our lifestyle was based on that. In addition, we lived on my base salary only, not total compensation. Any pay above salary was saved." For those who are in a position to do so, living off salary alone (or a specific set point if base compensation is variable) and fighting the temptation to spend or increase the lifestyle when bonuses, equity distributions, perhaps inheritances, investment returns or other windfalls come their way is a great way to build long term wealth. We did basically the same thing and used the variable compensation and any windfalls that came our way to pay off our home mortgage and stuff the kids' 529's full enough to cover their college tuitions. Retirement savings became "Job#1" when there was no longer a mortgage and the 529's were topped off.
This approach gives us the option today to actually increase our lifestyle in retirement. I guess you could say- burning the candle on the latter end of adulthood vs living it up in early years when a bonus etc. came along. All that said, spending money is still not something we are very good at after living conservatively our whole lives but I would have never done it any other way.
Dan,
The short answer is "No".
A more detailed response: I actually retired at the end of 2019. As part of my "Bucket" approach, when I rebalanced in 2020, I actually bought equity index funds as part of my annual rebalancing (wish I had done it earlier in 2020). In fact, $100,000 invested in Feb. 2020 just before COVID hit is worth over $250,000 today (with dividends reinvested). I rebalanced well below the Feb level.
The "Bucket" approach allows me to essentially "self annuitize" by having progressive buckets with different timeframes and investment mixes. The timeframes are long enough that I don't lose sleep over downturns and just rebalance equity/bond mix in each bucket once or twice a year.
I guess you could say in retirement, I just keep doing what I have done since starting to invest in the mid 1980's. Starting with the 1987 equity downturn, I rebalance into downturns by adding equities when the equity % drops below target. The only major downturn I have not rebalanced into since 1987 was 9/11. I was too consumed at work in the aftermath for months and did not want to benefit / profit off of that catastrophe.
Ted, I agree with your math. $5,500/month is $66,000/year, or an 8.6% initial withdrawal rate on $768K. But I think the more interesting question is when you make the annuity decision.
In our hypothetical, Person C commits $100K to a deferred annuity at age 45 in exchange for $5,500/month for life beginning at 65. That's a legitimate way to insure against longevity and market risk. My objection is committing the money 20 years before you know whether you'll actually need that insurance.
The alternative is to leave the $100K invested. If it achieved the historical return of the total U.S. stock market over those 20 years, it would be worth approximately $768K at age 65. At that point, you have both wealth and flexibility:
Stay invested in VTSAX/VTI.
Diversify to something like 60/40.
Annuitize some or all of the portfolio.
Buy an immediate annuity—or another annuity product.
Or decide you don't need an annuity at all.
And you can make that decision based on your actual circumstances at 65: Social Security, other assets, health, spending needs, whether you're still working, risk tolerance, longevity expectations and desire to leave money to heirs.
As for the $5,500/month withdrawal, I don't think "8.6%" tells the whole story. The portfolio doesn't have to earn 8.6% and preserve the $768K. It can consume principal.
As an illustration, using long-term historical average returns:
A 100%-stock portfolio could still have substantial assets after 20 years of $66K annual withdrawals and, under a simple constant-return illustration, could have significant assets remaining even at 100.
A 60/40 portfolio produces a less favorable result but, under those assumptions, could still last into the late 90s.
Those aren't forecasts—sequence-of-returns risk could produce a much worse result. But again, the 65-year-old gets to assess that risk at 65, rather than having the 45-year-old make the decision for him.
And if the portfolio does well, the retiree gets something the pure-life annuity doesn't provide: remaining capital and potential money for heirs. My question is why voluntarily give up the flexibility of $100K at age 45 when you can preserve the option to buy that insurance at 65—or later—when you actually know whether you need it. The annuity buys certainty of a specific outcome. The investment preserves optionality and the potential for growth. I'd rather preserve the optionality and only buy the certainty later if I feel I need it. In my case, I don't see that day coming, so I'm glad I deflected all those annuity sales pitches years ago.
$100K invested in Vanguard Total Market Index Fund (VTSAX) for the last 20 years with dividends reinvested would be worth approximately $768,000 today (source AI).
Those buying an annuity over that period not only incurred the comparatively high cost structure of the annuity but also incurred the lost opportunity cost.
Annuities are the gateway to a mediocre retirement when purchased far ahead of retirement.
I personally could not imagine buying one even now after retiring but for some it may help them (and the annuity sales person) sleep better.
Comments
100% spot on in your interpretation Dick. Look on the bright side, with a reduced or eliminated Social Security benefit you won't care how it is taxed-nothing to tax. I'm all about financial simplicity particularly in retirement. Toward that end, all this talk of Roths whetted my appetite for another sizable Roth conversion yesterday. Investing in a simplified future tax situation always gives me a dose of dopamine. I'll get another dopamine hit when I make the associated sizeable tax pre-payment next month. That payment in effect gives Uncle Sam that tax revenue over 10 years prior to the beginning of my RMDs when he'd just begin to otherwise incrementally see this revenue. Once and done, no more tax calculations on that money after this year and Uncle Sam can spend it next month.. Win, Win. See, I have no aversion to taxes, I even like to pay them early. I know you'll never agree with my view on true independence from government dole but I do put my money where my mouth is on the topic of never relying on S.S. nor wanting anything to do with it. I will do it again next quarter with another Roth conversion.
Post: Income taxes on retirees with Social Security
Link to comment from August 19, 2026
Oh Marilyn, I apologize for starting your morning like this but it gets so much worse. Imagine a non- working spouse who was astute enough back in 1998 in their 30's to open and contribute to a Roth account and contribute each year since. They have amassed approaching 3/4 of a million dollars in that account by trusting that the U.S. Equity Market is a wealth building engine. Presently, they are still a few years from collecting Social Security. By the time their spousal S.S. payments commence who knows, it may be approaching a million dollars in the account. Thanks to the largess of the Social Security program, that spouse will be able to leave much more invested for longer tax free in the Roth AND probably pass some down to the next generation who can leave it invested tax free for 10 years. All very wonderful for the spouse and their family. You can't make this stuff up. Only a government program mired in the past could operate this way. The good news though Marilyn, not everyone lined up on the receiving end of this largess feels entitled to it nor wants others taxed more to sustain it. I leave you on that positive note. Enjoy your morning.
Post: Income taxes on retirees with Social Security
Link to comment from August 18, 2026
"Roth is for upper income people not the bulk of American workers": This is simply inaccurate particularly with the advent of Roth 401Ks. You must have a very different definition of "upper income" to include anyone with a 401K or IRA account evidently. If anything Roth participation should be encouraged and fostered not discouraged with taxation etc. "You say SS pays benefits to independently wealthy individuals and yet you don’t want those benefits taxed for individuals whose independent wealth comes from a Roth account. I do get that at all". You are fixated on taxation vs prudent spending. There is also prudent taxation that does not induce disincentives in the wrong areas. Taxing Roths is a disincentive to a rare positive note in our economic universe. "It simply is not fair that a person with retirement income of say $40,000 has their SS benefits deemed taxable while a person with Roth income of $100,000 does not". Again, step outside the echo chamber. Taxation is not the only solution. What is not fair is that you and I are even eligible to collect. By eliminating/reducing S.S. benefits for people like you and I, we are making a much bigger contribution to the solution. Expanding taxation on S.S. benefits is indeed minor in the scheme of things for people like you and I but to tax Roth in any manner has broader deleterious implications. Roth is an incremental solution not a problem.
Post: Income taxes on retirees with Social Security
Link to comment from August 17, 2026
Dick, I’ll politely reel you back into the conversation at hand from your self-imposed, tangential echo chamber on this topic. At no time did I indicate that those in need of Social Security should not continue to receive it now or in the future. That notion originated in your response. I’ll be more explicit to help you along. The shrinking of Social Security should happen in the upper income thresholds which based on your rather detailed disclosures of your situation, includes you and while I would never disclose my situation in detail, includes me as well. The fact that you or I and anyone in our economic demographic or above collects or is about to collect S.S. is the nonsense. If there is going to be a hit to benefits, it needs to start at the top. My closing statement specifically stated as much if you read that far. With that basis (re)set; if you re-read my comments, it is directed at the notion that Roth IRA’s should not be used to help fix or perpetuate the current S.S. mess. I gather you are not a participant in the Roth IRA universe. If that is the case then frankly you are not in a position to have personally experienced how much progress toward financial independence has been and continues to be facilitated for so many with Roth IRA’s as a powerful element in their portfolios. I’ll skip over the politically charged rhetoric in your response and only address the items that are relevant to my original post. · I don’t see employer benefits (be they public or private) germane to self-reliance in this context. Benefits are part of compensation that we all work for and consider when opting to accept or reject employment as we work toward financial security and ideally true independence in retirement. So, this is out of context, no comment necessary. I’ll skip further down a few paragraphs as they are solely within your own echo chamber. I made my point above that the shrinking of Social Security needs to be at the upper end of the economic strata not the lower or even mid. Enough said. · Regarding your paragraph on the ability to achieve greater results by investing a dollar vs paying S.S. tax. From a sheer return perspective, I’ll bet on the U.S. equity market over time vs S.S. It’s unfortunate that the S.S. program itself does not have a market-based component to aid in long term liquidity. That said, before you place any more words in my mouth from your echo chamber, I believe strongly that virtually everyone should have to pay into the system to support those who NEED Social Security. I’ll also add that I’ll continue to side with the Warren Buffets of the world who have faith in the U.S. equity markets to create true wealth and financial independence. In closing, the solution to the Social Security morass need not be to solely address the revenue/tax side of the equation. There needs to be a reduction in spend and it needs to start at the top with people like you and me. Roth IRA’s are one vehicle to lift people out of the lower and indeed mid economic levels; some percentage of whom could be (and are) in a position to live entirely without S.S. one day. This is a worthy goal for society and the individual. Back to my original point in all this: Why sully a solid, successful, win-win program such as Roth IRAs to fund the failings of a runaway Social Security program …and to add…that is so poorly administrated that it pays benefits to independently wealthy individuals.
Post: Income taxes on retirees with Social Security
Link to comment from August 17, 2026
If the Federal Government were to look at individual states for benchmarking on how to diminish the economic quality of life of its citizenry, New Jersey would be an excellent benchmark. Luckily, there are 49 more states to benchmark.
Post: Income taxes on retirees with Social Security
Link to comment from August 16, 2026
Roth IRA’s are one of the best vehicles yet developed to reduce seniors’ reliance on the archaic, politically poisoned Social Security Program…..at least for those who opted to participate. To entangle Roth IRAs with the lamentable state of the Social Security mess is ridiculous. With the advent of the Tax Payer Relief Act of 1997, a rare “ win- win” occurred where the Federal Government received accelerated tax payments and tax payers gained long term tax relief. Behold: people gained more incentive to save for retirement and self reliance / independence from government in retirement. Isn’t that what we as a nation want to encourage? The insatiable federal appetite for more accelerated tax revenue resulted in further adjustments after 1997 to Roth resulting in Roth conversions and “ back door” contributions. Those who opted to contribute to Roths are virtually universally glad they did and many wish they participated more/ earlier. Even non- working spouses who contributed the maximum amount allowed each year since Roth inception in January, 1998 through January, 2026 could have approximately $695,000 in tax free funds if invested in a Total U.S. Market Index fund with dividend reinvestment. Talk about a spousal benefit! The focus should be on shrinking Social Security by encouraging self reliance, not breaking even more promises outside the program to have it muddle along in its current decrepit state. I’d rather see my future S.S. Benefits slashed or eliminated vs poison the wealth creating, self empowering and yes, tax revenue accelerating “ win- win” engine that the Roth IRA is.
Post: Income taxes on retirees with Social Security
Link to comment from August 16, 2026
Dick, I think an excerpt from your post above bears amplification for our younger readers: Your words: "One other difference from many others is that we lived on one income our entire married life and our lifestyle was based on that. In addition, we lived on my base salary only, not total compensation. Any pay above salary was saved." For those who are in a position to do so, living off salary alone (or a specific set point if base compensation is variable) and fighting the temptation to spend or increase the lifestyle when bonuses, equity distributions, perhaps inheritances, investment returns or other windfalls come their way is a great way to build long term wealth. We did basically the same thing and used the variable compensation and any windfalls that came our way to pay off our home mortgage and stuff the kids' 529's full enough to cover their college tuitions. Retirement savings became "Job#1" when there was no longer a mortgage and the 529's were topped off. This approach gives us the option today to actually increase our lifestyle in retirement. I guess you could say- burning the candle on the latter end of adulthood vs living it up in early years when a bonus etc. came along. All that said, spending money is still not something we are very good at after living conservatively our whole lives but I would have never done it any other way.
Post: What is the right percentage?
Link to comment from August 11, 2026
Dan, The short answer is "No". A more detailed response: I actually retired at the end of 2019. As part of my "Bucket" approach, when I rebalanced in 2020, I actually bought equity index funds as part of my annual rebalancing (wish I had done it earlier in 2020). In fact, $100,000 invested in Feb. 2020 just before COVID hit is worth over $250,000 today (with dividends reinvested). I rebalanced well below the Feb level. The "Bucket" approach allows me to essentially "self annuitize" by having progressive buckets with different timeframes and investment mixes. The timeframes are long enough that I don't lose sleep over downturns and just rebalance equity/bond mix in each bucket once or twice a year. I guess you could say in retirement, I just keep doing what I have done since starting to invest in the mid 1980's. Starting with the 1987 equity downturn, I rebalance into downturns by adding equities when the equity % drops below target. The only major downturn I have not rebalanced into since 1987 was 9/11. I was too consumed at work in the aftermath for months and did not want to benefit / profit off of that catastrophe.
Post: For most retirees, the greatest fear is not death—it is running out of money before they die.
Link to comment from August 11, 2026
Ted, I agree with your math. $5,500/month is $66,000/year, or an 8.6% initial withdrawal rate on $768K. But I think the more interesting question is when you make the annuity decision. In our hypothetical, Person C commits $100K to a deferred annuity at age 45 in exchange for $5,500/month for life beginning at 65. That's a legitimate way to insure against longevity and market risk. My objection is committing the money 20 years before you know whether you'll actually need that insurance. The alternative is to leave the $100K invested. If it achieved the historical return of the total U.S. stock market over those 20 years, it would be worth approximately $768K at age 65. At that point, you have both wealth and flexibility:
- Stay invested in VTSAX/VTI.
- Diversify to something like 60/40.
- Annuitize some or all of the portfolio.
- Buy an immediate annuity—or another annuity product.
- Or decide you don't need an annuity at all.
And you can make that decision based on your actual circumstances at 65: Social Security, other assets, health, spending needs, whether you're still working, risk tolerance, longevity expectations and desire to leave money to heirs. As for the $5,500/month withdrawal, I don't think "8.6%" tells the whole story. The portfolio doesn't have to earn 8.6% and preserve the $768K. It can consume principal. As an illustration, using long-term historical average returns:- A 100%-stock portfolio could still have substantial assets after 20 years of $66K annual withdrawals and, under a simple constant-return illustration, could have significant assets remaining even at 100.
- A 60/40 portfolio produces a less favorable result but, under those assumptions, could still last into the late 90s.
Those aren't forecasts—sequence-of-returns risk could produce a much worse result. But again, the 65-year-old gets to assess that risk at 65, rather than having the 45-year-old make the decision for him. And if the portfolio does well, the retiree gets something the pure-life annuity doesn't provide: remaining capital and potential money for heirs. My question is why voluntarily give up the flexibility of $100K at age 45 when you can preserve the option to buy that insurance at 65—or later—when you actually know whether you need it. The annuity buys certainty of a specific outcome. The investment preserves optionality and the potential for growth. I'd rather preserve the optionality and only buy the certainty later if I feel I need it. In my case, I don't see that day coming, so I'm glad I deflected all those annuity sales pitches years ago.Post: For most retirees, the greatest fear is not death—it is running out of money before they die.
Link to comment from August 9, 2026
$100K invested in Vanguard Total Market Index Fund (VTSAX) for the last 20 years with dividends reinvested would be worth approximately $768,000 today (source AI). Those buying an annuity over that period not only incurred the comparatively high cost structure of the annuity but also incurred the lost opportunity cost. Annuities are the gateway to a mediocre retirement when purchased far ahead of retirement. I personally could not imagine buying one even now after retiring but for some it may help them (and the annuity sales person) sleep better.
Post: For most retirees, the greatest fear is not death—it is running out of money before they die.
Link to comment from August 8, 2026