Don't forget the qualified dividends. You are much more likely to have some of those than capital gains if one is a long-term investor and has assets in non-tax advantaged accounts. For those in the 12% bracket they are often tax free. If you max out the bracket with your Roth conversion they won't be.
Those numbers look good. I would encourage you to look at three complicating incomes that are common for couples 65+. Those are social security, qualified dividends and long-term capital gains. Doing so can greatly change the effective income tax rate on your Roth conversions. Like from 12% to 32%.
Their value [fiat currencies] depends entirely upon the collective trust of people making transactions in those currencies. If that confidence evaporates, so does the value of that money.
You can't eat or drink gold. It doesn't protect you from the weather. Other than for some small industrial uses and to make jewelry, gold itself is worthless until you can get someone to trade something useful, like food or drink for your gold. My point is that just like fiat currencies gold's value is based mostly upon the collective trust that other people will make transactions with you for things of real value like food, drink, shelter, clothes and so on. That's a fundamental characteristic of all currencies.
My Dad lives in a CCRC and pays the monthly fee, an electric bill, a cable TV bill and a phone bill (he still has a land line!) He has renter's insurance instead of his homeowner insurance. They provide one meal a day as part of the monthly fee and charge about $8 for additional meals. He moved from a four-bedroom house on an acre of land to a one-bedroom apartment. His electric bill is less than half what it was, renter's insurance is a tenth of what he was paying for homeowner's, he saves thousands on maintenance.
The larger your AGI the SMALLER the amount of your entrance fee that you can deduct. Reworking my original example, let's say your AGI is $500k instead of $100k. Instead of $92.5k of the $200k entrance fee being deducted now (200k*0.5-500k*.075) $62.5k instead of $92.5k is deductible. All of this just points back to what I said in my original post. It is convoluted and depends on many different variables of each individual considering CCRA. To make the best decision for you, you will have to look deeply at the details particular to your situation and not depend on any sort of generalizations. In summary, details matter. If you aren't wiling/able to do the detailed analysis of your particular deal, hire a professional.
There are a few different ways that the entrance fees may be structured. Some are never refundable. Some are amortizing entrance fees, specify a period during which the entrance fee can be refundable to the resident or the resident's estate on a declining basis. Some are always refundable. And finally, some are a blend of the above. You are correct that only the non-refundable portion of an entrance fee may be considered for an itemized deduction. And to be more specific, only that portion of the non-refundable entrance fee that is a prepaid medical expense and exceeds 7.5% of your Adjusted Gross income in the year that you paid it is tax deductible. But it might not even be worth it to claim this deduction. As an example, let's say that you pay a $200k total non-refundable entrance fee of which your CCRC tells you 50% of that is prepaid medical expenses and your AGI for that year was $100k. In that case only $42,500 $92,500 (200k*0.5-100k*.075) is deductible and then only if you itemize instead of taking the standard deduction. For a couple, both over 65, in 2025 the standard deduction is 31,500 + 3,200 +12,000 = $46,700 and thus there is no an advantage to itemizing for this example. *edited 7/11 to fix math error!
If the entry fee was claimed as a medical expense on your tax return the year you paid it and that deduction resulted in a reduced taxable income in that year, then any portion of that expense that is later recovered may be considered as income and taxable to either you or your estate. It is a bit convoluted to figure out the amounts so either do some deep research or higher a tax pro.
A key concept with bond funds is duration. Bond duration is a measure of a bond's price sensitivity to changes in interest rates. Duration quantifies the percentage change in a bond's price for a 1% change in interest rates. If a bond fund has a duration of 6 years, typical for an intermediate term bond fund, and interest rates rise by 1%, the fund's price is expected to decrease by approximately 6%. A bond fund with a high duration is a warning that the price drop with increasing interest rates will be large. If you can't tolerate these drops, don't hold high duration bond funds. Instead stay with short-term funds with durations typically close to 2 years. If that is still too much, then there are some ultra-short-term funds with durations of less than 1 year. After that, money markets, CD's or if you have the skills and time build your own short-term ladder of Treasury bills and/or bonds. *Edited 7/8 to fix typo's
The best story wins. Not the best idea. Not the right answer. Just whoever tells a story that catches people’s attention and makes them feel good. George Packer wrote: "The most durable narratives are not the ones that stand up best to fact-checking. They’re the ones that address our deepest needs and desires." This drives you crazy if you assume the world is swayed by facts and objectivity because it clearly isn't.
Comments
Don't forget the qualified dividends. You are much more likely to have some of those than capital gains if one is a long-term investor and has assets in non-tax advantaged accounts. For those in the 12% bracket they are often tax free. If you max out the bracket with your Roth conversion they won't be.
Post: Calculating the Maximum Income While Staying in the 12% Tax Bracket
Link to comment from December 7, 2025
Those numbers look good. I would encourage you to look at three complicating incomes that are common for couples 65+. Those are social security, qualified dividends and long-term capital gains. Doing so can greatly change the effective income tax rate on your Roth conversions. Like from 12% to 32%.
Post: Calculating the Maximum Income While Staying in the 12% Tax Bracket
Link to comment from December 7, 2025
Post: Inflation Insurance
Link to comment from November 24, 2025
My Dad lives in a CCRC and pays the monthly fee, an electric bill, a cable TV bill and a phone bill (he still has a land line!) He has renter's insurance instead of his homeowner insurance. They provide one meal a day as part of the monthly fee and charge about $8 for additional meals. He moved from a four-bedroom house on an acre of land to a one-bedroom apartment. His electric bill is less than half what it was, renter's insurance is a tenth of what he was paying for homeowner's, he saves thousands on maintenance.
Post: How Has Living in a CCRC Affected Your Monthly Bills?
Link to comment from November 13, 2025
Apparently, you did do "complicated" calculations!
Post: Bankruptcies in continuing care
Link to comment from July 11, 2025
The larger your AGI the SMALLER the amount of your entrance fee that you can deduct. Reworking my original example, let's say your AGI is $500k instead of $100k. Instead of $92.5k of the $200k entrance fee being deducted now (200k*0.5-500k*.075) $62.5k instead of $92.5k is deductible. All of this just points back to what I said in my original post. It is convoluted and depends on many different variables of each individual considering CCRA. To make the best decision for you, you will have to look deeply at the details particular to your situation and not depend on any sort of generalizations. In summary, details matter. If you aren't wiling/able to do the detailed analysis of your particular deal, hire a professional.
Post: Bankruptcies in continuing care
Link to comment from July 11, 2025
There are a few different ways that the entrance fees may be structured. Some are never refundable. Some are amortizing entrance fees, specify a period during which the entrance fee can be refundable to the resident or the resident's estate on a declining basis. Some are always refundable. And finally, some are a blend of the above. You are correct that only the non-refundable portion of an entrance fee may be considered for an itemized deduction. And to be more specific, only that portion of the non-refundable entrance fee that is a prepaid medical expense and exceeds 7.5% of your Adjusted Gross income in the year that you paid it is tax deductible. But it might not even be worth it to claim this deduction. As an example, let's say that you pay a $200k total non-refundable entrance fee of which your CCRC tells you 50% of that is prepaid medical expenses and your AGI for that year was $100k. In that case only
$42,500$92,500 (200k*0.5-100k*.075) is deductible and then only if you itemize instead of taking the standard deduction. For a couple, both over 65, in 2025 the standard deduction is 31,500 + 3,200 +12,000 = $46,700 and thus there isnoan advantage to itemizing for this example. *edited 7/11 to fix math error!Post: Bankruptcies in continuing care
Link to comment from July 10, 2025
If the entry fee was claimed as a medical expense on your tax return the year you paid it and that deduction resulted in a reduced taxable income in that year, then any portion of that expense that is later recovered may be considered as income and taxable to either you or your estate. It is a bit convoluted to figure out the amounts so either do some deep research or higher a tax pro.
Post: Bankruptcies in continuing care
Link to comment from July 9, 2025
A key concept with bond funds is duration. Bond duration is a measure of a bond's price sensitivity to changes in interest rates. Duration quantifies the percentage change in a bond's price for a 1% change in interest rates. If a bond fund has a duration of 6 years, typical for an intermediate term bond fund, and interest rates rise by 1%, the fund's price is expected to decrease by approximately 6%. A bond fund with a high duration is a warning that the price drop with increasing interest rates will be large. If you can't tolerate these drops, don't hold high duration bond funds. Instead stay with short-term funds with durations typically close to 2 years. If that is still too much, then there are some ultra-short-term funds with durations of less than 1 year. After that, money markets, CD's or if you have the skills and time build your own short-term ladder of Treasury bills and/or bonds. *Edited 7/8 to fix typo's
Post: Bond Conundrum
Link to comment from July 7, 2025
The best story wins. Not the best idea. Not the right answer. Just whoever tells a story that catches people’s attention and makes them feel good. George Packer wrote: "The most durable narratives are not the ones that stand up best to fact-checking. They’re the ones that address our deepest needs and desires." This drives you crazy if you assume the world is swayed by facts and objectivity because it clearly isn't.
Post: The great uninformed and misinformed population worries Quinn
Link to comment from April 23, 2025