I am afraid that I share that perspective. I graduated from a Top engineering school in 1981 with minimal debt; but found myself out of work in the 1982 recession. It was a long road back that included pawning items to buy groceries, shopping with a calculator to see what we could afford, and purchasing a foreclosure as our first home (with a double-digit interest rate). I hear about how difficult it is for my son's generation, but I don't see any of them doing those types of things.
I like to defer capital gains; ideally forever. This can be accomplished if shares are donated to charity or passed on in an estate. Here's an example... I had shares in a regional bank, that got clobbered back in 2023. I sold those shares at a loss and got the deduction in my 2023 tax return. I simultaneously bought shares in a different bank that was also way down. Since that purchase those shares are up over 100%. I just gave them to my church. I got a tax deduction for the capital loss in 2023, and a tax deduction for a charitable contribution in 2025. And no capital gains tax ever. That is how it works...
I was diagnosed with pulmonary hypertension at age 60 (while undergoing heart valve repair). Since then my cardiologist has me taking 1/2 a 20 mg sildenafil every morning and every night. This is now the second unintended side effect of his prescription š
They are withdrawing much less 4% if they have half their assets in TIPs (50%), and are drawing that down evenly across 20 years, that means they are only spending 2.5% per year. They are ārebalancingā every year as they cash in bonds without replacement. Only they are actually rebalancing in a more aggressive direction. in short, their strategy has nothing to do with ā4% ruleā.
Correct. However, if you time conversions to coincide with a qualifying event in the same year (like retiring or reduced work hours) ābingoā you can get the IRMAA premiums waived. i speak from personal experience. It works, just need to navigate the paperwork.
I believe that in most cases it is an unintentional mistake. A lot of people do not understand āstepped up basisā. There is probably a significant overlap in this group with the people who also ask how they can just withdraw all of their traditional IRA funds with zero tax (itās my money). Financial illiteracy is a real problem. Thanks Jonathan for helping to address this issue with Humble dollar.
My grandparents had a family farm, back when the inheritance tax exclusion was MUCH lower. They set up a trust and had their most ābusiness-mindedā son identified as the trustee. When Grandma was gone and it was time to distribute the trust, many sibling rivalries and issues surfaced in a very disturbing way. Some of the siblings still no longer talk to one another. I am sure that is not what Grandpa and Grandma intended. The choice of a trustee really is critical.
I think the tip about ābunchingā deductions is under appreciated, from my discussions with friends and family. my wife and I are charitably inclined and we make 2+ years of charitable gifts every other year. Last year in addition to ānormalā giving we put appreciated stock and cash into our Fidelity donor advised fund. we itemized last year and had about 160% of the standard deduction. Now this year our DAF will send checks to most of the charities that we support, and weāll take the standard deduction this year. next year (2025) we will make big donations to our daf again (thx Citigroup stock) and then rinse and repeat. we are in our mid-60s so I think we have at least 3 more iterations of this process before we switch to qcds from our traditional IRA.
Comments
I am afraid that I share that perspective. I graduated from a Top engineering school in 1981 with minimal debt; but found myself out of work in the 1982 recession. It was a long road back that included pawning items to buy groceries, shopping with a calculator to see what we could afford, and purchasing a foreclosure as our first home (with a double-digit interest rate). I hear about how difficult it is for my son's generation, but I don't see any of them doing those types of things.
Post: Generational Perspective
Link to comment from May 10, 2025
I like to defer capital gains; ideally forever. This can be accomplished if shares are donated to charity or passed on in an estate. Here's an example... I had shares in a regional bank, that got clobbered back in 2023. I sold those shares at a loss and got the deduction in my 2023 tax return. I simultaneously bought shares in a different bank that was also way down. Since that purchase those shares are up over 100%. I just gave them to my church. I got a tax deduction for the capital loss in 2023, and a tax deduction for a charitable contribution in 2025. And no capital gains tax ever. That is how it works...
Post: One Stock at a Time
Link to comment from February 24, 2025
I was diagnosed with pulmonary hypertension at age 60 (while undergoing heart valve repair). Since then my cardiologist has me taking 1/2 a 20 mg sildenafil every morning and every night. This is now the second unintended side effect of his prescription š
Post: Avoiding Alzheimer’s
Link to comment from September 14, 2024
They are withdrawing much less 4% if they have half their assets in TIPs (50%), and are drawing that down evenly across 20 years, that means they are only spending 2.5% per year. They are ārebalancingā every year as they cash in bonds without replacement. Only they are actually rebalancing in a more aggressive direction. in short, their strategy has nothing to do with ā4% ruleā.
Post: Laying Down a Floor
Link to comment from September 14, 2024
True. IRMAA surcharges, while annoying, only last one year per conversion, and are minor compared to a 5-10% higher tax bracket (post 2025).
Post: Paying to Avoid Pain
Link to comment from May 11, 2024
Correct. However, if you time conversions to coincide with a qualifying event in the same year (like retiring or reduced work hours) ābingoā you can get the IRMAA premiums waived. i speak from personal experience. It works, just need to navigate the paperwork.
Post: Paying to Avoid Pain
Link to comment from May 11, 2024
Yes, this is an example where āmarket timingā might actually make sense. i am a couple of years older than Jonathan, so i may have to suck it up with IRMAA premium impacts but i am trying to make some very significant conversions this year and next (taking advantage of the 22-24% brackets that may go away). I converted about $100k worth of stocks 2 weeks ago during the late April downturn. My recently converted Qualcomm position surged more than 10% after that move. You never know how those things will turn out, but I see every downturn as a conversion opportunity. I had multiple opportunities in 2022 š©
Post: Paying to Avoid Pain
Link to comment from May 11, 2024
I believe that in most cases it is an unintentional mistake. A lot of people do not understand āstepped up basisā. There is probably a significant overlap in this group with the people who also ask how they can just withdraw all of their traditional IRA funds with zero tax (itās my money). Financial illiteracy is a real problem. Thanks Jonathan for helping to address this issue with Humble dollar.
Post: Fact Finding
Link to comment from May 8, 2024
My grandparents had a family farm, back when the inheritance tax exclusion was MUCH lower. They set up a trust and had their most ābusiness-mindedā son identified as the trustee. When Grandma was gone and it was time to distribute the trust, many sibling rivalries and issues surfaced in a very disturbing way. Some of the siblings still no longer talk to one another. I am sure that is not what Grandpa and Grandma intended. The choice of a trustee really is critical.
Post: What’s Your Plan?
Link to comment from May 8, 2024
I think the tip about ābunchingā deductions is under appreciated, from my discussions with friends and family. my wife and I are charitably inclined and we make 2+ years of charitable gifts every other year. Last year in addition to ānormalā giving we put appreciated stock and cash into our Fidelity donor advised fund. we itemized last year and had about 160% of the standard deduction. Now this year our DAF will send checks to most of the charities that we support, and weāll take the standard deduction this year. next year (2025) we will make big donations to our daf again (thx Citigroup stock) and then rinse and repeat. we are in our mid-60s so I think we have at least 3 more iterations of this process before we switch to qcds from our traditional IRA.
Post: Avoiding or Evading?
Link to comment from April 10, 2024