Really depends on “where the lines cross” in terms of break-even age. I’ve run this analysis is income lab and in our case it doesn’t break even until I’m in my late 80s. So many things can change between now and then in terms of my health, the tax code and numerous other things. so to me, it doesn’t make sense to sustain a sure immediate tax bill that is way out of the ordinary and would require me to incur capital gains on investments just to pay it. i’d rather take my chances and see how things pan out in terms of the tax laws associated with the huge tax bills that these relatively new accounts will incur for the older retirees who started saving in them before anyone really understood how the decumulation from them would pan out.
If you have a enough to itemize from any combination of high state taxes, mortgage interest, property tax, and charitable contributions (not counting the first 0.5% of AGI in your cash contributions), you may find that you have already exceeded your standard deduction amount and can itemize. From there, all your charitable cash donations are deductible on Schedule A after not counting the first 0.5% of your AGI. Higher income taxpayers sometimes will bunch together their contributions and only make one bigger contribution every couple of years in order to push them into having enough to itemize.
Great post, Adam. Love the simplicity of just targeting the bracket rather than having the goal of converting all pre-tax to Roth by a certain date no matter what the early tax hit is. In terms of total life-time taxes, seems to me state taxes figure into the calculation, too, for people who live in high-tax states like California (which is where I live). The progressive income tax brackets here go in roughly 1% steps from 0 to over 13%. Most retirees won’t exceed 9.3% with its upper income limit of $740,000 MFJ. We hit the 8% bracket, though, in 2025 and will again in 2026 with very little ordinary income, no Roth conversions - just LTCG and qualified dividends. As a result, our state tax will exceed our Federal tax in 2026 by 4 to 1. The other consideration for us is the ACA subsidy, which my wife will need for another 7 years. This costs us another $7000 because every dollar counts against the ACA subsidy income threshold whether it’s qualified dividends or regular income. So lots to consider when trying to minimize lifetime taxes in retirement.
So what are one’s ‘means’ if one has no pension; and social security and dividend income aren’t enough to cover one’s annual spending? In decumulating one’s portfolio for retirement income, which is what an ever-increasing percentage of retirees are faced with, ‘means’ becomes an extraordinarily squishy notion. How long are you going to live? Are you going to have huge medical expenses along the way? What if the market tanks? What if the market takes off and never stops? What if inflation goes through the roof? Or remains dead flat? For most new retirees, any sort of concrete number for means very quickly becomes fuzzy, if not meaningless. I like to think of more as analogous to an electron probability cloud. The goal isn’t to know what the number is at any given time. It’s to understand what it’s liable to be, and what I’m going to do if when it turns out to be different
We started using risk-based spending guard rails about a year ago. It has been a real game changer in terms of increasing our comfort level with spending, to the point where now we are worried about spending too little. To put this in perspective, before we started using this approach to decumulation, we were spending about half of what we are spending now. Most of the increase has been on travel.
If I understand your argument correctly, it goes like this:
If you don’t spend more than you earn, you will always be financially ok.
I never spent more than I earned.
I never had a budget.
I am financially ok.
Therefore having a budget is pointless.
Yours is a facile argument. You could’ve chosen any one of myriad topics and written the exact same thing.
Going to a doctor will not make you well.
Going to the gym will not make you fit.
Knowing about nutrition will not make you healthy.
Learning how to drive will not make you a good driver.
Having a lawn mower does not keep your lawn trimmed (particularly irksome).
So no, having a budget won’t tellyou when you can retire (although with AI integrations, that may not be true much longer). And having a financial plan will not ensure you don’t run out of money in your old age. I think If someone today were to live according to your line of thought - never spending more than they earn and not bothering with a budget - they would either end up working until they die or they’d need to figure out how to live on social security alone, and do so without a budget. (“Gee, after working until 70 my income went from $123,000 a year to $40,000 a year. I never spent more than I earned, and my apartment costs $5000 a month in rent. Can I still afford that? If not, how much can I afford to spend on rent?” Beats me.). It turns out you actually have to know how to use a budget, which includes understanding why you created it and what you hope to achieve from having done it. And then - most obviously - act accordingly. Perhaps you would not have stirred up so many negative responses here if you’d simply written this as a My Point of View piece, sharing your financial history and current reality, and how, for you, a budget never figured in. The way you wrote this piece, it appears you didn’t bother talking to anyone who actually uses a budget to some good effect; or if you did, your intent here was not to share what you learned, but to stir up controversy (cf, definition of facile). In any case, may you have a budget-free and happy, healthy 2026.
You seem to be impervious to alternative points of view. Re-read comments from others here and try this: start by accepting that what they are saying is true. You really can’t go wrong doing that because for them in fact, it is true. Next I’d suggest trying to understand how they were able to arrive at the truth they shared in their comment. One approach might be to look back at your own financial life and imagine how it may have worked out for you had you applied what their comment is offering.
I just ran a stress test scenario in Income Lab on how our plan would fare during the Great Depression using our current portfolio setup, balance and spending. The scenario timeframe covered annual spending guardrails and portfolio balance from 1929 to 1970, and showed that although we’d survive it - barely - there would be several downward spending adjustments required during the first half of that time period. The good news is that the adjustments would take us only somewhat lower than our maximum spending target, which includes around 50% discretionary spending and a 5% per year built-in aging reduction that starts during the Slow-Go years. The ending balance would be pretty near 0; and the portfolio balance during the last 5 years taking my wife to 100 (8 years after my own dirt nap at 100) would be a bit hair raising. All of which is to say that our plan would still work - with spending guardrails it always does - but doing a stress test like this emphasizes how important it is to use conservative assumptions when modeling retirement plans and have a written plan in place to follow for whoever it is that’s still be alive when things get hairy.
Comments
Really depends on “where the lines cross” in terms of break-even age. I’ve run this analysis is income lab and in our case it doesn’t break even until I’m in my late 80s. So many things can change between now and then in terms of my health, the tax code and numerous other things. so to me, it doesn’t make sense to sustain a sure immediate tax bill that is way out of the ordinary and would require me to incur capital gains on investments just to pay it. i’d rather take my chances and see how things pan out in terms of the tax laws associated with the huge tax bills that these relatively new accounts will incur for the older retirees who started saving in them before anyone really understood how the decumulation from them would pan out.
Post: Tax Smart Retirement
Link to comment from March 8, 2026
If you have a enough to itemize from any combination of high state taxes, mortgage interest, property tax, and charitable contributions (not counting the first 0.5% of AGI in your cash contributions), you may find that you have already exceeded your standard deduction amount and can itemize. From there, all your charitable cash donations are deductible on Schedule A after not counting the first 0.5% of your AGI. Higher income taxpayers sometimes will bunch together their contributions and only make one bigger contribution every couple of years in order to push them into having enough to itemize.
Post: What is the best way to donate to charity in 2026?
Link to comment from March 7, 2026
Great post, Adam. Love the simplicity of just targeting the bracket rather than having the goal of converting all pre-tax to Roth by a certain date no matter what the early tax hit is. In terms of total life-time taxes, seems to me state taxes figure into the calculation, too, for people who live in high-tax states like California (which is where I live). The progressive income tax brackets here go in roughly 1% steps from 0 to over 13%. Most retirees won’t exceed 9.3% with its upper income limit of $740,000 MFJ. We hit the 8% bracket, though, in 2025 and will again in 2026 with very little ordinary income, no Roth conversions - just LTCG and qualified dividends. As a result, our state tax will exceed our Federal tax in 2026 by 4 to 1. The other consideration for us is the ACA subsidy, which my wife will need for another 7 years. This costs us another $7000 because every dollar counts against the ACA subsidy income threshold whether it’s qualified dividends or regular income. So lots to consider when trying to minimize lifetime taxes in retirement.
Post: Tax Smart Retirement
Link to comment from March 7, 2026
So what are one’s ‘means’ if one has no pension; and social security and dividend income aren’t enough to cover one’s annual spending? In decumulating one’s portfolio for retirement income, which is what an ever-increasing percentage of retirees are faced with, ‘means’ becomes an extraordinarily squishy notion. How long are you going to live? Are you going to have huge medical expenses along the way? What if the market tanks? What if the market takes off and never stops? What if inflation goes through the roof? Or remains dead flat? For most new retirees, any sort of concrete number for means very quickly becomes fuzzy, if not meaningless. I like to think of more as analogous to an electron probability cloud. The goal isn’t to know what the number is at any given time. It’s to understand what it’s liable to be, and what I’m going to do
ifwhen it turns out to be differentPost: What does ”means” mean?
Link to comment from February 14, 2026
Very illuminating. Thank you!
Post: Misleading Indicator
Link to comment from January 31, 2026
We started using risk-based spending guard rails about a year ago. It has been a real game changer in terms of increasing our comfort level with spending, to the point where now we are worried about spending too little. To put this in perspective, before we started using this approach to decumulation, we were spending about half of what we are spending now. Most of the increase has been on travel.
Post: Spending Without Guilt: An Overlooked Retirement Skill
Link to comment from January 24, 2026
So you’re saying that having a lawn mower won’t keep my yard trimmed? That’s it?
Post: Can a budget do all that?
Link to comment from January 4, 2026
If I understand your argument correctly, it goes like this:
- If you don’t spend more than you earn, you will always be financially ok.
- I never spent more than I earned.
- I never had a budget.
- I am financially ok.
- Therefore having a budget is pointless.
Yours is a facile argument. You could’ve chosen any one of myriad topics and written the exact same thing.- Going to a doctor will not make you well.
- Going to the gym will not make you fit.
- Knowing about nutrition will not make you healthy.
- Learning how to drive will not make you a good driver.
- Having a lawn mower does not keep your lawn trimmed (particularly irksome).
So no, having a budget won’t tell you when you can retire (although with AI integrations, that may not be true much longer). And having a financial plan will not ensure you don’t run out of money in your old age. I think If someone today were to live according to your line of thought - never spending more than they earn and not bothering with a budget - they would either end up working until they die or they’d need to figure out how to live on social security alone, and do so without a budget. (“Gee, after working until 70 my income went from $123,000 a year to $40,000 a year. I never spent more than I earned, and my apartment costs $5000 a month in rent. Can I still afford that? If not, how much can I afford to spend on rent?” Beats me.). It turns out you actually have to know how to use a budget, which includes understanding why you created it and what you hope to achieve from having done it. And then - most obviously - act accordingly. Perhaps you would not have stirred up so many negative responses here if you’d simply written this as a My Point of View piece, sharing your financial history and current reality, and how, for you, a budget never figured in. The way you wrote this piece, it appears you didn’t bother talking to anyone who actually uses a budget to some good effect; or if you did, your intent here was not to share what you learned, but to stir up controversy (cf, definition of facile). In any case, may you have a budget-free and happy, healthy 2026.Post: Can a budget do all that?
Link to comment from January 4, 2026
You seem to be impervious to alternative points of view. Re-read comments from others here and try this: start by accepting that what they are saying is true. You really can’t go wrong doing that because for them in fact, it is true. Next I’d suggest trying to understand how they were able to arrive at the truth they shared in their comment. One approach might be to look back at your own financial life and imagine how it may have worked out for you had you applied what their comment is offering.
Post: Can a budget do all that?
Link to comment from January 3, 2026
I just ran a stress test scenario in Income Lab on how our plan would fare during the Great Depression using our current portfolio setup, balance and spending. The scenario timeframe covered annual spending guardrails and portfolio balance from 1929 to 1970, and showed that although we’d survive it - barely - there would be several downward spending adjustments required during the first half of that time period. The good news is that the adjustments would take us only somewhat lower than our maximum spending target, which includes around 50% discretionary spending and a 5% per year built-in aging reduction that starts during the Slow-Go years. The ending balance would be pretty near 0; and the portfolio balance during the last 5 years taking my wife to 100 (8 years after my own dirt nap at 100) would be a bit hair raising. All of which is to say that our plan would still work - with spending guardrails it always does - but doing a stress test like this emphasizes how important it is to use conservative assumptions when modeling retirement plans and have a written plan in place to follow for whoever it is that’s still be alive when things get hairy.
Post: Would You Raid the Piggy Bank or Mortgage the House?
Link to comment from December 13, 2025