High-level early retirement plan - What do y'all think?

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ralph124cf
Posts: 2985
Joined: Tue Apr 01, 2014 11:41 am

Re: High-level early retirement plan - What do y'all think?

Post by ralph124cf »

Your only real risk factor is divorce.

There are many people on this board (and many more in "real life") who have been totally blindsided when their spouse files for divorce.

Other than that, I second previous suggestions for Roth transfers after you retire.

Ralph
calliecake47
Posts: 114
Joined: Mon Apr 04, 2016 6:33 pm

Re: High-level early retirement plan - What do y'all think?

Post by calliecake47 »

livesoft wrote: Mon May 17, 2021 5:50 am
Grifin wrote: Sat May 15, 2021 3:23 pmI have run a few scenarios in turbo tax assuming a few thousand in interest income (~$5k), ...
I think you can be more tax-efficient. We just did our Federal tax return and had $2 in interest income which is taxed at our full marginal rate. For tax-efficiency we avoid interest income and would rather have qualified dividends which are taxed at a lower rate of 0% for us.
How do you end up with just $2 in interest income? I know the obvious answer is you don't have any of your taxable dollars in anything that earns interest, but where do you keep your emergency funds? And if you keep your money all in accounts that earn dividends then when you need it wouldn't you have capital gains?

I'm just trying to learn here because we're recently retired and most (about 75%) of our money is in joint taxable accounts.
livesoft
Posts: 86079
Joined: Thu Mar 01, 2007 7:00 pm

Re: High-level early retirement plan - What do y'all think?

Post by livesoft »

calliecake47 wrote: Tue May 18, 2021 1:56 pmHow do you end up with just $2 in interest income? I know the obvious answer is you don't have any of your taxable dollars in anything that earns interest, but where do you keep your emergency funds? And if you keep your money all in accounts that earn dividends then when you need it wouldn't you have capital gains?

I'm just trying to learn here because we're recently retired and most (about 75%) of our money is in joint taxable accounts.
See this thread for starters: viewtopic.php?t=87471

Folks who fill out their tax returns may have learned that qualified dividend income is taxed at a rate as low as 0%. Folks will also know that long-term capital gains are taxed at a rate as low as 0% or those gains are offset by previous tax-loss harvesting, so they do not even appear on page 1 of Form 1040.
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calliecake47
Posts: 114
Joined: Mon Apr 04, 2016 6:33 pm

Re: High-level early retirement plan - What do y'all think?

Post by calliecake47 »

livesoft wrote: Tue May 18, 2021 2:01 pm
calliecake47 wrote: Tue May 18, 2021 1:56 pmHow do you end up with just $2 in interest income? I know the obvious answer is you don't have any of your taxable dollars in anything that earns interest, but where do you keep your emergency funds? And if you keep your money all in accounts that earn dividends then when you need it wouldn't you have capital gains?

I'm just trying to learn here because we're recently retired and most (about 75%) of our money is in joint taxable accounts.
See this thread for starters: viewtopic.php?t=87471

Folks who fill out their tax returns may have learned that qualified dividend income is taxed at a rate as low as 0%. Folks will also know that long-term capital gains are taxed at a rate as low as 0% or those gains are offset by previous tax-loss harvesting, so they do not even appear on page 1 of Form 1040.
Thanks for the reference, it is very interesting. So in its simplest terms, if someone doesn’t have any capital losses left from TLH to carry over currently they would need to stay under $80,800 in QDI and LTCG and under $25,100 in income for married filing jointly, anything over that would be taxed. Given that scenario it seems as long as you have $4,000,000 or less in invested taxable accounts then you’d be able to stay under the $80K capital gains tax, assuming 2% QDI each year? (more or less)
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