I started looking at this many years ago, especially with the Trump tax cuts and the market that did so well during his presidency. I started with a spreadsheet that got more and more complicated each year as I plan an upper end 30 year retirement. The result is that I am making Roth conversions to fill in my highest tax bracket while staying under 182,000 where penalties kick in for Medicare. Even assuming now 4.1% inflation for my particular situation, the RMD's are a killer if you don't average out distributions over a longer time period. The divider in the Uniform Lifetime Table for RMD's is wicked in the end. It also doesn't help that most likely you or your spouse end up in the single tax bracket in the latter part of retirement.
It only comes down to basically taking SS early or waiting till age 70. I will take it at 70 as the higher earner and have not decided yet on my wife's, although later is probably the right choice. This may result by a SS calculator that we will get less SS. This is not the red herring for me. It is RMDs from the 401K and now an IRA. After working on my own spreadsheet for years now on the overall retirement flow I could only come to two conclusions: I will pay more in taxes in retirement than when I was working, and the best I can do is average the percentage I estimate I will pay each year. There are some big hitters waiting out there. One is that when one spouse dies, the other will be single. Then their taxes go way up because of that. My effort is to move as much money as I can within my average percentage each year into a Roth before taking SS. Also, to take advantage of the Trump tax cuts because this will go back to much higher taxes when it sunsets the end of 2025. Then continue to move money to a Roth afterwards to zero out the IRA before my estimated mortality and my wife is single.
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I started looking at this many years ago, especially with the Trump tax cuts and the market that did so well during his presidency. I started with a spreadsheet that got more and more complicated each year as I plan an upper end 30 year retirement. The result is that I am making Roth conversions to fill in my highest tax bracket while staying under 182,000 where penalties kick in for Medicare. Even assuming now 4.1% inflation for my particular situation, the RMD's are a killer if you don't average out distributions over a longer time period. The divider in the Uniform Lifetime Table for RMD's is wicked in the end. It also doesn't help that most likely you or your spouse end up in the single tax bracket in the latter part of retirement.
Post: Self-Inflicted
Link to comment from July 9, 2022
It only comes down to basically taking SS early or waiting till age 70. I will take it at 70 as the higher earner and have not decided yet on my wife's, although later is probably the right choice. This may result by a SS calculator that we will get less SS. This is not the red herring for me. It is RMDs from the 401K and now an IRA. After working on my own spreadsheet for years now on the overall retirement flow I could only come to two conclusions: I will pay more in taxes in retirement than when I was working, and the best I can do is average the percentage I estimate I will pay each year. There are some big hitters waiting out there. One is that when one spouse dies, the other will be single. Then their taxes go way up because of that. My effort is to move as much money as I can within my average percentage each year into a Roth before taking SS. Also, to take advantage of the Trump tax cuts because this will go back to much higher taxes when it sunsets the end of 2025. Then continue to move money to a Roth afterwards to zero out the IRA before my estimated mortality and my wife is single.
Post: My Time to Claim
Link to comment from March 21, 2022